Monday, November 19, 2012
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DOJ, Harris Sue eBay Over Agreement Not to Compete
From Staff and Wire Service Reports
The Department of Justice and state Attorney General Kamala Harris Friday separately sued eBay Inc., saying it had entered into an unlawful agreement with Intuit, Inc. by which each agreed not to hire the other employees.
The DOJ claimed in its complaint that Meg Whitman, the former eBay chief executive who was the Republican candidate for governor in 2010 and now runs Hewlett-Packard Co., was intimately involved in making the agreement, as was Scott Cook, Intuit’s founder and executive committee chair. Cook was a member of eBay’s board of directors at the same time he was making complaints about eBay’s recruiting of Intuit employees.
Acting Assistant Attorney General Joseph Wayland, who is in charge of the DOJ’s Antitrust Division, said the agreement “hurt employees by lowering the salaries and benefits they might have received and deprived them of better job opportunities at the other company.” He said the DOJ “has consistently taken the position that these kinds of agreements are per se unlawful under antitrust laws.”
The two companies compete directly for specialized computer engineers and scientists. The federal lawsuit seeks to prevent eBay from enforcing the agreement and from making similar agreements with other companies.
According to the Justice Department and state complaints filed in federal court in San Jose, the agreement was in place from 2006 to 2009. Intuit is already subject to a settlement barring it from making such agreements.
Harris said in a release that her office had worked closely with the DOJ on the case, but filed its own suit because California law contains stronger protections against anticompetitive practices than federal law. The California lawsuit would allow the state to recover damages and ensure that the companies do not engage in such conduct in the future.
California’s lawsuit lists Intuit as a co-conspirator.
“If California is going to continue to be the high-tech capital of the world, we can’t allow anticompetitive conduct that prevents talent from going where it’s put to its highest use,” the attorney general said.
Harris said the agreement was enforced at the highest levels of eBay. The complaint alleges that emails exchanged between Whitman and Cook detail their intention not to recruit or hire one another’s employees. The complaint alleges that the agreement between the companies violated California’s Unfair Competition Law, the Sherman Anti-Trust Act and the Cartwright Act.
The complaint also alleges that neither company “took any steps to ensure that employees affected by the agreement knew of its existence, or how it would impact them,” and suggests that had they done so, they would have opened themselves up to litigation for violating the state’s strong public policy against employee non-competition agreements.
California seeks to recover damages for each act of unfair competition, as well as injunctive relief to prevent any such agreement from occurring again.
eBay spokesperson Lara Wyss said the Justice Department and the California attorney general “are taking an overly aggressive interpretation in their enforcement of antitrust law in this area. eBay will vigorously defend itself.” The company said both the federal and state governments “are using the wrong standard in these matters. We compete openly for talent in a broad, diverse global market across a range of industries and professional disciplines, and eBay’s hiring practices conform to the standards that the Department of Justice has approved in resolving cases against other companies.”
Copyright 2012, Metropolitan News Company