Gov't sues eBay over noncompetition agreement

November 16, 2012

WASHINGTON (AP) - The Justice Department alleged Friday that Meg Whitman, the former CEO of eBay Inc., was intimately involved in making an anticompetitive agreement that prohibited eBay and Intuit Inc. from hiring each other's employees.

In a federal lawsuit, the government said Whitman and Scott Cook, Intuit's founder and executive committee chair, were involved in forming, monitoring and enforcing the anticompetitive agreement. California Attorney General Kamala Harris filed a separate lawsuit under state law, which she said contains stronger protections against anticompetitive practices than federal law.

Cook was a member of eBay's board of directors at the same time he was making complaints about eBay's recruiting of Intuit employees.

"eBay's agreement with Intuit hurt employees by lowering the salaries and benefits they might have received and deprived them of better job opportunities at the other company," said acting Assistant Attorney General Joseph Wayland, who is in charge of the U.S. Justice Department's antitrust division. The division "has consistently taken the position that these kinds of agreements are per se (on their face) unlawful under antitrust laws."

The two companies compete directly for specialized computer engineers and scientists.

At Hewlett Packard Co., where Whitman is now chief executive, company spokesman Michael Thacker said Whitman would have no comment. Whitman ran unsuccessfully for governor of California as a Republican in 2010.

eBay spokeswoman Lara Wyss said the Justice Department and the California attorney general "are taking an overly aggressive interpretation in their enforcement of antitrust law in this area. eBay will vigorously defend itself." The company said both the federal and state governments "are using the wrong standard in these matters. We compete openly for talent in a broad, diverse global market across a range of industries and professional disciplines, and eBay's hiring practices conform to the standards that the Department of Justice has approved in resolving cases against other companies."

The federal lawsuit seeks to prevent eBay from enforcing the agreement and from making similar agreements with other companies.

According to the Justice Department complaint filed in federal court in San Jose, Calif., the agreement was in place from 2006 to 2009. Intuit is already subject to a settlement barring it from making such agreements.

The California lawsuit would allow the state to recover damages and ensure that the companies do not engage in such conduct in the future.

California's lawsuit lists Intuit as a co-conspirator.

"If California is going to continue to be the high-tech capital of the world, we can't allow anticompetitive conduct that prevents talent from going where it's put to its highest use," Harris said in a statement.

Intuit spokeswoman Diane Carlini said the company is not named in the federal lawsuit and has resolved issues stemming from a similar complaint filed against it and other Silicon Valley companies in 2010.

"This is an eBay matter," Carlini said of the federal lawsuit filed Friday.

eBay, the online auction site, was not part of the previous case.

Carlini said Intuit, which operates a variety of online financial services that include TurboTax and the personal finance software Quicken, is cooperating with the attorney general's office in the separate state lawsuit. But she said any complaints about the company's past recruiting practices have been resolved.

"We don't believe we have any issues," she said.

eBay's revenues in 2011 were $11.7 billion. Intuit's 2011 revenues were $3.85 billion.