Non-solicitation of employees

Belgian Competition Authority sanctions no-hire clauses between competitors

Non-solicitation clauses can meet legitimate preoccupations of companies, in particular to protect their investment in employees, and can also be enforceable under certain conditions, for example, in service agreements.

The Belgian Competition Authority recently rendered a decision imposing a significant fine on competitors guilty of anti-competitive agreements, including non-solicitation clauses, stressing that non-solicitation clauses between competitors are in any event void.

The Belgian Competition Authority's recent decision concerned mutual agreements between competitors that constituted clear violations of antitrust law, including agreements on minimum prices and mutual alignment of intentions on public procurement procedures.

In addition, the Belgian Competition Authority found that there were also agreements on not actively recruiting employees of competitors. It was clear from several examples that it was common practice of the undertakings involved to actively apply the no-poach principle by all possible means of pressure. In this way, the aim was to bring calm to the market.

In its decision, the Belgian Competition Authority states that the non-poach agreements essentially prevent undertakings from competing for the essential ingredient of workers’ labour. With these agreements, companies deprive workers from job opportunities and the possibility of increasing their salary or improving their working conditions. In doing so, they thus limit competition in the downstream market for their services, in particular by limiting the capacity.

Based on foreign decisions in Hungary, Portugal, Spain and the USA, (among others), the Belgian Competition Authority concludes that non-solicitation clauses between competitors are considered illegal ‘per se’, i.e. without the need for their possible anti-competitive effects to be proven by the authority, because they eliminate competition in the same irreparable way as agreements to assign customers or markets. Namely, non-solicitation clauses bind employees to companies, which has an impact on the company’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 (Competition policy brief - Antitrust in Labour Markets, May 2024), the European Commission came to the same conclusion, both in terms of ‘no-hire’ clauses and ‘non-solicit’ (also called ‘no-cold-calling’) clauses. The Commission highlights that while these clauses are prohibited agreements between competitors, 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 also states that there are often less anti-competitive ways to achieve the same result, notably confidentiality and retention agreements, or (valid) non-compete clauses.

Author: Jan Van Gysegem