The U.S.-based internet corporation known as eBay Inc. violated federal antitrust laws when it entered into an agreement not to recruit or hire Intuit Inc.’s employees, the Justice Department said Friday in a civil antitrust lawsuit.
According to the department, the agreement eliminated a significant form of competition to the detriment of affected employees who were likely deprived of access to better job opportunities and salaries.
“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 Acting Assistant Attorney General Joseph Wayland, who heads the department’s Antitrust Division. “The Antitrust Division has consistently taken the position that these kinds of agreements are per se unlawful under the antitrust laws.”
The civil lawsuit, filed in U.S. District Court in San Jose, Calif., seeks to prevent eBay from adhering to or enforcing the agreement and from entering into any similar agreements with any other companies. Intuit already is subject to a settlement prohibiting it from entering into such agreements as part of an earlier case with the department.
A spokeswoman for eBay, Lara Wyss, said the company “strongly believes” the Justice Department and California Attorney General are wrong and are using the wrong standard in these matters.
“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.” she said. “The DOJ and State Attorney General are taking an overly aggressive interpretation in their enforcement of antitrust law in this area. eBay will vigorously defend itself.”
The lawsuit alleges that the agreement, which was enforced at the highest levels of each company, barred either firm from soliciting each other’s employees, and for over a year barred at least eBay from hiring any employees from Intuit at all. In court papers, the department said Meg Whitman, then eBay’s CEO, and Scott Cook, Intuit’s founder and executive committee chair, were intimately involved in forming, monitoring and enforcing the anticompetitive agreement.
Mr. Cook was serving as a member of eBay’s board of directors at the same time he was making complaints about eBay’s recruiting of Intuit employees.
According to the lawsuit, beginning no later than 2006 and lasting at least until 2009, eBay and Intuit entered an illegal agreement that restricted their ability to actively recruit employees from the other company, and for some period of time even restricted at least eBay from hiring any employees at Intuit. In 2007, the pact evolved into an agreement that eBay would not recruit Intuit’s employees. eBay’s recruiting personnel were instructed to not pursue potential applications that came from Intuit and to throw away such resumes, the department said.
The Justice Department said it was not necessary to name Intuit in the new lawsuit because the company had previously been named in a September 2010 lawsuit and settlement.
The September 2010 lawsuit named six high technology companies — Adobe Systems Inc., Apple Inc., Google Inc., Intel Corp., Intuit Inc. and Pixar — over a series of bilateral agreements not to solicit each other’s employees. All six companies entered into a settlement which prohibited them from entering agreements to refrain from, or pressure others to refrain from, soliciting, recruiting, or otherwise competing for another firm’s employees.
The department also filed a lawsuit against Lucasfilm in December 2010 for entering into a similar agreement with Pixar, and Lucasfilm entered into a similar settlement. The eBay case grew out of the same investigation, department officials said.
eBay is a Delaware corporation with its principal place of business in San Jose. In 2011, eBay had revenues of $11.7 billion. Intuit is a Delaware corporation with its principal place of business in Mountain View, Calif. In 2011, Intuit had revenues of $3.85 billion