DOJ’s Antitrust Action Against EBay to Proceed

SAN FRANCISCO (CN) - A federal judge allowed the Department of Justice - but not California - to pursue antitrust claims against eBay over an alleged "handshake-style" agreement with Intuit not to recruit one another's employees.

In separate rulings, U.S. District Judge Edward Davila said California lacked standing to seek an injunction, while the United States "plausibly alleged an actionable agreement between the two companies."

Antitrust regulators sued eBay in November 2012, alleging former CEO Meg Whitman and Intuit founder Scott Cook agreed in 2006 to refrain from hiring and recruiting candidates from one another.

In 2007, Whitman complained to Cook that Intuit had been recruiting eBay employees in violation of their agreement, according to the complaint. Cook allegedly responded with an expletive.

Intuit was not named in the complaint against eBay, as it is already subject to an order stemming from another antitrust lawsuit barring it from enforcing any agreement that limits hiring competition.

EBay argued there could be no conspiracy between the companies because Cook sat on eBay's board of directors, and that Section 8 of the Clayton Act permits people to serve on multiple boards.

Davila wasn't buying it, saying eBay could not hide behind the Clayton Act to avoid a conspiracy action under Section 1 of the Sherman Act.

"Here, neither party provides any evidence or argument showing that Mr. Cook's interlock is an acceptable one under Section 8, let alone that the interlock is so irreproachable that it serves to immunize eBay and Intuit from Section 1 scrutiny," he ruled. "Therefore, the court finds that Section 8 does not preclude a finding that the United States has plausibly stated an actionable agreement."

Davila found the state's case for an injunction less plausible.

"California contends that its allegations that eBay continued to enforce its agreement with Intuit even after learning of the DOJ's investigation into similar agreements among other technology companies and the lingering effects that occurred therefrom are sufficient to state a threatened injury for purposes of injunctive standing. The court disagrees," he wrote.

"At best, the public announcements of the DOJ's investigations put eBay on notice that its agreement was potentially illegal. However, the announcements did not concern eBay itself or the particulars of its agreement with Intuit. Moreover, they did not and could not constitute a legal determination that the behavior at issue indeed amounts to an antitrust violation. eBay's adherence to its agreement in the face of generalized legal ambiguity simply does not, without more, suffice to state a threatened, forward-looking, antitrust injury."

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