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September 24, 2010
WASHINGTON (Dow Jones) -- Several leading technology companies have agreed to settle civil charges that they violated antitrust law by agreeing not to poach each other's skilled employees, the Justice Department announced Friday.
The settlement prevents Google Inc. (GOOG), Apple Inc. (AAPL), Intel Corp. (INTC), Adobe Systems Inc. (ADBE), Intuit Inc. (INTU) and Walt Disney Co. (DIS) unit Pixar Animation from agreeing not to solicit, recruit or compete for each other's talent. The companies didn't admit wrongdoing as part of the settlement, according to court documents.
The department alleged that senior executives at the companies formed agreements not to cold-call each other's workers. For example, the department said, Apple and Google had such an agreement since at least 2006, while Google had similar agreements with Intel and Intuit since at least 2007. Apple also maintained similar pacts with Adobe and Pixar, the department said.
These agreements eliminated a significant form of competition for highly skilled employees, the department's antitrust regulators argued.
They said cold-calling is an important method used by high-tech companies to recruit workers with specialized skills. That competition for talent leads to better career opportunities, the department said.
"The agreements challenged here restrained competition for affected employees without any procompetitive justification and distorted the competitive process," Justice Department antitrust lawyer Molly Boast said in a statement.
Representatives for Google, Intel, Adobe and Intuit said they didn't believe their actions violated the law.
Amy Lambert, associate general counsel for Google, said on the company's blog that the search giant had agreed not to cold-call employees at partner companies "in order to maintain a good working relationship with these companies," but abandoned the policy last year. She said there was no evidence that Google's policy hindered hiring or affected wages.
Lambert said Google had continued to recruit workers from those companies and hired hundreds of employees from them during the time period in question.
Intel spokesman Chuck Mulloy said the company "is settling the matter because it believes it would not harm the company or its ability to do business."
Laura Fennell, Intuit senior vice president and general counsel, said in a statement that her company has "agreed to disagree with the DOJ on the issue of any wrongdoing in this matter." She said the company doesn't intend to enter into the broad nonsolicit agreements that are prohibited by the settlement and that the terms of the settlement won't have a significant impact on Intuit's business.
Adobe spokeswoman Holly Campbell said in a statement that the company firmly believed its recruiting policies "in no way diminished competition for talent in the marketplace."
Representatives for Apple and Pixar didn't immediately respond to requests for comment.
The Justice Department has been investigating hiring practices in the technology sector for more than a year. The department and the companies have had differing visions of how far employers should be able to go in agreeing to limit the kind of headhunting that can help valuable employees increase their compensation.
The companies had argued privately to the government that there is nothing anticompetitive about the no-poaching agreements. They said they must be able to offer each other assurances that they won't lure away each others' star employees if they are to collaborate on key innovations that ultimately benefit the consumer.
Until this investigation, policing the labor markets hadn't been a central focus of antitrust enforcers in recent years.
The department said Friday that it is continuing to investigate other no-solicitation agreements.
-By Brent Kendall, Dow Jones Newswires
(Vauhini Vara and Thomas Catan contributed to this article.)
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