Contrary to the reasons for efficiency in purchasing group clauses and competition, non-poaching agreements can sometimes not be used to compensate for sellers` performance or cause efficiency gains, but simply to increase corporate profits at the expense of other market players. The case, In re High-Tech Employee Antitrust Litigation, was filed by a group of Silicon Valley software and hardware engineers, who argue that the “non-poaching” agreements are contrary to Section 1 of the Sherman Act, which prohibits trade restrictions. The argument is that any agreement restricting competition in the marketplace is a monopolistic act that has an impact on intergovernmental trade. If the Department of Justice were to win this case, it would be a turning point decision, said Alison Smith, a partner at the law firm McDermott Will-Emery. “I don`t think there`s ever been a case where a non-poaching agreement was considered illegal per se.” “Non-poaching” clauses are treated as price agreements, as they are agreements between buyers (here employers and potential employers) to purchase services provided by sellers (employees) only on certain conditions and/or to refuse to offer them competitively. Like all price agreements, these agreements are inherently illegal. (A buyer`s cartel is called “Monopsony” and not “monopoly”). Just as antitrust laws protect an employer`s competitive product or service market, they also protect their employees` market to sell their services. However, customers should keep in mind that, in this context, their competing service buyers are not only competitors in the markets for their goods and services, but also customers, suppliers and others who wish to purchase the services of their employees.
The appeal of workers in highly competitive sectors is an important way to protect themselves from unfair competition, but companies that need such protection must be vigilant when updating their contracts in order to respond to the latest legislative and judicial developments. What is a non-poaching clause? A “non-poaching” clause is the promise of one or both parties to an agreement not to compete for workers of the other party or contracting parties, neither for the duration of the agreement, nor for the duration of the agreement, nor for a period after the end of the agreement.