On April 3, 2018, the Department of Justice Antitrust Division (“DOJ”) announced that it had entered into a settlement with two of the world’s largest railroad equipment manufacturers resolving a lawsuit alleging the defendant employers had entered into unlawful “no-poach” agreements. The DOJ’s Complaint, captioned U.S. v. Knorr-Bremse AG and Westinghouse Air Brake Technologies Corp., 18-cv-00747 (D. D.C.) alleges that three employers referred to as Knorr, Wabtec and Faively,[1] unlawfully promised one another “not to solicit, recruit, hire without approval, or otherwise compete for employees.” It goes on to allege “[t]hese no-poach agreements denied American rail industry workers access to better job opportunities, restricted their mobility, and deprived them of competitively significant information that they could have used to negotiate better terms of employment.”
This development should come as no surprise; since October 2016 federal antitrust enforcement agencies[2] have been vocal about their increased focus on no-poaching and wage-fixing agreements among employers. This past January, the U.S. Assistant Attorney General for the Antitrust Division reiterated that no-poaching agreements among employers remained an enforcement priority and employers could expect the DOJ to announce an increasing number of enforcement actions in the coming months.
Although the allegations against Knorr and Wabtec concern agreements between high-level corporate officers, employers should take steps to ensure that all managers, recruiters, and human resources professionals comply with applicable antitrust laws. For example, seemingly innocuous activities like discussing employee salary and benefits at industry conferences can constitute an unlawful information exchange. Consulting the joint FTC and DOJ Antitrust Red Flags for Employment Practices provides an accessible starting point for understanding this area of the law. However, employers will be well served to take additional steps to audit their business practices and communications with competitors throughout the organization in order to detect, and mitigate any legal risk associated with potentially unlawful agreements with competitors.
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[1] “Knorr” refers to Knorr-Bremse AG, including its wholly owned US subsidiaries. “Wabtec” is an abbreviation of Westinghouse Air Brake Technologies Corporation. “Faiveley” refers to Faiveley Transport S.A. Faiveley is not included in the case caption because it was acquired by Wabtec in 2016.
[2] The DOJ Antitrust Division and the Federal Trade Commission (“FTC”)