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US Justice to ratchet tech no-poach probe

Non-hiring practices at Google, Apple, Intel...

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The US Department of Justice is about ready to ratchet an investigation into what could be salary fixing in the tech industry, according to a report citing people familiar with the matter.

Antitrust lawsuits usually focus on the effects that collusion among providers of a good or service to fix prices or carve up markets, thereby undermining competition and harming consumers. In rare cases, companies agree not to poach each others' employees, which has the effect of ensuring that key workers, who would normally be attracted by higher offers from competitors, stay put for less money than they might otherwise work. So, instead of keeping prices artificially high, this practice keeps costs artificially low.

The DOJ refused to comment on the story, but according to a report in the Wall Street Journal, Google, Intel, IBM, Apple, and InterActiveCorp are being investigated. An IBM spokesperson told the paper that it had indeed been contacted by the Justice Department in relation to a broad investigation into tech and non-tech hiring practices, and an Intel spokesperson would not confirm anything about an investigation, but did add that the chip maker believes its hiring practices to be legal. Google, Apple, and IAC did not comment.

The precedent for such action is a bit skinny, but the Antitrust Division has launched similar labor-related lawsuits in the past, including one in 1994 against hospitals in Utah that colluded to keep the pay of nurses down by exchanging pay rates and another in 1995 against the American Bar Association by the Massachusetts School of Law, which alleged that it was denied accreditation by the ABA because it didn't pay its law school professors enough dough. Both of these cases were settled before they went to trial.

It has been a long time since the United States had an aggressive antitrust bent, much less one that didn't pretty much look the other way when it came to antitrust law. Democrats tend to be more for using antitrust law to curb excesses than their Republican compatriots, but a moderate Republican like Teddy Roosevelt, who used the Sherman Antitrust Act to show he was tough on big business and therefore should keep his job as President, will swing the antitrust stick from time to time to keep big business from getting too far out of line.

It is no coincidence that these two barely related labor antitrust cases mentioned above, as well as the antitrust case against Microsoft, happened in the Clinton Administration, or that the Republican Bush Administration that came to power to as the Microsoft case was being appealed pulled back on some of the tougher remedies that the DOJ had originally sought to curb Microsoft's most egregious and monopolistic behavior during the Clinton presidency. It is similarly not a coincidence that the 1952 antitrust lawsuit that made IBM start behaving itself and to a certain extent allowed for the creation of a more open data processing and then open computer business for the next five decades, got started at the end of the Democratic Truman Administration and was followed through to an actual consent decree agreed to by Big Blue by a moderate Republican Eisenhower Administration.

At the end of the Johnson Administration (yup, a Democrat), the DOJ launched another antitrust lawsuit against IBM, one that the incoming Republican Nixon Administration didn't spike but which did not get to trial until after Nixon had resigned and his successor, Gerald Ford, took over. And the case dragged on until finally President Reagan's antitrust chief, William Baxter, withdrew the suit against IBM, saying it had no merit. This, being a case that had been underway for 13 years. By the way, at the time, Baxter was a consultant to a law firm that worked for IBM. And just to show you how incestuous this can all be, Nicholas deBelleville Katzenbach, who was Johnson's Attorney General and then Under Secretary of State, went to work as general counsel for IBM right after the second antitrust lawsuit was launched by the DOJ in 1969.

While it is significant to note that the Obama Administration is taking antitrust issues more seriously than its predecessor, there are many things about business and the tech industry that people can be too jaded and too cynical about. Antitrust law, and how it is wielded or not depending on the politics of the moment, is not one of them. Nothing works quite so well as sensible regulation, and nothing is so hard to come by. ®

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