Competition law

The Competition and Markets Authority (CMA) has recently published new guidance on ‘Competing for Talent’ which is designed to help businesses involved in recruiting and retaining workers understand how competition law applies to what they do.

The guidance begins by debunking two commonly held myths: (1) that competition law does not apply to agreements between employers about wages or working conditions; and (2) that it is acceptable to agree wages with other companies if the companies do not compete for customers.

Using real-life case studies to illustrate key points, the guidance then goes on to explain the three main types of anti-competitive behaviour that arise in labour markets (all of which are forms of business cartels and can involve freelancers and contracted workers as well as permanent employees):

1. No-poaching: this occurs when a business agrees not to hire or poach another business’s employees (for example, no-hire or no-cold calling agreements). Such arrangements do not have to be mutual to be caught by competition law.

2. Wage-fixing: this occurs when businesses that compete for the same type of employees agree to fix pay, benefits or other terms and conditions of employment.

3. Exchange of competitively sensitive information/benchmarking: this occurs when ‘competitively sensitive’ information is exchanged between competing businesses (for example, decisions relating to hiring workers or setting pay or benefits). Information is considered competitively sensitive if it reduces uncertainty as to the operation of the market in question, and/or could influence the competitive strategy of other businesses.

The guidance also provides practical advice on:

• How to avoid infringing competition law

• The consequences of infringing competition law

• How to report suspected anti-competitive behaviour to the CMA