September 25, 2010 1:10 am

Tech firms agree to halt anti-poaching deals

Two of the world’s leading technology companies – Google and Apple – agreed to halt employment practices that restricted each other and additional companies from recruiting their employees, the US Department of Justice said.

Google, Apple and four other technology companies settled a DoJ lawsuit by promising to eschew blanket deals not to poach staffers for the next five years. The lawsuit was filed on Friday alongside the settlement, which will need a judge’s final approval.

According to the complaint by the antitrust division, senior executives at the companies distorted competition in the high tech sector by agreeing not to recruit each others’ employees by arranging multiple “do not cold call” lists.

The DoJ said that “cold calling” – in which a company makes contact with another firm’s employee who has not applied for a job – was a “particularly effective method” of competing for computer engineers and scientists because the employees might not respond to other kinds of recruitment.

Under the terms of the proposed settlement, the companies have agreed not to engage in broad no-solicitation deals. Narrower arrangements must be limited in scope and duration and shown to regulators on demand. The settlement does not include a fine.

The antitrust division said the agreements between Apple and Google, Apple and Adobe Systems, Apple and Disney’s Pixar, Google and Intel, and Google and Intuit, depressed salaries in theory.

According to the DoJ’s complaint, Apple’s agreement with Google began in 2006, when the companies’ executives reached “an express no cold call agreement through direct and explicit communications”.

Google spokesman Adam Kovacevich said his company’s deals grew out of technology partnerships that could have been damaged by over-eager recruiting. He said that many employees at the partner companies who sought jobs at Google still got them.

The agreements were not limited by geography, time, job function or product group and employees were not alerted to the arrangement, the DoJ said. It alleged that Apple complained to Google in Febuary of 2006 and March 2007 that the internet giant was attempting to recruit individuals and in both cases, Google investigated the matter and reported back to Apple.

“The agreements challenged here restrained competition for affected employees . . . and distorted the competitive process,” said Molly Boast, deputy assistant general in the antitrust division.

The DoJ said its complaint arose out of a larger, ongoing investigation into employment practices. Other companies who had been subjects of the antitrust probe, including Microsoft, IBM and Yahoo.,said on Friday that they had been told they were no longer a focus. Genentech said it believed it was also in the clear.

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