In addition, the Competition Act does not specifically apply to no-poaching or wage agreements. However, the same may apply to Article 3(3) of the Law on competition, where those agreements determine the remuneration of workers and restrict or control the supply of skilled labour on the labour market. As we approach the period of rapid globalization, regulators in all regions are trying to show a renewed commitment to enforcing antitrust laws against companies that do not engage in poaching and wage agreements. Non-compete obligations or solicitation clauses or confidentiality clauses are contained in agreements to deal with the mechanisms of the same and are relevant to most transactions. Despite its popularity, the application of these clauses is a different story. We have drafted the principles for the application of these clauses in the light of an interesting case of the Bombay High Court, Kenrise Media Pvt. Ltd v Ashish K. Mishra, MANU/KA/2167/2021 (Kenrise case). Enforcement actions by the U.S. Department of Justice (DoJ) make it clear that no-poaching agreements violate antitrust laws.

Since 2010, when the DoJ took action against Google, Apple, Adobe, Intel, Pixar, and Intuit for entering into an agreement not to recruit/hire each other`s employees, the DoJ has expanded its review to no-poaching and wage-setting agreements. The DoJ has presented several successful cases in which agreements to set wages or prevent poaching have been recognized as anti-competitive. Although the poaching ban has been subject to judicial review, the Competition Commission of India (ICC) has encountered only a few cases of recruitment practices involving allegations such as predatory recruitment and non-compete obligations. However, CCI did not show much interest in these cases and closed them by calling them employment questions. The applicability of solicitation bans in India is highly subjective. Indian courts have consistently refused to enforce non-compete obligations in employment contracts after termination. These clauses imply a “restriction on trade” which is clearly excluded by section 27 of the Indian Contract Act 1872. They are also considered contrary to public policy because they can deprive an individual of his or her fundamental right to subsistence. The general trend in the court system is that clauses that apply during employment are valid and those that work after employment are invalid.

The enforceability of this clause depends on the facts and circumstances of the case. As far as the Indian position is concerned, such agreements have been considered valid for very restrictive reasons. The Indian Contract Act, 1872 (“Act”) is the main law in India dealing with trade restriction agreements and their legality. Section 27 of the Act prohibits such agreements in clear and explicit terms. It states that “any agreement discouraging a person from carrying on a lawful profession, trade or enterprise of any kind is null and void in this regard”. It provides an exception for agreements that include a ban on carrying on a business whose goodwill is sold. The legality of non-solicitation and wage agreements has also attracted considerable attention in Europe. In 2010, Spain`s competition authority, the National Market and Competition Commission, fined eight freight forwarders €14 million for forming a cartel to coordinate their pricing strategies. In addition to coordinating their prices, the Authority also noted that companies coordinate their strategies on various other issues, including the conditions for hiring workers.

[iii] The non-compete and non-solicitation obligations of the staff drafters were provided for in the employment contracts concluded between Kenrise and the respective drafter and were similar to the non-competition and solicitation clauses of R1. The employment contract for the editors also provided that the editors would not seek employment in a company whose activities were in competition with Kenrise`s. However, they noted that this increase in headcount could simply be due to a lack of awareness or understanding, as in most cases, such agreements are not at the forefront of HR professionals or companies. However, they may be discovered during another investigation by the authorities. HkCC`s recent advisory bulletin, which states that wage setting and non-solicitation agreements raise potential competition concerns, is an important development. In addition to agreements between competitors, the Advisory Bulletin also covers agreements that may be concluded between companies that do not compete in the supply of the same goods and services, that is, . . .