[Federal Register Volume 75, Number 190 (Friday, October 1, 2010)]
[Notices]
[Pages 60820-60830]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-24624]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States v. Adobe Systems, Inc., et al.; Proposed Final
Judgment and Competitive Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment,
Stipulation and Competitive Impact Statement have been filed with the
United States District Court for the District of Columbia in United
States of America v. Adobe Systems, Inc., et al., Civil Case No. 1:10-
CV-01629. On September 24, 2010, the United States filed a Complaint
alleging that Adobe Systems, Inc., Apple Inc., Google Inc., Intel
Corp., Intuit, Inc., and Pixar entered into various bilateral
agreements in which they agreed not to actively solicit each other's
highly skilled technical employees, in violation of Section 1 of the
Sherman Act, 15 U.S.C. 1. The proposed Final Judgment, filed the same
time as the Complaint, requires Defendants to refrain from entering
into similar agreements in the future.
Copies of the Complaint, proposed Final Judgment and Competitive
Impact Statement are available for inspection at the Department of
Justice, Antitrust Division, Antitrust Documents Group, 450 Fifth
Street, NW., Suite 1010, Washington, DC 20530 (telephone: 202-514-
2481), on the Department of Justice's Web site at http://www.justice.gov/atr, and at the Office of the Clerk of the United
States District Court for the District of Columbia. Copies of these
materials may be obtained from the Antitrust Division upon request and
payment of the copying fee set by Department of Justice regulations.
Public comment is invited within 60 days of the date of this
notice. Such comments, and responses thereto, will be published in the
Federal Register and filed with the Court. Comments should be directed
to James J. Tierney, Chief, Networks and Technology Section, Antitrust
Division, U.S. Department of Justice, 450 Fifth Street, NW., Suite
7100, Washington, DC 20530 (telephone: 202-307-6200).
J. Robert Kramer II,
Director of Operations and Civil Enforcement.
United States District Court for the District of Columbia
United States of America, U.S. Department of Justice, Antitrust
Division, 450 Fifth Street, NW., Suite 7100, Washington, DC 20530,
Plaintiff, v. Adobe Systems, Inc., 345 Park Avenue, San Jose, CA
95110; Apple Inc., 1 Infinite Loop, Cupertino, CA 95014; Google
Inc., 1600 Amphitheater Parkway, Mountain View, CA 94043; Intel
Corporation, 2200 Mission College Boulevard, Santa Clara, CA 95054;
Intuit, Inc., 2632 Marine Way, Mountain View, CA 94043; and Pixar,
1200 Park Avenue, Emeryville, CA 94608, Defendants.
Case: 1:10-cv-01629.
Assigned to: Kollar-Kotelly, Colleen.
Assign. Date: 9/24/2010.
Complaint
The United States of America, acting under the direction of the
Attorney General of the United States, brings this civil antitrust
action to obtain equitable relief against Defendants Adobe Systems,
Inc. (``Adobe''), Apple Inc. (``Apple''), Google Inc. (``Google''),
Intel Corporation (``Intel''), Intuit, Inc. (``Intuit''), and Pixar,
alleging as follows:
Nature of the Action
1. This action challenges under Section 1 of the Sherman Act five
bilateral no cold call agreements among Adobe, Apple, Google, Intel,
Intuit, and Pixar.
2. Defendants compete for highly skilled technical employees
(``high tech employees'') and solicit employees at other high tech
companies to fill employment openings. Defendants' concerted behavior
both reduced their ability to compete for employees and disrupted the
normal price-setting mechanisms that apply in the labor setting. These
no cold call agreements are facially anticompetitive because they
eliminated a significant form of competition to attract high tech
employees, and, overall, substantially diminished competition to the
detriment of the affected employees who were likely deprived of
competitively important information and access to better job
opportunities.
3. Defendants' agreements are restraints of trade that are per se
unlawful under Section 1 of the Sherman Act, 15 U.S.C. 1. The United
States seeks an order prohibiting such agreements.
Jurisdiction and Venue
4. Each Defendant hires specialized computer engineers and
scientists throughout the United States, and each sells high technology
products throughout the United States. Such activities, including the
recruitment and hiring activities at issue in this Complaint, are in
the flow of and substantially affect interstate commerce. The Court has
subject matter jurisdiction under Section 4 of the Sherman Act, 15
U.S.C. 4, and under 28 U.S.C. 1331 and 1337 to prevent and restrain the
Defendants from violating
[[Page 60821]]
Section 1 of the Sherman Act, 15 U.S.C. 1.
5. Venue is proper in this judicial district under Section 12 of
the Clayton Act, 15 U.S.C. 22, and under 28 U.S.C. 1391(b)(2), (c).
Defendants transact or have transacted substantial business here.
Defendants
6. Defendant Adobe is a Delaware corporation with its principal
place of business in San Jose, California.
7. Defendant Apple is a California corporation with its principal
place of business in Cupertino, California.
8. Defendant Google is a Delaware corporation with its principal
place of business in Mountain View, California.
9. Defendant Intel is a Delaware corporation with its principal
place of business in Santa Clara, California.
10. Defendant Intuit is a Delaware corporation with its principal
place of business in Mountain View, California.
11. Defendant Pixar is a California corporation with its principal
place of business in Emeryville, California.
Trade and Commerce
12. High tech labor is characterized by expertise and
specialization. Defendants compete for high tech employees, and in
particular specialized computer science and engineering talent on the
basis of salaries, benefits, and career opportunities. In recent years,
talented computer engineers and computer scientists have been in high
demand.
13. Although Defendants employ a variety of recruiting techniques,
cold calling another firm's employees is a particularly effective
method of competing for computer engineers and computer scientists.
Cold calling involves communicating directly in any manner (including
orally, in writing, telephonically, or electronically) with another
firm's employee who has not otherwise applied for a job opening.
Defendants frequently recruit employees by cold calling because other
firms' employees have the specialized skills necessary for the vacant
position and may be unresponsive to other methods of recruiting. For
example, several Defendants at times have received an extraordinary
number of job applications per year. Yet these companies still cold
called engineers and scientists at other high tech companies to fill
certain positions.
14. In a well-functioning labor market, employers compete to
attract the most valuable talent for their needs. Defendants' concerted
behavior both reduced their ability to compete for employees and
disrupted the normal price-setting mechanisms that apply in the labor
setting. These no cold call agreements are facially anticompetitive
because they eliminated a significant form of competition to attract
high tech employees, and, overall, substantially diminished competition
to the detriment of the affected employees who were likely deprived of
competitively important information and access to better job
opportunities.
The Unlawful Agreements
15. The six Defendants entered into five substantially similar
agreements not to cold call employees. The agreements were between (i)
Apple and Google, (ii) Apple and Adobe, (iii) Apple and Pixar, (iv)
Google and Intel, and (v) Google and Intuit. As detailed below, these
agreements were created and enforced by senior executives of these
companies.
16. These no cold call agreements were not ancillary to any
legitimate collaboration between Defendants. None of the agreements was
limited by geography, job function, product group, or time period.
Thus, they were much broader than reasonably necessary for the
formation or implementation of any collaborative effort. The lack of
necessity for these broad agreements is further demonstrated by the
fact that Defendants engaged in substantial collaborations that either
did not include no cold call agreements or contained narrowly tailored
hiring restrictions.
Apple-Google Agreement
17. Beginning no later than 2006, Apple and Google agreed not to
cold call each other's employees. Senior executives at Apple and Google
reached an express no cold call agreement through direct and explicit
communications. The executives actively managed and enforced the
agreement through direct communications.
18. The Apple-Google agreement covered all Google and all Apple
employees and was not limited by geography, job function, product
group, or time period. Moreover, employees were not informed of and did
not agree to this restriction.
19. In furtherance of this agreement, Apple placed Google on its
internal ``Do Not Call List,'' which instructed Apple employees not to
cold call employees from the listed companies, including Google.
Similarly, in its Hiring Policies and Protocols manual, Google listed
Apple among the companies that had special agreements with Google and
were part of the ``Do Not Cold Call'' list. The manual instructed
Google employees not to cold call employees of the listed companies.
20. The companies, through their senior executives, policed
potential breaches of the agreement. In February 2006 and March 2007,
Apple complained to Google regarding recruiting efforts Google had made
and, on both occasions, Google investigated the matter internally and
reported its findings back to Apple.
Apple-Adobe Agreement
21. Beginning no later than May 2005, Apple and Adobe agreed not to
cold call each other's employees. Senior executives at Apple and Adobe
reached an express no cold call agreement through direct and explicit
communications. The executives actively managed and enforced the
agreement through direct communications.
22. The Apple-Adobe agreement covered all Adobe and all Apple
employees and was not limited by geography, job function, product
group, or time period. Moreover, employees were not informed of and did
not agree to this restriction.
23. In furtherance of this agreement, Apple placed Adobe on its
internal ``Do Not Call List,'' which instructed Apple employees not to
cold call employees from the listed companies, including Adobe.
Similarly, Adobe included Apple in its internal list of ``Companies
that are off limits,'' instructing recruiters not to cold call
candidates from Apple.
Apple-Pixar Agreement
24. Beginning no later than April 2007, Apple and Pixar agreed not
to cold call each other's employees. Senior executives at Apple and
Pixar reached an express no cold call agreement through direct and
explicit communications. The executives actively managed and enforced
the agreement through direct communications.
25. The Apple-Pixar agreement covered all Pixar and all Apple
employees and was not limited by geography, job function, product
group, or time period. Moreover, employees were not informed of and did
not agree to this restriction.
26. In furtherance of this agreement, Apple placed Pixar on its
internal ``Do Not Call List,'' which instructed Apple employees not to
cold call employees from the listed companies, including Pixar.
Similarly, Pixar instructed Pixar human resources personnel to adhere
to the agreement and maintain a paper trail establishing that Pixar had
not actively recruited job applicants from Apple.
[[Page 60822]]
Google-Intel Agreement
27. Beginning no later than September 2007, Google and Intel agreed
not to cold call each other's employees. Senior executives at Google
and Intel reached an express no cold call agreement through direct and
explicit communications. The executives actively managed and enforced
the agreement through direct communications.
28. The agreement covered all Intel and all Google employees and
was not limited by geography, job function, product group, or time
period. Moreover, employees were not informed of and did not agree to
this restriction.
29. In furtherance of this agreement, Google listed Intel in its
Hiring Policies and Protocols manual among the companies that have
special agreements with Google and were part of the ``Do Not Cold
Call'' list. The manual instructed Google employees not to cold call
employees of the listed companies. Similarly, Intel instructed its
human resources staff about the existence of the agreement.
Google-Intuit Agreement
30. In June 2007, Google and Intuit agreed that Google would not
cold call any Intuit employee. Senior executives at Google and Intuit
reached an express no cold call agreement through direct and explicit
communications. The executives actively managed and enforced the
agreement through direct communications.
31. The agreement covered all Intuit employees and was not limited
by geography, job function, product group, or time period. Moreover,
Intuit employees were not informed of and did not agree to this
restriction.
32. In furtherance of this agreement, in its Hiring Policies and
Protocols manual, Google listed Intuit among the companies that had
special agreements with Google and were part of the ``Do Not Cold
Call'' list. The manual instructed Google employees not to cold call
employees of the listed companies.
Violation Alleged
Violation of Section 1 of the Sherman Act
33. The United States hereby incorporates paragraphs 1 through 32.
34. Defendants are direct competitors for employees, including
specialized computer engineers and scientists, covered by the
agreements at issue here. Defendants' concerted behavior both reduced
their ability to compete for employees and disrupted the normal price-
setting mechanisms that apply in the labor setting. These no cold call
agreements are facially anticompetitive because they eliminated a
significant form of competition to attract high tech employees, and,
overall, substantially diminished competition to the detriment of the
affected employees who were likely deprived of competitively important
information and access to better job opportunities.
35. Defendants' agreements constitute unreasonable restraints of
trade that are per se unlawful under Section 1 of the Sherman Act, 15
U.S.C. 1.
Requested Relief
The United States requests that the Court:
(A) Adjudge and decree that Defendants' agreements not to compete
constitute illegal restraints of interstate trade and commerce in
violation of Section 1 of the Sherman Act;
(B) Enjoin and restrain Defendants from enforcing or adhering to
existing agreements that unreasonably restrict competition for
employees between them;
(C) Permanently enjoin and restrain each Defendant from
establishing any similar agreement unreasonably restricting competition
for employees except as prescribed by the Court;
(D) Award the United States such other relief as the Court may deem
just and proper to redress and prevent recurrence of the alleged
violations and to dissipate the anticompetitive effects of the illegal
agreements entered into by Adobe, Apple, Google, Intel, Intuit, and
Pixar; and
(E) The United States be awarded the costs of this action.
Dated this 24th day of September 2010.
Respectfully submitted,
For Plaintiff United States.
Molly S. Boast,
Acting Assistant Attorney General.
J. Robert Kramer II,
Director of Operations.
James J. Tierney,
Chief, Networks and Technology Section. DC Bar #434610.
Scott A. Scheele,
Assistant Chief, Networks and Technology Section, DC Bar #429061.
Ryan S. Struve (DC Bar 495406),
Adam T. Severt,
Jessica N. Butler-Arkow (DC Bar 430022),
H. Joseph Pinto III,
Anthony D. Scicchitano,
Trial Attorneys.
U.S. Department of Justice, Antitrust Division, Networks and
Technology Section, 450 Fifth Street, NW., Suite 7100, Washington,
DC 20530. Telephone: (202) 307-6200. Facsimile: (202) 616-8544.
[email protected].
Certificate of Service
I, Ryan Struve, hereby certify that on September 24, 2010, I caused
a copy of the Complaint to be served on Defendants Adobe Systems, Inc.,
Apple, Inc., Google, Inc., Intel Corporation, Intuit, Inc., and Pixar
by mailing the document via e-mail to the duly authorized legal
representatives of the defendants, as follows:
For Defendant Adobe Systems, Inc., Craig A. Waldman, Esq., Jones Day,
555 California Street, 26th Floor, San Francisco, CA 94104. Telephone:
(415) 875-5765. Fax: (415) 963-6813. E-mail: [email protected].
For Defendant Apple Inc., Richard Parker, Esq., O'Melveny & Myers LLP,
1625 Eye Street, NW., Washington, DC 20006. Telephone: (202) 383-5380.
Fax: (202) 383-5414. E-mail: [email protected].
For Defendant Google Inc., Mark Leddy, Esq., Cleary Gottlieb Steen &
Hamilton LLP, 2000 Pennsylvania Avenue, NW., Washington, DC 20006.
Telephone: (202) 974-1570. Fax: (202) 974-1999. E-mail:
[email protected].
For Defendant Intel Corporation, Leon B. Greenfield, Esq., WilmerHale,
1875 Pennsylvania Avenue, NW., Washington, DC 20006. Telephone: (202)
663-6972. Fax: (202) 663-6363. E-mail: [email protected].
For Defendant Intuit, Inc., Joe Sims, Esq., Jones Day, 51 Louisiana
Avenue, NW., Washington, DC 20001. Telephone: (202) 879-3863. Fax:
(202) 626-1700. E-mail: [email protected].
For Defendant Pixar, Deborah A. Garza, Esq., Covington & Burling LLP,
1201 Pennsylvania Avenue, NW., Washington, DC 20004. Telephone: (202)
662-5146. Fax: (202) 778-5146. E-mail: [email protected].
Ryan Struve, Esq., Trial Attorney, Networks & Technology Section, U.S.
Department of Justice, Antitrust Division, 450 Fifth Street, NW., Suite
7100, Washington, DC 20530. Telephone: (202) 307-6200. Fax: (202) 616-
8544. E-mail: [email protected].
United States District Court for the District of Columbia
United States of America, Plaintiff, v. Adobe Systems, Inc.;
Apple Inc.; Google Inc.; Intel Corporation; Intuit, Inc.; and Pixar,
Defendants.
Case No. 1:10-cv-01629.
Assigned to: Kollar-Kotelly, Colleen.
Assign. Date: 9/24/2010.
Competitive Impact Statement
Plaintiff United States of America (``United States''), pursuant to
Section
[[Page 60823]]
2(b) of the Antitrust Procedures and Penalties Act (``APPA'' or
``Tunney Act''), 15 U.S.C. 16(b)-(h), files this Competitive Impact
Statement relating to the proposed Final Judgment submitted for entry
in this civil antitrust proceeding.
I. Nature and Purpose of the Proceeding
The United States brought this lawsuit against Defendants Adobe
Systems, Inc. (``Adobe''), Apple Inc. (``Apple''), Google Inc.
(``Google''), Intel Corporation (``Intel''), Intuit, Inc. (``Intuit'')
and Pixar, on September 24, 2010, to remedy violations of Section 1 of
the Sherman Act, 15 U.S.C. 1. The Complaint alleges that Defendants
entered into a series of bilateral agreements, pursuant to which a
Defendant agreed not to cold call another Defendant's employees for
employment opportunities. The effect of these agreements was to reduce
Defendants' competition for highly skilled technical employees (``high
tech employees''), diminish potential employment opportunities for
those same employees, and interfere in the proper functioning of the
price-setting mechanism that would otherwise have prevailed.
Defendants' agreements are naked restraints of trade and violate
Section 1 of the Sherman Act, 15 U.S.C. 1.
At the same time the Complaint was filed, the United States also
filed a proposed Final Judgment, which would remedy the violation by
having the Court declare the Defendants' cold calling agreements
illegal, enjoin Defendants from enforcing any such agreements currently
in effect, and prohibit Defendants from entering similar agreements in
the future.
The United States and Defendants have stipulated that the proposed
Final Judgment may be entered after compliance with the APPA, unless
the United States withdraws its consent. Entry of the proposed Final
Judgment would terminate this action, except that this Court would
retain jurisdiction to construe, modify, and enforce the proposed Final
Judgment and to punish violations thereof.
II. Description of the Events Giving Rise to the Alleged Violation of
the Antitrust Laws
The six Defendants entered into five substantially similar
agreements that restrained competition for employees and were not
disclosed to the affected employees. These agreements banned cold
calling of employees. Cold calling involves communicating directly in
any manner (including orally, in writing, telephonically, or
electronically) with another firm's employee who has not otherwise
applied for a job opening. The agreements were between (i) Apple and
Google, (ii) Apple and Adobe, (iii) Apple and Pixar, (iv) Google and
Intel, and (v) Google and Intuit. Aside from the Google and Intuit
agreement, which only prohibited Google from cold calling any Intuit
employee, each agreement covered all employees at both firms that were
parties to the agreement. Senior executives at each firm entered the
express agreements, and implemented and enforced them.
Defendants' agreements disrupted the competitive market forces for
employee talent. The agreements are facially anticompetitive because
they eliminated a significant form of competition to attract high tech
employees, and, overall, substantially diminished competition to the
detriment of the affected employees who were likely deprived of
competitively important information and access to better job
opportunities.
Each of the five agreements was a naked restraint of trade that was
per se unlawful under Section 1 of the Sherman Act, 15 U.S.C. 1.
Apple-Google Agreement
Beginning no later than 2006, Apple and Google agreed not to cold
call each other's employees. Senior executives at Apple and Google
reached this express agreement through direct and explicit
communications. The executives actively managed and enforced the
agreement through direct communications. The agreement covered all
employees of both firms and was not limited by geography, job function,
product group, or time period. In furtherance of this agreement, Apple
placed Google on its internal ``Do Not Call List,'' which instructed
employees not to actively solicit employees from the listed companies.
Similarly, Google listed Apple among the companies that had special
agreements with Google and were part of its ``Do Not Cold Call'' list.
On occasion, Apple complained to Google when it believed the agreement
had been breached. Each time, Google conducted an internal
investigation to determine whether Google violated the agreement and
reported its findings back to Apple.
Apple-Adobe Agreement
Beginning no later than May 2005, Apple requested an agreement from
Adobe to refrain from cold calling each other's employees. Faced with
the likelihood that refusing would result in retaliation and
significant competition for its employees, Adobe agreed. Senior
executives at Apple and Adobe reached this express agreement through
direct and explicit communications. The executives actively managed and
enforced the agreement through direct communications. The agreement
covered all employees of both firms and was not limited by geography,
job function, product group, or time period. In furtherance of this
agreement, Apple placed Adobe on its internal ``Do Not Call List,'' and
similarly, Adobe included Apple in its internal list of ``Companies
that are off limits.''
Apple-Pixar Agreement
Beginning no later than April 2007, Apple and Pixar agreed that
they would not cold call each other's employees. Executives at Apple
and Pixar reached this express agreement through direct and explicit
communications. The executives actively managed and enforced the
agreement through direct communications. The agreement covered all
employees of both firms and was not limited by geography, job function,
product group, or time period. In furtherance of this agreement, Apple
placed Pixar on its internal ``Do Not Call List'' and senior executives
at Pixar instructed human resources personnel to adhere to the
agreement and maintain a paper trail in the event Apple accused Pixar
of violating the agreement.
Google-Intel Agreement
Beginning no later than September 2007, Google and Intel agreed to
refrain from cold calling each other's employees. Senior executives at
Google and Intel reached this express agreement through direct and
explicit communications. The executives actively managed and enforced
the agreement through direct communications. The agreement covered all
employees of both firms and was not limited by geography, job function,
product group, or time period. In furtherance of this agreement, Google
listed Intel among the companies that have special agreements with
Google and are part of its ``Do Not Call'' list. Similarly, Intel
instructed its human resources staff about the existence of the
agreement.
Google-Intuit Agreement
Beginning no later than June 2007, Google and Intuit agreed to
prohibit Google from cold calling any Intuit employee. Senior
executives at Google and Intel reached this express agreement through
direct and explicit communications. The executives actively managed and
enforced the agreement through direct communications. The agreement
covered all Intuit employees and was
[[Page 60824]]
not limited by geography, job function, product group, or time period.
In furtherance of this agreement, Google listed Intuit among the
companies that have special agreements with Google and are part of its
``Do Not Call'' list. Google policed the agreement to ensure it was
followed, including by investigating complaints from Intuit that Google
had violated the agreement. On each occasion, Google determined that it
had not violated the agreement and informed Intuit.
III. The Agreements Were Naked Restraints and Not Ancillary To
Achieving Legitimate Business Purposes
Section 1 of the Sherman Act outlaws ``[e]very contract,
combination in the form of trust or otherwise, or conspiracy, in
restraint of trade or commerce among the several States.'' 15 U.S.C. 1.
The Sherman Act is designed to ensure ``free and unfettered competition
as the rule of trade. It rests on the premise that the unrestrained
interaction of competitive forces will yield the best allocation of our
economic resources, the lowest prices, the highest quality and the
greatest material progress * * *.'' National Collegiate Athletic Ass'n
v. Board of Regents of Univ. of Okla., 468 U.S. 85, 104 n.27 (1984)
(quoting Northern Pac. Ry. v. United States, 356 U.S. 1, 4-5 (1958)).
The law has long recognized that ``certain agreements or practices
which because of their pernicious effect on competition and lack of any
redeeming virtue are conclusively presumed to be unreasonable and
therefore illegal without elaborate inquiry as to the precise harm they
have caused or the business excuse for their use.'' Northern Pac. Ry.,
356 U.S. at 545. Such naked restraints of competition among horizontal
competitors (i.e., agreements that have a pernicious effect on
competition with no redeeming virtue) are deemed per se unlawful.
The United States has previously challenged restraints on
employment as per se illegal. In 1996, the United States challenged
guidelines designed to curb competition between residency programs for
senior medical students and residents of other programs. Members of the
Association of Family Practice Residency Directors had agreed not to
directly solicit residents from each other, conduct recognized as ``per
se unlawful'' under Section 1. United States v. Ass'n of Family
Practice Residency Doctors, No. 96-575-CV-W-2, Complaint at 6 (W.D.Mo.
May 28, 1996); Competitive Impact Statement, 61 FR 28891, 28894
(W.D.Mo. May 28, 1996). The Court entered an agreed-upon Final
Judgment, enjoining the association from restraining competition among
residency programs for residents, including enjoining all prohibitions
on direct and indirect solicitation of residents from other programs.
1996-2 Trade Cases ] 71,533, 28894 (W.D.Mo. Aug. 15, 1996).
In analogous circumstances, the Sixth Circuit has held that an
agreement among competitors not to solicit one another's customers was
a per se violation of the antitrust laws. U.S. v. Cooperative Theaters
of Ohio, Inc., 845 F.2d 1367 (6th Cir. 1988). In that case, two movie
theater booking agents agreed to refrain from actively soliciting each
other's customers. Despite the defendants' arguments that they
``remained free to accept unsolicited business from their competitors'
customers,'' id. (emphasis in original), the Sixth Circuit found their
``no-solicitation agreement'' was ``undeniably a type of customer
allocation scheme which courts have often condemned in the past as a
per se violation of the Sherman Act.'' Id. at 1373.
Antitrust analysis of downstream, customer-related restraints is
equally applicable to upstream monopsony restraints on employment
opportunities. In 1991, the Antitrust Division brought an action
against conspirators who competed to procure billboard leases and had
agreed to refrain from bidding on each other's former leases for a year
after the space was lost or abandoned by the other conspirator. United
States v. Brown, 936 F.2d 1042 (9th Cir. 1991) (affirming jury verdict
convicting defendants of conspiring to restrain trade in violation of
15 U.S.C. 1). The agreement was limited to an input market (the
procurement of billboard leases) and did not extend to downstream sales
(in which the parties also competed). In affirming defendants'
convictions, the appellate court held that the agreement was per se
unlawful:
The agreement restricted each company's ability to compete for
the other's billboard sites. It clearly allocated markets between
the two billboard companies. A market allocation agreement between
two companies at the same market level is a classic per se antitrust
violation.
Id. at 1045.
There is no basis for distinguishing allocation agreements based on
whether they involve input or output markets. Anticompetitive
agreements in both input and output markets create allocative
inefficiencies. Hence, naked restraints on cold calling customers,
suppliers, or employees are similarly per se unlawful.
Still, an agreement that would normally be condemned as a per se
unlawful restraint on competition may nonetheless be lawful if it is
ancillary to a legitimate procompetitive venture and reasonably
necessary to achieve the procompetitive benefits of the collaboration.
Ancillary restraints therefore are not per se unlawful, but rather
evaluated under the rule of reason, which balances a restraint's
procompetitive benefits against its anticompetitive effects.\1\ To be
considered ``ancillary'' under established antitrust law, however, the
restraint must be a necessary or intrinsic part of the procompetitive
collaboration.\2\ Restraints that are broader than reasonably necessary
to achieve the efficiencies from a business collaboration are not
ancillary and are properly treated as per se unlawful.
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\1\ See generally Department of Justice, Antitrust Division, and
Federal Trade Commission, Antitrust Guidelines for Collaborations
Among Competitors Sec. 1.2 (2000) (``Collaboration Guidelines'').
See also Major League Baseball v. Salvino, 542 F.3d 290, 339 (2d
Cir. 2008) (Sotomayor, J., concurring) (``a per se or quick look
approach may apply * * * where a particular restraint is not
reasonably necessary to achieve any of the efficiency-enhancing
benefits of a joint venture and serves only as a naked restraint
against competition.''); Dagher v. Saudi Refining, Inc., 369 F.3d
1108, 1121 (9th Cir. 2004) (``reasonably necessary to further the
legitimate aims of the joint venture''); rev'd on other grounds sub
nom. Texaco v. Dagher, 547 U.S. 1, 8 (2006); Rothery Storage & Van
Co. v. Atlas Van Lines, Inc., 792 F.2d 210, 227 (DC Cir. 1986)
(``the restraints it imposes are reasonably necessary to the
business it is authorized to conduct''); In re Polygram Holdings.,
Inc., 2003 WL 21770765 (F.T.C. 2003) (parties must prove that the
restraint was ``reasonably necessary'' to permit them to achieve
particular alleged efficiency), aff'd, Polygram Holdings, Inc. v.
F.T.C., 416 F.3d 29 (DC Cir. 2005).
\2\ See Rothery Storage & Van Co., 792 F.2d at 227 (national
moving network in which the participants shared physical resources,
scheduling, training, and advertising resources, could forbid
contractors from free riding by using its equipment, uniforms, and
trucks for business they were conducting on their own); Salvino, 542
F.3d at 337 (Sotomayor, J., concurring) (Major League Baseball teams
created a formal joint venture to exclusively license, and share
profits for, team trademarks, resulting in ``decreased transaction
costs, lower enforcement and monitoring costs, and the ability to
one-stop shop * * *.'' Such benefits ``could not exist without the *
* * agreements.''); Addamax v. Open Software Found., 152 F.3d 48
(1st Cir. 1998) (computer manufacturers formed nonprofit joint
research and development venture to develop operating system;
agreement on price to be paid for security software that was used by
joint venture was ancillary to effort to develop a new system). See
also Collaboration Guidelines at Sec. 3.2 (``[I]f the participants
could achieve an equivalent or comparable efficiency-enhancing
integration through practical, significantly less restrictive means,
then * * * the agreement is not reasonably necessary.'').
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Although Defendants at times engaged in legitimate collaborative
projects, the agreements to ban cold calling were not, under
established antitrust law, properly ancillary to those
[[Page 60825]]
collaborations. Defendants' agreements were not tied to any specific
collaboration, nor were they narrowly tailored to the scope of any
specific collaboration. The agreements extended to all employees at the
firms, including those who had little or nothing to do with the
collaboration at issue. The agreements were not limited by geography,
job function, product group, or time period. This overbreadth and other
evidence demonstrated that the no cold calling agreements were not
reasonably necessary for any collaboration and, hence, not ancillary.
The lack of reasonable necessity for these broad agreements is
demonstrated also by the fact that Defendants successfully collaborated
with other companies without similar agreements, or with agreements
containing more narrowly focused hiring restrictions.
Some Defendants had extensive business relationships with one
another and, in some cases, common board memberships. Such generalized
relationships, however, cannot themselves justify overly broad
restraints on competition.
Defendants' agreements regarding cold calling of employees are per
se unlawful under Section 1 of the Sherman Act. Defendants' concerted
behavior both reduced their ability to compete for employees and
disrupted the normal price-setting mechanisms that apply in the labor
setting. These no cold call agreements are facially anticompetitive
because they eliminated a significant form of competition to attract
high tech employees, and, overall, substantially diminished competition
to the detriment of the affected employees who were likely deprived of
competitively important information and access to better job
opportunities.
IV. Explanation of the Proposed Final Judgment
The proposed Final Judgment sets forth (1) conduct in which the
parties may not engage; (2) conduct in which the parties may engage
without violating the proposed Final Judgment; (3) certain actions the
parties are required to take to ensure compliance with the terms of the
proposed Final Judgment; and (4) oversight procedures the United States
may use to ensure compliance with the proposed Final Judgment. Section
VI of the proposed Final Judgment provides that these provisions will
expire five years after entry of the proposed Final Judgment.
A. Prohibited Conduct
Section IV of the proposed Final Judgment preserves competition for
employees by prohibiting Defendants, and all other persons in active
concert or participation with any of the Defendants with notice of the
proposed Final Judgment, from agreeing, or attempting to agree, with
another person to refrain from cold calling, soliciting, recruiting, or
otherwise competing for employees of the other person. It also
prohibits each Defendant from requesting or pressuring another person
to refrain from cold calling, soliciting, recruiting, or otherwise
competing for employees of the other person. Although the Complaint
alleges only that the Defendants agreed to ban cold calling of
employees, the proposed Final Judgment more broadly enjoins agreements
regarding solicitation, recruitment and other methods of competing for
employees to provide prophylactic protection against other activities
that could interfere with competition for employees.
B. Conduct Not Prohibited
The Final Judgment does not prohibit all agreements related to
employee solicitation and recruitment. Section V makes clear that the
proposed Final Judgment does not prohibit ``no direct solicitation
provisions'' \3\ that are reasonably necessary for, and thus ancillary
to, legitimate procompetitive collaborations.\4\ Such restraints remain
subject to scrutiny under the rule of reason.
---------------------------------------------------------------------------
\3\ Section II.H. of the proposed Final Judgment defines ``no
direct solicitation provision'' as ``any agreement, or part of an
agreement, among two or more persons that restrains any person from
cold calling, soliciting, recruiting, or otherwise competing for
employees of another person.''
\4\ The Complaint alleges a violation of the Sherman Antitrust
Act, 15 U.S.C. 1. The scope of the Final Judgment is limited to
violations of the Federal antitrust laws. It prohibits certain
conduct and specifies other conduct that the Judgment would not
prohibit. The Judgment does not address whether any conduct it does
not prohibit would be prohibited by other Federal or State laws,
including California Business & Professions Code Sec. 16600
(prohibiting firms from restraining employee movement).
---------------------------------------------------------------------------
Section V.A.1 does not prohibit no direct solicitation provisions
contained in existing and future employment or severance agreements
with a Defendant's employees. Narrowly tailored no direct solicitation
provisions are often included in severance agreements and rarely
present competition concerns. Sections V.A.2-4 also makes clear that
the proposed Final Judgment does not prohibit no direct solicitation
provisions reasonably necessary for:
1. Mergers or acquisitions (consummated or unconsummated),
investments, or divestitures, including due diligence related thereto;
2. Contracts with consultants or recipients of consulting services,
auditors, outsourcing vendors, recruiting agencies or providers of
temporary employees or contract workers;
3. The settlement or compromise of legal disputes; and
4. Contracts with resellers or OEMs; contracts with certain
providers or recipients of services; or the function of a legitimate
collaboration agreement, such as joint development, technology
integration, joint ventures, joint projects (including teaming
agreements), and the shared use of facilities.
The investigation focused on anticompetitive agreements related to
Defendants' relationships with resellers, OEMs, providers of services,
and collaborations with other companies. Section V of the proposed
Final Judgment contains additional requirements applicable to no direct
solicitation provisions contained in these types of contracts and
collaboration agreements. The proposed Final Judgment recognizes that
Defendants may sometimes enter written or unwritten contracts and
collaboration agreements and sets forth requirements that recognize the
different nature of written and unwritten contracts.
Thus, for written contracts, Section V.B of the proposed Final
Judgment requires that the Defendants: (1) Identify, with specificity,
the agreement to which the no direct solicitation provision is
ancillary; (2) narrowly tailor the no direct solicitation provision to
affect only employees who are anticipated to be directly involved in
the arrangement; (3) identify with reasonable specificity the employees
who are subject to the no direct solicitation provision; (4) include a
specific termination date or event; and (5) sign the agreement,
including any modifications to the agreement.
If the no direct solicitation provision relates to an oral
agreement, Section V.C of the proposed Final Judgment requires that the
Defendants maintain documents sufficient to show the terms of the no
direct solicitation provision, including: (1) The specific agreement to
which the no direct solicitation provision is ancillary; (2) an
identification, with reasonable specificity, of the employees who are
subject to the no direct solicitation provision; and (3) the no direct
solicitation provision's specific termination date or event.\5\
---------------------------------------------------------------------------
\5\ For example, a defendant might document these requirements
terms through electronic mail or in memoranda that it will retain.
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[[Page 60826]]
The purpose of Sections V.B. and V.C. is to ensure that no direct
solicitation provisions related to Defendants' contracts with
resellers, OEMs, and providers of services, and collaborations with
other companies, are reasonably necessary to the contract or
collaboration. In addition, the requirements set forth in Sections V.B
and V.C of the proposed Final Judgment provide the United States with
the ability to monitor Defendants' compliance with the proposed Final
Judgment.
At least one Defendant has a large number of routine consulting and
services agreements that contain no direct solicitation provisions that
may not comply with the terms of the proposed Final Judgment. In many
cases, these no direct solicitation provisions are contained in
contracts acquired through a merger or were presented to the Defendant
by third parties in non-negotiated, pre-printed agreements that were
not reviewed in the ordinary course by the Defendant's legal
department. To avoid the unnecessary burden of identifying these
existing contracts and re-negotiating any no direct solicitation
provisions, Section V.D of the proposed Final Judgment provides that,
subject to the conditions below, Defendants shall not be required to
modify or conform existing no direct solicitation provisions included
in consulting or services agreements to the extent such provisions
violate this Final Judgment. The Final Judgment further prohibits
Defendants from enforcing any such existing no direct solicitation
provision that would violate the proposed Final Judgment.
Finally, Section V.E of the proposed Final Judgment provides that a
Defendant is not prohibited from unilaterally adopting or maintaining a
policy not to consider applications from employees of another person,
or not to solicit, cold call, recruit or hire employees of another
person, provided that the Defendant does not request or pressure
another person to adopt, enforce, or maintain such a policy.
C. Required Conduct
Section VI of the proposed Final Judgment sets forth various
mandatory procedures to ensure Defendants' compliance with the proposed
Final Judgment, including providing officers, directors, human resource
managers, and senior managers who supervise employee recruiting with
copies of the proposed Final Judgment and annual briefings about its
terms. In addition, because the agreements were not disclosed to
employees, Section VI.A.5 requires each Defendant to provide its
employees with reasonably accessible notice of the existence of all
agreements covered by Section V.A.5 and entered into by the company.
Under Section VI, each Defendant must file annually with the United
States a statement identifying any agreement covered by Section V.A.5.,
and describing any violation or potential violation of the Final
Judgment known to any officer, director, human resources manager, or
senior manager who supervises employee recruiting, solicitation, or
hiring efforts. If one of these persons learns of a violation or
potential violation of the Judgment, the Defendant must take steps to
terminate or modify the activity to comply with the Judgment and
maintain all documents related to the activity.
D. Compliance
To facilitate monitoring of the Defendants' compliance with the
proposed Final Judgment, Section VII grants the United States access,
upon reasonable notice, to Defendants' records and documents relating
to matters contained in the proposed Final Judgment. Defendants must
also make their employees available for interviews or depositions about
such matters. Moreover, upon request, Defendants must answer
interrogatories and prepare written reports relating to matters
contained in the proposed Final Judgment.
V. Remedies Available to Potential Private Litigants
Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any
person who has been injured as a result of conduct prohibited by the
antitrust laws may bring suit in Federal court to recover three times
the damages the person has suffered, as well as costs and reasonable
attorneys' fees. Entry of the proposed Final Judgment will neither
impair nor assist the bringing of any private antitrust damage action.
Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C.
16(a), the proposed Final Judgment has no prima facie effect in any
subsequent private lawsuit that may be brought against Defendants.
VI. Procedures Applicable for Approval or Modification of the Proposed
Final Judgment
The United States and Defendants have stipulated that the proposed
Final Judgment may be entered by the Court after compliance with the
provisions of the APPA, provided that the United States has not
withdrawn its consent. The APPA conditions entry upon the Court's
determination that the proposed Final Judgment is in the public
interest.
The APPA provides a period of at least sixty (60) days preceding
the effective date of the proposed Final Judgment within which any
person may submit to the United States written comments regarding the
proposed Final Judgment. Any person who wishes to comment should do so
within sixty (60) days of the date of publication of this Competitive
Impact Statement in the Federal Register, or the last date of
publication in a newspaper of the summary of this Competitive Impact
Statement, whichever is later. All comments received during this period
will be considered by the United States, which remains free to withdraw
its consent to the proposed Final Judgment at any time prior to the
Court's entry of judgment. The comments and the response of the United
States will be filed with the Court and published in the Federal
Register.
Written comments should be submitted to: James J. Tierney, Chief,
Networks & Technology Enforcement Section, Antitrust Division, United
States Department of Justice, 450 Fifth Street, NW., Suite 7100,
Washington, DC 20530.
The proposed Final Judgment provides that the Court retains
jurisdiction over this action, and the parties may apply to the Court
for any order necessary or appropriate for the modification,
interpretation, or enforcement of the Final Judgment.
VII. Alternatives to the Proposed Final Judgment
The United States considered, as an alternative to the proposed
Final Judgment, a full trial on the merits against the Defendants. The
United States is satisfied, however, that the relief contained in the
proposed Final Judgment will quickly establish, preserve, and ensure
that employees can benefit from competition by Defendant companies.
Thus, the proposed Final Judgment would achieve all or substantially
all of the relief the United States would have obtained through
litigation, but avoids the time, expense, and uncertainty of a full
trial on the merits of the Complaint.
VIII. Standard of Review Under the APPA for Proposed Final Judgment
The Clayton Act, as amended by the APPA, requires that proposed
consent judgments in antitrust cases brought by the United States be
subject to a sixty-day comment period, after which the Court shall
determine whether entry of the proposed Final Judgment ``is in the
public interest.'' 15 U.S.C. 16(e)(1). In
[[Page 60827]]
making that determination, the Court, in accordance with the statute as
amended in 2004, is required to consider:
(A) The competitive impact of such judgment, including termination
of alleged violations, provisions for enforcement and modification,
duration of relief sought, anticipated effects of alternative remedies
actually considered, whether its terms are ambiguous, and any other
competitive considerations bearing upon the adequacy of such judgment
that the court deems necessary to a determination of whether the
consent judgment is in the public interest; and
(B) The impact of entry of such judgment upon competition in the
relevant market or markets, upon the public generally and individuals
alleging specific injury from the violations set forth in the complaint
including consideration of the public benefit, if any, to be derived
from a determination of the issues at trial.
15 U.S.C. 16(e)(1)(A) & (B). In considering these statutory factors,
the Court's inquiry is necessarily a limited one as the United States
is entitled to ``broad discretion to settle with the Defendant within
the reaches of the public interest.'' United States v. Microsoft Corp.,
56 F.3d 1448, 1461 (DC Cir. 1995); see generally United States v. SBC
Commc'ns, Inc., 489 F. Supp. 2d 1 (D.D.C. 2007) (assessing public
interest standard under the Tunney Act); United States v. InBev N.V./
S.A., 2009-2 Trade Cas. (CCH) ] 76,736, 2009 U.S. Dist. LEXIS 84787,
No. 08-1965 (JR), at *3 (D.D.C. Aug. 11, 2009) (noting that the court's
review of a consent judgment is limited and only inquires ``into
whether the government's determination that the proposed remedies will
cure the antitrust violations alleged in the complaint was reasonable,
and whether the mechanism to enforce the final judgment are clear and
manageable'').\6\
---------------------------------------------------------------------------
\6\ The 2004 amendments substituted ``shall'' for ``may'' in
directing relevant factors for a court to consider and amended the
list of factors to focus on competitive considerations and to
address potentially ambiguous judgment terms. Compare 15 U.S.C.
16(e) (2004), with 15 U.S.C. 16(e)(1) (2006); see also SBC Commc'ns,
489 F. Supp. 2d at 11 (concluding that the 2004 amendments
``effected minimal changes'' to Tunney Act review).
---------------------------------------------------------------------------
Under the APPA a court considers, among other things, the
relationship between the remedy secured and the specific allegations
set forth in the United States' complaint, whether the decree is
sufficiently clear, whether enforcement mechanisms are sufficient, and
whether the decree may positively harm third parties. See Microsoft, 56
F.3d at 1458-62. With respect to the adequacy of the relief secured by
the decree, a court may not ``engage in an unrestricted evaluation of
what relief would best serve the public.'' United States v. BNS, Inc.,
858 F.2d 456, 462 (9th Cir. 1988) (citing United States v. Bechtel
Corp., 648 F.2d 660, 666 (9th Cir. 1981)); see also Microsoft, 56 F.3d
at 1460-62; United States v. Alcoa, Inc., 152 F. Supp. 2d 37, 40
(D.D.C. 2001); InBev, 2009 U.S. Dist. LEXIS 84787, at *3. Courts have
held that:
[t]he balancing of competing social and political interests affected
by a proposed antitrust consent decree must be left, in the first
instance, to the discretion of the Attorney General. The court's
role in protecting the public interest is one of insuring that the
government has not breached its duty to the public in consenting to
the decree. The court is required to determine not whether a
particular decree is the one that will best serve society, but
whether the settlement is `within the reaches of the public
interest.' More elaborate requirements might undermine the
effectiveness of antitrust enforcement by consent decree.
Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\7\
In determining whether a proposed settlement is in the public interest,
a district court ``must accord deference to the government's
predictions about the efficacy of its remedies, and may not require
that the remedies perfectly match the alleged violations.'' SBC
Commc'ns, 489 F. Supp. 2d at 17; see also Microsoft, 56 F.3d at 1461
(noting the need for courts to be ``deferential to the government's
predictions as to the effect of the proposed remedies''); United States
v. Archer-Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003)
(noting that the court should grant due respect to the United States'
prediction as to the effect of proposed remedies, its perception of the
market structure, and its views of the nature of the case).
---------------------------------------------------------------------------
\7\ Cf. BNS, 858 F.2d at 464 (holding that the court's
``ultimate authority under the [APPA] is limited to approving or
disapproving the consent decree''); United States v. Gillette Co.,
406 F. Supp. 713, 716 (D. Mass. 1975) (noting that, in this way, the
court is constrained to ``look at the overall picture not
hypercritically, nor with a microscope, but with an artist's
reducing glass''). See generally Microsoft, 56 F.3d at 1461
(discussing whether ``the remedies [obtained in the decree are] so
inconsonant with the allegations charged as to fall outside of the
`reaches of the public interest.' '').
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In addition, ``a proposed decree must be approved even if it falls
short of the remedy the court would impose on its own, as long as it
falls within the range of acceptability or is `within the reaches of
public interest.' '' United States v. Am. Tel. & Tel. Co., 552 F. Supp.
131, 151 (D.D.C. 1982) (citations omitted) (quoting United States v.
Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975)), aff'd sub nom.
Maryland v. United States, 460 U.S. 1001 (1983); see also United States
v. Alcan Aluminum Ltd., 605 F. Supp. 619, 622 (W.D. Ky. 1985)
(approving the consent decree even though the court would have imposed
a greater remedy). To meet this standard, the United States ``need only
provide a factual basis for concluding that the settlements are
reasonably adequate remedies for the alleged harms.'' SBC Commc'ns, 489
F. Supp. 2d at 17.
Moreover, the Court's role under the APPA is limited to reviewing
the remedy in relationship to the violations that the United States has
alleged in its Complaint, and does not authorize the court to
``construct [its] own hypothetical case and then evaluate the decree
against that case.'' Microsoft, 56 F.3d at 1459; see also InBev, 2009
U.S. Dist. LEXIS 84787, at *20 (``[T]he `public interest' is not to be
measured by comparing the violations alleged in the complaint against
those the court believes could have, or even should have, been
alleged.''). Because the ``court's authority to review the decree
depends entirely on the government's exercising its prosecutorial
discretion by bringing a case in the first place,'' it follows that
``the court is only authorized to review the decree itself,'' and not
to ``effectively redraft the complaint'' to inquire into other matters
that the United States did not pursue. Microsoft, 56 F.3d. at 1459-60.
Courts ``cannot look beyond the complaint in making the public interest
determination unless the complaint is drafted so narrowly as to make a
mockery of judicial power.'' SBC Commc'ns, 489 F. Supp. 2d at 15.
In its 2004 amendments, Congress made clear its intent to preserve
the practical benefits of utilizing consent decrees in antitrust
enforcement, adding the unambiguous instruction that ``[n]othing in
this section shall be construed to require the court to conduct an
evidentiary hearing or to require the court to permit anyone to
intervene.'' 15 U.S.C. 16(e)(2). This language effectuates what
Congress intended when it enacted the Tunney Act in 1974, as Senator
Tunney explained: ``[t]he court is nowhere compelled to go to trial or
to engage in extended proceedings which might have the effect of
vitiating the benefits of prompt and less costly settlement through the
consent decree process.'' 119 Cong. Rec. 24,598 (1973) (statement of
Senator Tunney). Rather, the procedure for the public interest
determination is left to the discretion of the Court, with the
recognition that the court's ``scope of review remains sharply
proscribed by precedent and the nature
[[Page 60828]]
of Tunney Act proceedings.'' SBC Commc'ns, 489 F. Supp. 2d at 11.\8\
---------------------------------------------------------------------------
\8\ See United States v. Enova Corp., 107 F. Supp. 2d 10, 17
(D.D.C. 2000) (noting that the ``Tunney Act expressly allows the
court to make its public interest determination on the basis of the
competitive impact statement and response to comments alone'');
United States v. Mid-Am. Dairymen, Inc., 1977-1 Trade Cas. (CCH) ]
61,508, at 71,980 (W.D. Mo. 1977) (``Absent a showing of corrupt
failure of the government to discharge its duty, the Court, in
making its public interest finding, should * * * carefully consider
the explanations of the government in the competitive impact
statement and its responses to comments in order to determine
whether those explanations are reasonable under the
circumstances.''); S. Rep. No. 93-298, 93d Cong., 1st Sess., at 6
(1973) (``Where the public interest can be meaningfully evaluated
simply on the basis of briefs and oral arguments, that is the
approach that should be utilized.'').
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IX. Determinative Documents
There are no determinative materials or documents within the
meaning of the APPA that the United States considered in formulating
the proposed Final Judgment.
Dated: September 24, 2010.
Respectfully submitted,
Ryan S. Struve (DC Bar 495406),
Adam T. Severt,
Jessica N. Butler-Arkow (DC Bar 430022),
H. Joseph Pinto III,
Anthony D. Scicchitano,
Trial Attorneys.
U.S. Department of Justice, Antitrust Division, Networks and
Technology Section, 450 5th Street, NW., Suite 7100, Washington, DC
20530. Telephone: (202) 307-6200. Facsimile: (202) 616-8544.
[email protected].
United States District Court for the District of Columbia
United States of America, Plaintiff, v. Adobe Systems, Inc.;
Apple Inc.; Google Inc.; Intel Corporation; Intuit, Inc.; and Pixar,
Defendants.
[Proposed] Final Judgment
Whereas, the United States of America filed its Complaint on
September 24, 2010, alleging that each of the Defendants participated
in at least one agreement in violation of Section One of the Sherman
Act, and the United States and the Defendants, by their respective
attorneys, have consented to the entry of this Final Judgment without
trial or adjudication of any issue of fact or law;
And whereas this Final Judgment does not constitute any admission
by the Defendants that the law has been violated or of any issue of
fact or law, other than that the jurisdictional facts as alleged in the
Complaint are true;
And whereas, the Defendants agree to be bound by the provisions of
this Final Judgment pending its approval by this Court;
Now therefore, before any testimony is taken, without trial or
adjudication of any issue of fact or law, and upon consent of the
Defendants, it is ordered, adjudged, and decreed.
I. Jurisdiction
This Court has jurisdiction over the subject matter and each of the
parties to this action. The Complaint states a claim upon which relief
may be granted against the Defendants under Section One of the Sherman
Act, as amended, 15 U.S.C. 1.
II. Definitions
As used in this Final Judgment:
A. ``Adobe'' means Adobe Systems, Inc., its (i) successors and
assigns, (ii) controlled subsidiaries, divisions, groups, affiliates,
partnerships, and joint ventures, and (iii) their directors, officers,
managers, agents acting within the scope of their agency, and
employees.
B. ``Apple'' means Apple Inc., its (i) successors and assigns, (ii)
controlled subsidiaries, divisions, groups, affiliates, partnerships,
and joint ventures, and (iii) their directors, officers, managers,
agents acting within the scope of their agency, and employees.
C. ``Google'' means Google Inc., its (i) successors and assigns,
(ii) controlled subsidiaries, divisions, groups, affiliates,
partnerships, and joint ventures, and (iii) their directors, officers,
managers, agents acting within the scope of their agency, and
employees.
D. ``Intel'' means Intel Corporation, its (i) successors and
assigns, (ii) controlled subsidiaries, divisions, groups, affiliates,
partnerships, and joint ventures, and (iii) their directors, officers,
managers, agents acting within the scope of their agency, and
employees.
E. ``Intuit'' means Intuit, Inc., its (i) successors and assigns,
(ii) controlled subsidiaries, divisions, groups, affiliates,
partnerships, and joint ventures, and (iii) their directors, officers,
managers, agents acting within the scope of their agency, and
employees.
F. ``Pixar'' means Pixar, its (i) successors and assigns, (ii)
controlled subsidiaries, divisions, groups, affiliates, partnerships,
and joint ventures, and (iii) their directors, officers, managers,
agents acting within the scope of their agency, and employees. Pixar
shall include directors, officers, managers, agents, or employees of
any parent of or any entity under common control with Pixar, only when
such individuals are acting in their capacity as directors, officers,
managers, agents, or employees of Pixar.
G. ``Agreement'' means any contract, arrangement, or understanding,
formal or informal, oral or written, between two or more persons.
H. ``No direct solicitation provision'' means any agreement, or
part of an agreement, among two or more persons that restrains any
person from cold calling, soliciting, recruiting, or otherwise
competing for employees of another person.
I. ``Person'' means any natural person, corporation, company,
partnership, joint venture, firm, association, proprietorship, agency,
board, authority, commission, office, or other business or legal
entity, whether private or governmental.
J. ``Senior manager'' means any company officer or employee above
the level of vice president.
III. Applicability
This Final Judgment applies to Adobe, Apple, Google, Intel, Intuit,
and Pixar, as defined in Section II, and to all other persons in active
concert or participation with any of them who receive actual notice of
this Final Judgment by personal service or otherwise.
IV. Prohibited Conduct
Each Defendant is enjoined from attempting to enter into, entering
into, maintaining or enforcing any agreement with any other person to
in any way refrain from, requesting that any person in any way refrain
from, or pressuring any person in any way to refrain from soliciting,
cold calling, recruiting, or otherwise competing for employees of the
other person.
V. Conduct Not Prohibited
A. Nothing in Section IV shall prohibit a Defendant and any other
person from attempting to enter into, entering into, maintaining or
enforcing a no direct solicitation provision, provided the no direct
solicitation provision is:
1. Contained within existing and future employment or severance
agreements with the Defendant's employees;
2. Reasonably necessary for mergers or acquisitions, consummated or
unconsummated, investments, or divestitures, including due diligence
related thereto;
3. Reasonably necessary for contracts with consultants or
recipients of consulting services, auditors, outsourcing vendors,
recruiting agencies or providers of temporary employees or contract
workers;
[[Page 60829]]
4. Reasonably necessary for the settlement or compromise of legal
disputes; or
5. Reasonably necessary for (i) contracts with resellers or OEMs;
(ii) contracts with providers or recipients of services other than
those enumerated in paragraphs V.A. 1-4 above; or (iii) the function of
a legitimate collaboration agreement, such as joint development,
technology integration, joint ventures, joint projects (including
teaming agreements), and the shared use of facilities.
B. All no direct solicitation provisions that relate to written
agreements described in Section V.A.5.i, ii, or iii, that a Defendant
enters into, renews, or affirmatively extends after the date of entry
of this Final Judgment shall:
1. Identify, with specificity, the agreement to which it is
ancillary;
2. Be narrowly tailored to affect only employees who are
anticipated to be directly involved in the agreement;
3. Identify with reasonable specificity the employees who are
subject to the agreement;
4. Contain a specific termination date or event; and
5. Be signed by all parties to the agreement, including any
modifications to the agreement.
C. For all no direct solicitation provisions that relate to
unwritten agreements described in Section V.A.5.i, ii, or iii, that a
Defendant enters into, renews, or affirmatively extends after the date
of entry of this Final Judgment, the Defendant shall maintain documents
sufficient to show:
1. The specific agreement to which the no direct solicitation
provision is ancillary;
2. The employees, identified with reasonable specificity, who are
subject to the no direct solicitation provision; and
3. The provision's specific termination date or event.
D. Defendants shall not be required to modify or conform, but shall
not enforce, any no direct solicitation provision to the extent it
violates this Final Judgment if the no direct solicitation provision
appears in Defendants' consulting or services agreements in effect as
of the date of this Final Judgment (or in effect as of the time a
Defendant acquires a company that is a party to such an agreement).
E. Nothing in Section IV shall prohibit a Defendant from
unilaterally deciding to adopt a policy not to consider applications
from employees of another person, or to solicit, cold call, recruit or
hire employees of another person, provided that Defendants are
prohibited from requesting that any other person adopt, enforce, or
maintain such a policy, and are prohibited from pressuring any other
person to adopt, enforce, or maintain such a policy.
VI. Required Conduct
A. Each Defendant shall:
1. Furnish a copy of this Final Judgment and related Competitive
Impact Statement within sixty days of entry of the Final Judgment to
each Defendant's officers, directors, human resources managers, and
senior managers who supervise employee recruiting, solicitation, or
hiring efforts;
2. Furnish a copy of this Final Judgment and related Competitive
Impact Statement to any person who succeeds to a position described in
Section VI.A.1 within thirty days of that succession;
3. Annually brief each person designated in Sections VI.A.1 and
VI.A.2 on the meaning and requirements of this Final Judgment and the
antitrust laws;
4. Obtain from each person designated in Sections VI.A.1 and
VI.A.2, within 60 days of that person's receipt of the Final Judgment,
a certification that he or she (i) has read and, to the best of his or
her ability, understands and agrees to abide by the terms of this Final
Judgment; (ii) is not aware of any violation of the Final Judgment that
has not been reported to the Defendant; and (iii) understands that any
person's failure to comply with this Final Judgment may result in an
enforcement action for civil or criminal contempt of court against each
Defendant and/or any person who violates this Final Judgment;
5. Provide employees reasonably accessible notice of the existence
of all agreements covered by Section V.A.5 and entered into by the
company; and
6. Maintain (i) a copy of all agreements covered by Section V.A.5;
and (ii) a record of certifications received pursuant to this Section.
B. For five (5) years after the entry of this Final Judgment, on or
before its anniversary date, each Defendant shall file with the United
States an annual statement identifying and providing copies of any
agreement and any modifications thereto described in Section V.A.5, as
well as describing any violation or potential violation of this Final
Judgment known to any officer, director, human resources manager, or
senior manager who supervises employee recruiting, solicitation, or
hiring efforts. Descriptions of violations or potential violations of
this Final Judgment shall include, to the extent practicable, a
description of any communications constituting the violation or
potential violation, including the date and place of the communication,
the persons involved, and the subject matter of the communication.
C. If any officer, director, human resources manager, or senior
manager who supervises employee recruiting, solicitation, or hiring
efforts of a Defendant learns of any violation or potential violation
of any of the terms and conditions contained in this Final Judgment,
that Defendant shall promptly take appropriate action to terminate or
modify the activity so as to comply with this Final Judgment and
maintain all documents related to any violation or potential violation
of this Final Judgment.
VII. Compliance Inspection
A. For the purposes of determining or securing compliance with this
Final Judgment, or of determining whether the Final Judgment should be
modified or vacated, from time to time authorized representatives of
the United States Department of Justice, including consultants and
other persons retained by the United States, shall, upon the written
request of an authorized representative of the Assistant Attorney
General in charge of the Antitrust Division, and on reasonable notice
to each Defendant, subject to any legally recognized privilege, be
permitted:
1. Access during each Defendant's regular office hours to inspect
and copy, or at the option of the United States, to require each
Defendant to provide electronic or hard copies of, all books, ledgers,
accounts, records, data, and documents in the possession, custody, or
control of each Defendant, relating to any matters contained in this
Final Judgment; and
2. To interview, either informally or on the record, each
Defendant's officers, employees, or agents, who may have their counsel,
including any individual counsel, present, regarding such matters. The
interviews shall be subject to the reasonable convenience of the
interviewee and without restraint or interference by any Defendant.
B. Upon the written request of an authorized representative of the
Assistant Attorney General in charge of the Antitrust Division, each
Defendant shall submit written reports or responses to written
interrogatories, under oath if requested, relating to any of the
matters contained in this Final Judgment as may be requested.
C. No information or documents obtained by the means provided in
this section shall be divulged by the United States to any person other
than an authorized representative of the executive branch of the United
States,
[[Page 60830]]
except in the course of legal proceedings to which the United States is
a party (including grand jury proceedings), or for the purpose of
securing compliance with this Final Judgment, or as otherwise required
by law.
D. If at the time information or documents are furnished by a
Defendant to the United States, the Defendant represents and identifies
in writing the material in any such information or documents to which a
claim of protection may be asserted under Rule 26(c)(1)(G) of the
Federal Rules of Civil Procedure, and the Defendant marks each
pertinent page of such material, ``Subject to claim of protection under
Rule 26(c)(1)(G) of the Federal Rules of Civil Procedure,'' then the
United States shall give the Defendant ten (10) calendar days notice
prior to divulging such material in any legal proceeding (other than a
grand jury proceeding).
VIII. Retention of Jurisdiction
This Court retains jurisdiction to enable any party to this Final
Judgment to apply to this Court at any time for further orders and
directions as may be necessary or appropriate to carry out or construe
this Final Judgment, to modify any of its provisions, to enforce
compliance, and to punish violations of its provisions.
IX. Expiration of Final Judgment
Unless this court grants an extension, this Final Judgment shall
expire five (5) years from the date of its approval by the Court.
X. Notice
For purposes of this Final Judgment, any notice or other
communication shall be given to the persons at the addresses set forth
below (or such other addresses as they may specify in writing to Adobe,
Apple, Google, Intel, Intuit, and Pixar): Chief, Networks & Technology
Enforcement Section, U.S. Department of Justice, Antitrust Division,
450 Fifth Street, NW., Suite 7100, Washington, DC 20530.
XI. Public Interest Determination
Entry of this Final Judgment is in the public interest. The parties
have complied with the Procedures of the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16, including making copies available to the
public of this Final Judgment, the Competitive Impact Statement, and
any comments thereon and the United States' responses to comments.
Based upon the record before the Court, which includes the Competitive
Impact Statement and any comments and response to comments filed with
the Court, entry of this final judgment is in the public interest.
Court approval subject to procedures of Antitrust Procedures and
Penalties Act, 15 U.S.C. 16.
United States District Judge.
[FR Doc. 2010-24624 Filed 9-30-10; 8:45 am]
BILLING CODE 4410-11-P