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High penalties loom – employers as members of a cartel

19. 6. 2024

Newsletter

Arthur Braun, M.A.

Many employers and their HR departments forget that they can also commit antitrust offences in their employment relationships with the well-known penalties of up to 10% of the previous year’s turnover.

Any behaviour that restricts competition on an affected market (and this is also the employment market) is relevant under antitrust law. There are three types of behaviour in particular that come to the attention of the antitrust authorities:

The easiest way for them to prove a cartel is a non-solicitation clause, eg when employers, e.g. within an industrial park or a city, agree that they will not poach or hire employees from each other. The motivation is clear, in a labour market where full employment has prevailed for years, a certain stability, possibly also lower wages, should be achieved.

Agreements regarding wages, benefits and other services provided by employers might make sense from an HR perspective, but restrict competition for labour and are therefore prohibited and can lead to fines.

Finally, the exchange of confidential information, e.g. between HR departments on pay and working conditions, is also generally prohibited. Caution should be exercised in particular with regard to benchmarking studies if they have too narrow a focus or are forward-looking.

Antitrust law has exceptions where restrictions are permitted, for example in the case of transactions or post-contractual non-competition clauses (with compensation), which are:

The priority of the authorities is to create effective competition on the already overheated labour market in CZ and SK. However, every managing director and HR manager must be aware that the antitrust authorities will scrutinise non-solicitation agreements in particular. It should be made clear internally that these have not been agreed or otherwise complied with.

In the coming months, we can expect to see many more proceedings for cartel agreements in the labour market known in both Czech and Slovak labour law. A collective labour agreement also ultimately sets minimum wages.

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