WASHINGTON (CN) – The Department of Justice sued Adobe Systems, Apple, Google, Intel, Intuit and Pixar in Federal Court, claiming the industry giants made illegal “no cold call agreements” to restrict or eliminate competition for high tech employees, which “disrupted the normal price-setting mechanism that apply in the labor setting.” The proposed final judgment and consent decree would bar the companies from doing this for 5 years.
“These no cold call agreements are facially anticompetitive because they eliminated a significant form of competition to attract high tech employees, and, overall, substantially diminished competition to the detriment of the affected employees who were likely deprived of competitively important information and access to better job opportunities,” according to the complaint.
The Justice Department’s Antitrust Division said the no cold call agreements affected interstate commerce and violated the Sherman and Clayton Acts.
“Although defendants employ a variety of recruiting techniques, cold calling another firm’s employees is a particularly effective method of competing for computer engineers and computer scientists,” the complaint states. “Cold calling involves communicating directly in any manner (including orally, in writing, telephonically, or electronically) with another firm’s employee who has not otherwise applied for a job opening. Defendants frequently recruit employees by cold calling because other firms’ employees have the specialized skills necessary for the vacant position and may be unresponsive to other methods of recruiting. For example, several defendants at times have received an extraordinary number of job applications per year. Yet these companies still cold called engineers and scientists at other high tech companies to fill certain positions.”
The DOJ claims, “The six defendants entered into five substantially similar agreements not to cold call employees. The agreements were between i) Apple and Google, (ii) Apple and Adobe, (iii) Apple and Pixar, (iv) Google and Intel, and (v) Google and Intuit. As detailed below, these agreements were created and enforced by senior executives of these companies.
“These no cold call agreements were not ancillary to any legitimate collaboration between defendants. None of the agreements was limited by geography, job function, product group, or time period. Thus, they were much broader than reasonably necessary for the formation or implementation of any collaborative effort. The lack of necessity for these broad agreements is further demonstrated by the fact that defendants engaged in substantial collaborations that either did not include no cold call agreements or contained narrowly tailored hiring restrictions.
“Beginning no later than 2006, Apple and Google agreed not to cold call each other’s employees. Senior executives at Apple and Google reached an express no cold call agreement through direct and explicit communications. The executives actively managed and enforced the agreement through direct communications.
“The Apple-Google agreement covered all Google and all Apple employees and was not limited by geography, job function, product group, or time period. Moreover, employees were not informed of and did not agree to this restriction.
” In furtherance of this agreement, Apple placed Google on its internal ‘Do Not Call List,’ which instructed Apple employees not to cold call employees from the listed companies, including Google. Similarly, in its Hiring Policies and Protocols manual, Google listed Apple among the companies that had special agreements with Google and were part of the ‘Do Not Cold Call’ list. The manual instructed Google employees not to cold can employees of the listed companies.
“The companies, through their senior executives, policed potential breaches of the agreement. In February 2006 and March 2007, Apple complained to Google regarding recruiting efforts Google had made and, on both occasions, Google investigated the matter internally and reported its findings back to Apple.”
The complaint describes the other agreements as well. The proposed settlement and consent decree must be approved by a judge.