Justice Department, State Sue eBay over Anti-Poaching Agreement

by Nick Trenchard | November 21, 2012


The Justice Department and the State of California is suing eBay Inc., the world’s largest online marketplace, on the grounds of violating antitrust laws by affirming to not hire Intuit workers.

According to Karen Gullo of Bloomberg.com, senior executives from both eBay and Intuit collaborated on a deal that prevented each company from hiring each others’ workers from 2006 to 2009. The Justice Department and State of California argue that the agreement deprived workers—mostly those specializing in computer engineering and other high-ranking employees—of better and higher paying jobs.

As a result of the policy, eBay’s recruiting staff were instructed to throw away resumes that came through from Intuit employees, officials said.

“eBay’s agreement with Intuit hurt employees by lowering the salaries and benefits they might have received and deprived them of better job opportunities at the other company,” said Joseph Wayland, acting assistant attorney general at the DOJ, in a statement. “The Antitrust Division has consistently taken the position that these kinds of agreements are per se unlawful under the antitrust laws.”

eBay said it will vigorously defend its position.

“eBay’s hiring practices conform to the standards that the Department of Justice has approved in resolving cases against other companies,” said EBay spokeswoman Lara Wyss, in Reuters report. “The DOJ is taking an overly aggressive interpretation in their enforcement of antitrust law in this area.”

Intuit, a tax and financial software company, stayed mum on the suit explaining that it was eBay’s issue to resolve.

The deal was first struck in 2006 when Meg Whitman was the chief executive officer of EBay. The lawsuit cites she was “intimately involved” in forming a truce with Scott Cook, the chairman and founder of Intuit, on the “War for Talent” over Silicon Valley’s pool of top-tier technology workers, according to the Justice Department’s lawyers in a complaint filed on Monday.

The suit highlights the extent of which technology companies go through in order to keep talented workers under their guise and to tilt the pay towards a cheaper workforce. It can also show how tenuous relationships are among the board of top technology companies when competing for talented employees.

The lawsuit has ordered a temporary restraint on such practices until eBay can successfully defend the “anticompetitive effects” of the agreement.

Check in with SV411 to stay informed on this topic as the lawsuit unfolds.

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