The US Department of Justice (DoJ) would prohibit eBay from entering into agreements with other tech firms to not recruit each other’s employees, in a settlement announced by the agency Thursday.
The settlement would bring to an end a long DoJ investigation into anticompetitive hiring practices at several tech companies, including Google, Apple and Intel.
In addition, California Attorney General Kamala Harris announced a related settlement with eBay, with the company agreeing to pay restitution and civil penalties of nearly $3.8 million, including $300,000 to the state for the harm to the state’s economy.
The proposed settlement with the DoJ in US District Court for the Northern District of California would prohibit eBay from entering or maintaining for five years what the DoJ called anticompetitive agreements related to employee hiring and retention. The settlement would broadly prohibit eBay from entering into or enforcing any agreement that prevents any competitor from soliciting, cold calling, recruiting, hiring or otherwise competing for employees.
“This is one further step towards closing an unfortunate chapter for Silicon Valley and other companies who unlawfully agreed to deny their employees the opportunity to receive competing job offers,” Bill Baer, assistant attorney general in at the DoJ’s Antitrust Division, said during a press briefing. “The behaviour was blatant and egregious. And the agreements were fully documented in company electronic communications.”
The DoJ, in November 2012, accused eBay of entering into a “handshake” agreement to not recruit or hire employees of software maker Intuit.
In the DoJ’s antitrust lawsuit, the agency alleged that senior executives and directors of eBay and Intuit entered into an agreement, beginning in about 2006, that prevented each firm from recruiting employees from the other and that prohibited eBay from hiring Intuit employees that approached eBay. Top executives at both companies discussed the agreement by e-mail, Baer said.
“EBay’s agreement with Intuit served no purpose but to limit competition between the two firms for employees, distorting the labor market and causing employees to lose opportunities for better jobs and higher pay,” Bill Baer, assistant attorney general in at the DoJ’s antitrust division, said in a statement. “The proposed settlement… ensures that eBay will not engage in similar conduct in the future.”
Intuit is already working under a similar consent decree and was not a defendant in this case.
No violation
EBay disputed that it violated the law. “EBay continues to believe that the policy that prompted this lawsuit was acceptable and legal, and led to no anticompetitive effects in the talent market in which eBay competed,” the company said in a statement. “Any hiring practices or decisions that could have raised concerns with the Department of Justice ceased years ago, as evidenced by the fact that Intuit signed a consent decree with the Department of Justice in 2010.”
The DoJ found e-mail messages exchanged between Meg Whitman, then CEO of eBay, and Intuit founder and executive committee Chairman Scott Cook, Baer said.
In one e-mail, eBay’s senior vice president of human resources wrote Whitman complaining that while eBay was adhering to its agreement not to hire Intuit employees, “it is hard to do this when Intuit recruits our folks.”
Intuit had sent a recruiting flyer to an eBay employee, according to the DoJ. Whitman forwarded that e-mail to Cook, asking him to “remind your folks not to send this stuff to eBay people”.
Cook responded: “Meg my apologies. I’ll find out how this slip up occurred again.”
The settlement comes after a series of DoJ Antitrust Division investigations into employee recruitment practices at several tech companies. In September 2010, the Antitrust Division filed a civil antitrust lawsuit against six tech firms – Adobe Systems, Apple, Google, Intel, Intuit and Pixar – for antitrust violations arising from ‘no cold call’ agreements.
In December 2010, the division filed a civil antitrust lawsuit against Lucasfilm, alleging antitrust violations involving similar activities restraining competition for employees. In both cases, settlements were filed at the same time the lawsuits were filed.
EBay had earlier filed a motion to dismiss the DoJ’s case against it, but the district court denied the motion.
In the settlement with the state of California, a portion of the settlement fund will be used to pay restitution to individuals employed in California by eBay or Intuit since 2005, according to a press release. About 40 people who were employed by Intuit and considered for but not offered a position at eBay will receive between $5,000 and $10,000 each.
Another 950 people who were employed by Intuit and applied for but were not offered positions at eBay will receive between $1,000 and $1,500 each. A third group of people who are current or former employees, but did not apply for jobs at the other company, will receive a maximum payment of $150.
Grant Gross, IDG News Service
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