US and EU competition authorities having closer look at labout market

May 10, 2024

Last week, the European Commission (Commission) published a new competition policy brief dealing with Antitrust in Labour Markets with a focus on no-poach agreements and wage fixing. This comes moments after the US regulator (FTC) banned so-called non-compete agreements in employment contracts safe few exceptions for executive positions. As a reminder, we covered the interplay between employment and competition law in our newsletter in June 2023

Full version of the Commission's Competition Policy Brief is available here.

Key takeaways:

1. Wage-fixing and no-poach agreements typically fall under the category of restrictions by object as defined in Article 101(1) TFEU. That means that these agreements are inherently harmful to the functioning of competition.
2. No-poach and wage-fixing agreements might be considered ancillary restraints but only under very stringent conditions.
3. Wage-fixing and no-poach agreements are unlikely to be exempted under Article 101(3) TFEU, i.e. these types of agreements are not considered to meet 4 cumulative conditions under Article 101(3) TFEU.

As mentioned, in April 2024 the US FTC banned non-compete agreements in the US. In principle, this implies that all new post-termination non-compete clauses between employers and employees are generally prohibited, with a few specific exceptions.