Aaron Chen and Julian Lai
According to media reports, legislators raised an inquiry on whether Citibank is in violation of the Fair Trade Act (FTA) by entering into contracts with the potential buyers requiring them to not recruit Citibank’s employees when Citibank intends to sell its consumer banking business. In response, the Fair Trade Commission (FTC) chairman, Li Mei, expressed that an investigative report would be filed within a month.
Whether this no-poaching agreement constitutes a concerted action is an issue that involves the application of FTA on the human resources market. Such an issue has attracted widespread attention in the United States, Japan, and other countries in recent years.
As an example, the US Federal Trade Commission and Department of Justice issued on October 2016 “Antitrust Guidance for Human Resource Professionals,” expressly stating that no-poaching agreements are per se illegal; in other words, there’s no need for further review on its effect on competition, as the agreement itself is considered illegal. Moreover, the Department of Justice filed a criminal suit against Surgical Care Affiliates, an American transcontinental medical institution, on January 5 2021. The indictment alleged that Surgical Care Affiliates and other competing businesses have, for years, conspired against hiring high-level personnel from each other, suppressing the competition for demands on high-level personnel. Accordingly, such behavior is in violation of Article 1 of the Sherman Act.
Additionally, the “Report of Study Group on Human Resources and Competition Policy” (人材と競争政策に関する検討会報告書) submitted by Japan Fair Trade Commission on February 15, 2018, also stipulate that businesses conspiring to directly or indirectly restrict the transfer of talent may violate Japan’s Antimonopoly Act, as such behavior diminishes competition in the human resources market among companies. Furthermore, the report specifically points out that even if the purpose of such behavior is to recover the cost of training talents, generally, it will still be considered unlawful since there should be other more appropriate and proportional methods to recover such cost.
To conclude, it is still unclear as to whether the facts of Citibank’s case are similar to the abovementioned foreign cases in their joint behaviors in the human resources market; it’ll be known only after FTC’s investigation. Nevertheless, this case is worth following, as FTC’s investigative report may set a precedent for whether restrictive agreements in the human resources market constitute anti-competitive behavior.