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eBay hit with antitrust suit over hiring practices

No-poaching pact with Intuit a no-no

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The US Department of Justice and the State of California both filed suit against eBay on Friday, alleging that the online marketplace entered into an illegal, anticompetitive hiring pact with tax and financial software maker Intuit.

As reported by Bloomberg, the lawsuit charges eBay with developing an "evolving handshake" arrangement with Intuit from 2006 to 2009, in which each company agreed not to recruit or hire the other's employees.

"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," the Justice Department said in a statement. "The Antitrust Division has consistently taken the position that these kinds of agreements are per se unlawful under the antitrust laws."  

If this sounds familiar, it should. The case is an extension of an earlier, industry-spanning Justice Department investigation, in which multiple Silicon Valley companies were found to have struck similar "no-poaching" agreements.

In September 2010, the government reached a settlement with Adobe, Apple, Google, Intel, Intuit, and Pixar, in which all six companies agreed not to make any further such hiring pacts. At the time, however, the DoJ warned that its probe wasn't over, and now it appears to have eBay in its sights.

In fact, the claim against eBay may actually be more serious than those resolved in the 2010 settlement. In the earlier case, the companies involved were found to have agreed not to actively recruit employees from each other's staffs. The new complaint alleges that Intuit actually backed away from hiring an eBay employee whom it had previously recruited, at the personal request of eBay's then-CEO, Meg Whitman.

Intuit was not named as a defendant on Friday, however, because the DoJ considers the terms of its 2010 settlement to be sufficient to prevent any further wrongdoing.

For its part, eBay denies the DoJ's allegations, claiming that the government is using "the wrong standard" to determine the legality of recruitment agreements between companies.

"We compete openly for talent in a broad, diverse global market across a range of industries and professional disciplines, and eBay's hiring practices conform to the standards that the Department of Justice has approved in resolving cases against other companies," a company rep told Bloomberg.

The DoJ obviously disagrees, and in a separate statement, California Attorney General Kamala Harris pointed out that the state's own unfair competition laws are actually stricter than the federal government's.

Harris and the DoJ are both seeking an injunction to prevent eBay from entering into any further no-poaching agreements, in addition to damages. Both complaints were filed in the United States District Court for the Northern District of California, San Jose, and no trial date has yet been set. ®

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