X

Reset Password

Username:

Change Password

Old Password:
New Password:
We have completed your request.

Managing the Modern Workplace
V&E International Labor & Employment Resources

  • 21
  • February
  • 2019

Author:

Share on:

Economics and Necessity May Create Corporate Alliances, But Antitrust Can Put Them Asunder

With apologies to President Kennedy’s prosaic description of alliances, antitrust issues — if not properly managed — can make alliances the source of legal issues. Companies form alliances all the time, for varying durations and for all kinds of (legitimate) reasons. Teaming agreements, joint ventures, distribution collaborations, joint purchasing, and bargaining groups; the list goes on. No doubt, these alliances often give rise to efficiencies, mutual benefits and business advantages, and allow corporate partners to combine their respective best employees to work jointly towards a common goal. Corporate alliances also can be a source of risk, however, particularly when the company on the other side of the partnership is your competitor and sensitive information is shared between alliance partners without proper safeguards in place.

Generally, communications between competitors regarding sensitive information, including employee data, carry the risk of anticompetitive effects. In addition to their intended functions, alliances also may create a situation in which it is easy for the participants to share sensitive information. Alliance partners do not have to be competitors in every respect for the exchange of information to give rise to antitrust risk. Two companies that provide different services or manufacture unrelated products can still be competitors in the market for employees and talent.

Setting aside legitimate reasons for companies entering an alliance to share sensitive employment data, sharing salary information of employees or categories of employees impacted by the corporate alliance can be problematic from an antitrust perspective. Indeed, there need not be an explicit agreement between two companies to fix the compensation, benefits or the terms of employment for their respective employees to trigger antitrust exposure. Federal antitrust agencies have made clear, including through official guidance issued in late 2016, that sharing sensitive information, coupled with parallel conduct, may be considered evidence of a tacit agreement or anticompetitive intent. In other words, if sensitive employment information is shared and then, for example, each company sets a certain wage for a certain type of job or employee function, competition scrutiny may follow.

To guard against these potential pitfalls, companies considering an alliance should establish protocols to limit the exchange of sensitive information and to protect against improper use of such information if it is shared. For example, a special (neutral) team could be set up to handle sensitive information related to the corporate alliance and walled off from other groups within the corporation accordingly. As a practical example, it would be wise to separate personnel responsible for deciding the terms of employment for new company hires from personnel who have access to sensitive salary information related to the alliance. Companies involved in corporate alliances should consider implementing such protocols to lessen the potential antitrust concerns posed by sharing sensitive information.

Subscribe to Managing the Modern Workplace to receive weekly email updates.

Sign Up for Updates

Receive e-mail news and alerts from the V&E Employment, Labor & OSHA team

Author

Lindsey R. Vaala

Lindsey R. Vaala Counsel