Antitrust compliance in times of crisis - a reminder for HR teams

Covid-19 is presenting employers with a vast array of challenges and business critical problems to address. Many of which go to the core of a company’s operations. Naturally, faced with navigating such unprecedented difficulty, firms may well look to their competitors to find solutions, discuss approaches or minimise potential impacts.

Despite such trying times, considerable caution remains important when it comes to discussions between firms on employment and remuneration matters. But, while some topics will remain off limits, with appropriate safeguards there is scope for communication and collaboration to assist in addressing common challenges.

Why the need for caution

Recent years have seen an increasing focus by enforcement agencies on compliance with competition laws when it comes to employment practices and to labour markets more generally. High profile cases, particularly in the United States, have involved enforcement action against agreements not to “poach” each other’s employees. Concerns have also been raised regarding agreements to fix employee compensation or other terms as well as the exchange of “sensitive” employee related information.

Penalties for breaching competition laws can involve significant financial penalties, criminal sanctions and damages claims so it remains important for companies to exercise caution.

What this means in the current climate

Despite the COVID-19 crisis and breadth of critical issues facing companies throughout each industry competition laws continue to apply. The fact that such issues affect the viability of the companies involved does not provide comfort, particularly where employees may be the victim of any resulting loss of competition.

Discussions regarding these possible current topics pose the greatest potential risk from a competition law perspective:

  • approach to suspension or reduction of wages or to other types of payments or benefits (such as cash bonuses or share awards);
  • whether, and in what proportion, employees may be placed on leave or temporarily suspended from work;
  • whether, and how, parts of the workforce may be restructured, or parts of the business remodelled;
  • amount of compensation to be offered to furloughed employees (e.g. top-ups to government subsidies or use of paid leave);
  • exchange of non-public information regarding employee compensation/terms or hiring practices (for example, how pay for quarantined employees is dealt with by your company or whether your company will implement a hiring freeze).
Scope for collaboration remains

But it’s not all doom and gloom. Competition laws also recognise that discussions between competing companies can be beneficial. This is where (i) they achieve a collective benefit that would not have otherwise arisen and (ii) safeguards are in place to minimise any harm to competition.

For example, discussions or collaborations in relation to the following topics pose limited risk from a competition law perspective:

  • identification of common industry issues to enable engagement with regulators / government (e.g. to evidence a common requirement/need in your industry or a compliance issue);
  • joint initiatives to preserve employment (e.g. initiatives to redeploy staff into grocery retail “secondments”);
  • practical matters to protect employee health and well-being, for example what approach may be adopted for testing or screening employees before or when they return to work and how to address issues where employees (or their family members) are shielding or in a vulnerable category;
  • approaches to compliance with social distancing requirements to enable employees to come back to work, for example what changes companies may need to make to working or operating spaces to meet evolving government guidance;
  • approaches to a return to overseas business travel, both the timing of it resuming and potential issues and what safeguards may be necessary.

Companies may want to share both their concerns and ideas, as their focus turns to how they can provide a safe working environment post-lockdown.

In conducting these discussions safeguards can be put in place to limit the exchange of sensitive information and thereby reduce any potential risk further. For example, information can be shared with a third party (e.g. consultant) to aggregate and anonymise the data prior to circulation amongst participants.

Our employment and competition teams are happy to discuss how best to undertake such initiatives without crossing the line.