Labour market cartels

What is a labour market cartel?

A labour market cartel occurs when employers secretly and unlawfully collude on their strategies for talent recruitment and/or managing employees. This can be in various forms including collusion on no-poaching/no-recruiting certain talent, fixing payments or salaries, and other information sharing. Cartel conduct may include:

No-poaching/no-hire

This is where businesses agree not to “steal” each other's employees by refusing to hire each other's employees. This can also include a “no-solicit” form of recruitment in which employers agree they will not actively approach each other’s employees for opportunities. This effectively ensures employees remain with the same business rather than explore other opportunities. This can be in the form of a no-hire clause or gentlemen's agreement.

Wage fixing

In these situations, businesses that typically compete to attract similar categories of employees reach agreements to either standardise salaries, benefits, and/or any other types of compensation e.g. they are either fixed, reduced or capped. This ensures uniform pay rates across all entities involved. This is also to ensure employees are less likely to leave their current role by limiting opportunities as well as decreases employees’ bargaining power.

Information sharing

Here, information is shared about the terms and conditions of employees’ contracts to ensure employees are less likely to leave or negotiate better terms since they are not likely to find better terms elsewhere.

How are labour market cartels harmful?

These forms of anti-competitive agreements can negatively impact markets by:

• Increasing an employer’s bargaining powers
• Provide for lower wages and unfair employment terms
• Limit other business’ ability to expand or participate fairly in the market

If you suspect a case of a potential labour market cartel, then you should report it to the CCPC. If you prefer, you can report anonymously.

What should you do if you are involved in a labour market cartel?

Consider applying for immunity under the CCPC and DPP’s Cartel Immunity Programme (CIP) or leniency under the CCPC’s Administrative Leniency Policy (ALP). The CIP and ALP encourage self-reporting of cartel conduct in return for immunity and/or leniency.

What are the penalties for labour market cartels in Ireland?

Under the Competition Act 2002, cartel activity can result in:

• criminal convictions with up to 10 years imprisonment
• fines of up to €50 million or 20% of turnover for individuals or undertakings. 
• director disqualification for five years.