The United States of America's Department of Justice Antitrust Division has filed a complaint with the District of Columbia District Court outlining a civil antitrust case against Apple, Adobe, Google, Intel, Intuit and Pixar. The Department of Justice Antitrust Division's case is founded on the Sherman Act, which was the first Federal statute to limit cartels and monopolies, and today still forms the basis for most antitrust litigation by the United States federal government. The complaint outlines each of the alleged unlawful agreements between the aforementioned companies. The case however, appears to emphasize Apple as the main company in violation. This report focuses on the main Apple agreements in question.
Nature of the Action
The following is taken from official court documents: "The action challenges under Section 1 of the Sherman Act Five bilateral no cold call agreements among Adobe, Apple, Google, Intel, Intuit, and Pixar.
Defendants compete for highly skilled technical employees and solicit employees at other high tech companies to fill employment opening. Defendants' concerted behaviour both reduced their ability to compete for employees and disrupted the normal price-setting mechanisms that apply in the labour setting. The no cold call agreements are facially anticompetitive because they eliminated a significant form of competition to attract high tech employees, and, overall, substantially diminish competition to the detriment of the affected employees, who were likely deprived of competitively important information and access to better job opportunities.
Defendants' agreements are restraints of trade that are per se unlawful under Section 1 of the Sherman Act, 15, U.S.C. § 1. The United States seeks an order prohibiting such agreements."
The Unlawful Agreements
According to court documents, "the six Defendants entered into five substantially similar agreements not to cold call employees. The agreements were between (i) Apple and Google, (ii) Apple and Adobe, (iii) Apple and Pixar, (iv) Google and Intel, and (v) Google and Intuit. As detailed below, these agreements were created and enforced by senior executives of these companies.
These no cold call agreements were not ancillary to any legitimate collaboration between Defendants. None of the agreements was limited by geography, job function, product group, or time period. Thus, they were much broader than reasonably necessary for the formation or implementation of any collaborative effort. The lack of necessity for these broad agreements is further demonstrated by the fact that Defendants engaged in substantial collaborations that either did not include no cold call agreements or contained narrowly tailored hiring restrictions."
"Beginning no later than 2006, Apple and Google agreed not to cold call each other's employees. Senior executives at Apple and Google reach an express no cold call agreement through direct and explicit communications. The executives actively managed and enforced the agreement through direct communications.
The Apple-Google agreement covered all Google and Apple employees and was not limited by geography, job function, product group, or time period. Moreover, employees were not informed of and did not agree to this restriction.
In furtherance of this agreement, Apple placed Google on its internal "Do Not Call List," which instructed Apple employees not to cold call employees from the listed companies, Including Google. Similarly, in its Hiring Policies and Protocols manual, Google listed Apple among the companies that had special agreements with Google and were part of the "Do Not Cold Call" list. The manual instructed Google employees not to cold call employees of the listed companies.
The companies, through their senior executives, policed potential breaches of the agreement. In February 2006 and March 2007, Apple complained to Google regarding recruiting efforts Google has made and, on both occasions, Google investigated the matter internally and reported its findings back to Apple."
"Beginning no later than May 2005, Apple and Adobe agreed not to cold call each other's employees. Senior executives at Apple and Adobe reached and express no cold call agreement through direct and explicit communications. The executives actively managed and enforced the agreement through direct communications.
The Apple-Adobe agreements covered all Adobe and all Apple employees and was not limited by geography, job function, product group, or time period. Moreover, employees were not informed of and did not agree to this restriction.
In furtherance of this agreement, Apple placed Adobe on its internal "Do Not Call List," which instructed Apple employees not to cold call employees from the listed companies, including Adobe. Similarly, Adobe included Apple in its internal list of "Companies that are off limits," instructing recruiters not to cold call candidates from Apple.
The Apple-Pixar agreement began in April 2007. The case outline is basically the same as it was laid out above in the Apple-Adobe Agreement. The other agreements that were listed in the unlawful agreements section above follow the same outline with just the dates varying."
Violation Alleged (Violation of Section 1 of the Sherman Act)
"The United States hereby incorporates paragraphs 1 though 32.
Defendants are direct competitors for employees, including specialized computer engineers and scientists, covered by the agreement at issue here. Defendants' concerted behaviour both reduced their ability to compete for employees and disrupted the normal price-setting mechanisms that apply in the labor setting. These no cold call agreements are facially anticompetitive because they eliminated a significant form of competition to attract high tech employees, and, overall, substantially diminished competition to the detriment of the affected employees who were likely deprived of competitively important information and access to better job opportunities.
Defendants' agreements constitute unreasonable restraints of trade that per se unlawful under Section 1 of the Sherman Act, 15 U.S.C. § 1."
The United States requests that the Court:
- (A) Adjudge and decree that Defendant's agreements not to compete constitute illegal restraints of interstate trade and commerce in violation of Section 1 of the Sherman Act;
(B) Enjoin and restrain Defendants from enforcing or adhering to existing agreements that unreasonably restrict competition of employees between them;
(C) Permanently enjoin and restrain each Defendant from establishing any similar agreement unreasonably restricting competition for employees except as prescribed by the Court;
(D) Award the United States such other relief as the Court may deem just and proper to redress and prevent recurrence of the alleged violations and to dissipate the anticompetitive effects of the illegal agreements entered into by Adobe, Apple, Intel, Intuit, and Pixar; and
(E) The United States be awarded the costs of this action
The complaint was filed by U.S. Department of Justice Antitrust Division of Washington D.C. The Presiding Judge in this case is noted as Colleen Kollar-Kotelly.
Update: The DOJ filed the formal complaint as detailed above on September 24th and then later in the day issued a statement stating that "the proposed settlement, which if accepted by the court will be in effect for five years, prohibits the companies from engaging in anticompetitive no solicitation agreements. Of course, the presiding Judge Colleen Kollar-Kotelly will have to formalize the proposed settlement and there has been no news on that front as of yet.
Civil Cover Sheet In-Part
Below is only a partial digital version of the civil cover sheet pertaining to this case that presents the relevant material. The original filing was on September 24, 2010.
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