The regulator has analyzed the implications of companies making agreements to refrain from recruiting each other’s employees or establishing mass hiring arrangements. These strategies, as highlighted by the AdC, are subject to competition policy scrutiny if they lead to the exclusion of other companies or restrict professional mobility within the sector.
The regulator indicates that non-solicitation of competitor employees or wage-fixing agreements could constitute market rule violations. Furthermore, mass hiring from a competitor may be perceived as a concentration operation under competition regulations, the AdC emphasized.
For instance, “in the face of talent scarcity, AI suppliers might attempt to limit labor mobility, restricting how their employees can leave the company to work for competitors or start their own businesses. This can be achieved by including contract clauses that limit employee actions outside the company,” noted the AdC.
There are also non-compete clauses that “can restrict labor mobility by preventing former employees from working for competitors or launching competing businesses after their employment contract ends and for a set period,” according to the AdC.
The situation is similar when companies establish “non-solicitation and non-recruitment agreements” with colleagues, as these understandings “limit former employees’ ability to make spontaneous offers, hire former colleagues, or start a new business with them,” the AdC reported.
Since these strategies “apply to the digital sector as a whole,” the AdC conducted a survey of 68 active digital sector companies in Portugal and found that “the majority include both non-compete clauses and confidentiality clauses, as well as clauses for the transfer of intellectual property rights over discoveries, creations, or innovations” in their employment contracts.
The AdC clarified that, under European law, “these clauses in employment contracts do not fall under potential anticompetitive agreements,” meaning they do not violate the Treaty on the Functioning of the European Union.
However, by restricting labor mobility, they have an “ambiguous” effect, potentially “reducing competition in labor markets, lowering wages, inhibiting the efficient allocation of labor, and hindering the circulation and dissemination of knowledge,” warned the AdC.
Other types of agreements, such as non-solicitation or wage-fixing agreements, “can infringe competition law.”
For companies operating in Portuguese territory, such practices may violate “notably Article 9 of the Competition Law and, if applicable, Article 101 of the Treaty on the Functioning of the European Union, which targets traditional cartels,” the AdC alerted.
The regulator recalled that the European Commission has already classified these two types of agreements as “restrictions by object” on competition (meaning these practices, in themselves, aim to distort competition), resembling “a buyer’s cartel (where labor is the acquired factor).”
The AdC remarked on the central role labor mobility plays in knowledge dissemination, particularly in an emerging sector like AI, warning that current talent retention strategies could harm competition and stifle innovation.
