September 17, 2010, 2:41 PM — The Wall Street Journal reports today that a number of large technology companies in the U.S. are in late-stage talks with the federal Department of Justice to head off an anti-trust trial over allegations that they engaged in collusion by agreeing not to hire each other's employees in order to cap wages on star performers.
Among the companies cited by WSJ are Google, Apple, Intel, Adobe Systems, Intuit and Walt Disney's Pixar Animation unit. Several other tech companies, including IBM, Microsoft and Yahoo, say they've been cleared by the Justice Department and no longer are targets of the probe.
So is there a chance the DoJ will proceed with a civil case? Sure, but I'd say it's a remote chance. As the WSJ points out, "there are powerful incentives for both sides to settle the potential civil case before it reaches that stage."
The reasons the companies wouldn't want to go to court are obvious: They could lose and pay huge fines, but more importantly, a guilty verdict could establish a precedent that might set in stone laws prohibiting anti-poaching agreements.
On the government side, proving that such agreements exist is extremely difficult -- after all, it's not likely there are written contracts between tech companies that could be discovered and entered into as evidence. Beyond that, the DoJ would have to persuade a court that employees of the companies involved in the case suffered significantly -- that is, they were prevented from being paid their fair market value -- because of anti-poaching accords.
Further, there are political implications. Is the Obama Justice Department willing to risk being portrayed as anti-business during a period when the White House is under tremendous pressure to demonstrate that it's not, well, anti-business? (And anyone who thinks politics doesn't enter into Justice Department decisions is being naive.)
The WSJ writes that a settlement "would allow the Justice Department to halt the practice, without the companies having to admit to any legal violations." While the second part is undeniably true -- after all, settlements by definition allow parties subject to potential litigation to claim no wrong-doing -- the first part also is naive. How would the Justice Department be able to "halt" a practice it can't prove exists? The answer is, it can't.
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