Big fines for anti-competitive practices in Belgium

A ‘no-hire’ agreement (also called a ‘non-poaching’ agreement) is an agreement that one employer will not recruit or hire another employer’s employees. In some limited contexts (primarily in service contracts), these agreements may be enforceable. Significantly, however, the Authority held in its decision that no-hire clauses between competitors are never permitted. 

The Authority’s decision concerned mutually-agreed practices between three large competitors that constituted clear violations of antitrust law. These included agreements on minimum prices (‘price-fixing’) and mutual alignment of intentions on public procurement procedures (‘bid rigging’).  

In addition, the Authority found that there were also agreements on not actively recruiting employees among the three competitors. It was clear from several examples that it was common practice of the businesses involved to actively apply the no-poach principle by all possible means of pressure. In this way, the aim was to control the labour market in the sector that the companies dominated. 

In its decision, the Authority reasoned that no-hire agreements essentially prevent businesses from competing for the essential ingredient of workers’ labour. In a normal job market, employers operating in the same sector compete for employees. With these agreements, the participating employers deprive workers of job opportunities and foreclose the possibility of increasing their salary or improving their working conditions by moving to a competing employer. In doing so, they limit competition in the market for workers’ services. Since the participating employers do not need to worry about competitors poaching their employees, they have little incentive to increase workers’ pay or improve their working conditions. 

Based on foreign decisions in Hungary, Portugal, Spain and the US (among others), the Belgian Competition Authority concluded that no-hire clauses between competitors are considered illegal ‘per se’, i.e. without the need for further specific proof of their possible anti-competitive effects, because they eliminate competition in the same clear and incontrovertible way as agreements to assign customers or markets. Namely, non-solicitation clauses bind employees to employers, which has an impact on the employer’s costs and workers’ wage conditions, as well as on the capacity of competitors in providing the same services. They therefore fall under the Belgian and European prohibition of anti-competitive agreements and concerted practices between competitors. 

In a policy brief dated May of this year, the European Commission came to the same conclusion, both in terms of no-hire clauses and ‘non-solicitation’ (also called ‘no-cold-calling’) clauses. The Commission held that such clauses are prohibited in agreements between competitors, and they are only permissible in other contexts (e.g. a joint venture or a service agreement) if they are strictly necessary for the purpose of the intended partnership. The Commission stated that there are often less anti-competitive ways to achieve the same result, notably confidentiality and retention agreements, or (valid) non-compete clauses in individual employment contracts. 

No-hire clauses can meet legitimate concerns, in particular to protect an employer’s investment in employees, and they can be enforceable in certain limited conditions, for example in service agreements. 

However, no-hire agreements between competitors are void in every case and – as this recent case amply demonstrates – can result in stiff sanctions under Belgian and European competition law.