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DOJ Targets Potential Collusion In High Tech Hiring

Posted  April 20, 2010

If you’ve ever wondered why Dilbert is still working for his insufferable pointy-haired boss, the answer could be collusive hiring practices at high tech companies.

Recent news reports indicate the U.S. Department of Justice is ramping up its investigation into hiring practices at large U.S. tech companies.  The probe is looking into whether the companies’ hiring practices are costing skilled computer engineers and other workers opportunities to change jobs for higher pay or better benefits.

According to news reports, the DOJ investigation, which began more than a year ago, is focusing on whether the tech companies – including IBM, Google, Apple, Intel Corp., and IAC/InterActiveCorp – have agreed to restrict hiring of employees away from each other.  The Wall Street Journal reported recently that the Justice Department has “concluded that such agreements do raise significant competitive concerns.”

The Department of Justice is concerned that such agreements could decrease competition for workers, leading to artificially lower pay and fewer opportunities for movement within the tech job market.  On one hand, maintaining a lower labor cost through these agreements could be viewed as tantamount to fixing costs, similar to the more familiar antitrust violation of price fixing.

On the other hand, companies say that their hiring practices do not violate competition laws, and in fact, may be necessary in order to encourage new partnerships since prospective partners may fear the loss of key employees otherwise.

Although the Department of Justice has not verified publicly its investigation, companies have reported being contacted about their hiring practices.  In the coming weeks, more than 10 companies will meet with the Department of Justice to discuss the issue.

Tagged in: Antitrust Enforcement,