Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Cal.: eBay, Department of Justice settle anticompetitive claims over no-hire agreement, (Sep 3, 2014)

By Greg Hammond, J.D.

eBay, Inc. has consented to the entry of a final judgment without trial, resolving allegations that the e-commerce company violated Section 1of the Sherman Act by entering into a no-hire agreement with Intuit, Inc. Approval of the final judgment by the federal district court in San Jose, California comes in the wake of the court’s preliminary approval of a settlement in a similar action brought by the State of California. eBay, through the final judgment, has not admitted any violation or any issue of fact or law (U.S. v. eBay, Inc., September 9, 2014, Davila, E.).

Background. The U.S. Department of Justice alleged that senior executives and directors of eBay and Intuit maintained a no-solicitation and no-hire agreement that prevented both companies from recruiting employees from the other and further prohibited eBay from hiring any Intuit employees. The agreement, according to the Department of Justice, was a naked restraint of trade in violation of Section 1 of the Sherman Act. eBay attempted to dismiss the Justice Department’s complaint, but the motion was denied (2013-2 Trade Cases ¶78,530) in September 2013.

Final judgment. According to the final judgment, eBay is enjoined from entering into any agreement to refrain from—or requesting that someone else refrain from—hiring, soliciting, cold calling, recruiting, or otherwise competing for employees of the other person. However, the judgment does not prohibit “no direct solicitation” agreements, as long as they are contained within eBay employment and severance agreements; are reasonably necessary for mergers or acquisitions, or similar transactions; are reasonably necessary for contracts with consultants and similar temporary employees or vendors; are reasonably necessary for the settlement of legal disputes; or are reasonably necessary for contracts with resellers, or for legitimate collaboration agreements. The Justice Department also will be able to conduct compliance inspections, in which eBay could be required to provide copies of books, ledgers, accounts, records, data, and documents relating to any matter contained in the judgment. eBay will be required to report any violations or potential violations of the Final Judgment for a period of five years after its entry.

The case number is 12-CV-05869-EJD-PSG.

Attorneys: N. Scott Sacks, U.S. Department of Justice, for United States of America. Thomas Patrick Brown (Paul Hastings LLP) for eBay, Inc.

Companies: eBay, Inc.

Cases: Antitrust CaliforniaNews