USA Won't Let EBay Skate in Antitrust Case

 Courthouse News Service

Friday, April 26, 2013Last Update: 8:15 AM PT

(CN) - The federal government today will fight a motion to dismiss antitrust claims against eBay, which it accused of declaring "a truce in 'The War for Talent'" with TurboTax-maker Intuit.
    

 The United States sued eBay in 2012, claiming it and Intuit entered a "no-solicit" and "no-hire" agreement over recruiting and hiring engineers and scientists from 2006 to 2009.
     

"(E)Bay and Intuit, two large and successful technology companies, decided to stop competing for each other's employees, in essence declaring a truce in 'The War for Talent,'" the new brief opposing dismissal states.
     

"The most senior executives of the two firms reached and enforced an explicit agreement that they would not recruit each other's employees. Later, they agreed further that eBay would not hire Intuit employees at all. In doing so, the two firms deprived their employees of the opportunity to earn higher salaries and benefits and limited their opportunities for career advancement."
    

 The no-poach policy was a "naked" restraint on competition, "clearly condemned by antitrust law," the government claims.
    

 A hearing on the motion was scheduled for today (Friday).
    

 The motion in opposition states: "No later than August 2006, eBay and Intuit entered into an agreement limiting each others' ability to recruit and hire employees of the other company. The agreement, which continued at least until 2009, prohibited each firm from soliciting the other's employees for employment, and for over a year, prevented eBay from hiring any Intuit employees.
     

"(E)Bay and Intuit compete to hire specialized computer engineers, scientists, and other categories of employees. According to eBay's senior vice president for human resources, and co-author of 'The War for Talent,' soliciting the employees of other firms in similar industries is an important arena of competition."
    

 EBay claims the no-solicitation agreement actually was between eBay and Scott Cook - an outside director on eBay's board, and founder and chairman of the executive committee of Intuit's board - not between eBay and Intuit. It claims that "a single overlapping director shields the companies against Section 1 [Sherman Act] scrutiny," the government says in its motion.
    

 Uncle Sam disagrees, claiming that this "wholly novel view would potentially create a chasm in Section 1 enforcement."
    

 EBay also claimed that the government failed to allege actual harm to broader market competition and that a "director interlock permitted by Section 8 of the Clayton Act preempts enforcement of Section 1."
     Again, the government disagreed.
     

"(E)Bay's motion to dismiss essentially ignores the facts alleged in the complaint, which must be taken as true for present purposes, and instead argues its own facts," the brief states. "eBay then offers unprecedented and incorrect interpretations of law that are inconsistent with basic antitrust principles and which would potentially confer broad antitrust immunity on firms with common directors."
    

 The government added: "Throughout the course of the agreement, eBay repeatedly declined opportunities to hire or interview Intuit employees, even when eBay had open positions for 'quite some time,' when the potential employee 'look[ed] great,' or when 'the only guy who was good was from [I]ntuit.' Both Intuit and eBay acknowledged that throughout the agreement they 'passed' on 'talented' applicants, consistent with their anticompetitive agreement.

The repeated requests from lower level employees at both companies to be allowed to recruit employees from the other firm demonstrates that there were opportunities for employees to move between the two firms and that employees were denied those opportunities."
     

California also sued eBay over the "handshake agreement," in 2012.
    

 EBay sought dismissal of California's complaint in March, claiming the state failed to show that the conduct harmed competition or warranted injunctive relief.
     

U.S. District Judge Edward Davila is scheduled to hear both cases today in San Jose.