Train HR staff on competition law, advises UK’s regulator

As we reported earlier in the week, the Competition and Markets Authority, the CMA, has published new guidance for employers to help them comply with competition law when recruiting. They set out the legal obligations in relation to no-poaching agreements (where businesses agree not to hire each other's employees), wage-fixing agreements (where businesses competing for the same talent pool fix salaries), and sharing information about the terms and conditions of employees’ contracts. 

The CMA recommends that employers should:
- understand how competition law applies to no-poaching and wage-fixing agreements;
- train HR staff on competition law and how it applies to agreements within recruitment; and
- ensure reporting processes are in place so staff can report no-poaching agreements or wage-fixing.

So, let’s get a view on this. Alan Davis is a competition lawyer and earlier he joined me by phone to discuss the new guidance.  Given that the CMA has recommended that businesses should train HR staff on competition law and how it applies to agreements within recruitment; I asked him what that training might look like: 

Alan Davis: “Essentially, what we would envisage would be getting together those individuals who are at the coalface, if you like, of recruitment and who do, or have the potential to, interact with competitors in the market, so it’s selecting the right people to attend that training, first of all. Secondly, I think what we would be doing would be educating them about the principles of competition law. 
We would expect that most businesses would already have competition law compliance programmes already in place anyway with respect to compliance with competition law generally. For example, that they don't enter into anti-competitive agreements with their competitors for the supply of goods and services, price fixing cartels, that sort of thing. Where I suspect it's slightly less understood is how the competition rules apply in a HR or recruitment context and I think that's why the CMA issued this guidance. So the training would cover the high-level principles on, you know, what is competition law and, secondly, why is it important to comply with competition law because, of course, breaching competition law has serious consequences and the types of breaches we're talking about are regarded as serious and therefore give rise to a high risk of penalties being imposed, up to 10% of the total turnover of the companies concerned, as well as things like director disqualification. So, you can be disqualified as company director for up to 15 years if you were involved with, or ought to have known about, a breach of competition law. So, understanding that context is obviously important, but then drilling down into explaining to the HR professionals how does competition law apply to your day to day activities? What are the do's and don'ts of what you can and cannot do? That could be do not enter into restrictions of competition like, no poaching, agreeing not to solicit your competitors employees and vice versa but, on the other hand, you know, what information can be shared or not shared? So, it is lawful under certain circumstances to have some sort of benchmarking surveys that are carried out so long as the data is sufficiently aggregated anonymised and historic, but it's unlawful to share live commercially sensitive information about your current and future wage levels, for example, with one of your direct competitors because that would lead to alignment between the competitors. So, explaining all of those things and then giving concrete examples about some of the enforcement cases that have been brought in these other jurisdictions which really bring, I suppose, the principles to life for those HR professionals and then giving them an opportunity to engage in a sort of Q&A around the things that they're not sure about, that they've come across, particular things that they think might be a problem or not a problem, and just given them the opportunity to actually have that interactive training input.”

Joe Glavina: “Anything else for HR to be aware of, Alan?” 

Alan Davis: “Well, there's a couple of other things. The CMA has quite rightly recommended that not only should companies be making sure that their recruitment and HR teams are up to speed on these issues, and providing training to them, the company should also be making sure that there's an appropriate speak up or whistleblowing policy within the firm which allows individuals to come forward to say, look, one of my competitors has approached me and asked me to do something, what should I do? Or have I broken competition law? Is there a risk, something I need to deal with? So I think making sure that there are those speak up policies in place which include these types of scenarios is very important. The secondly, to bear in mind that if a company finds that it has broken competition law, or believes it has breached competition law, through engaging in one of these agreements with a competitor, that there is the possibility to apply to the CMA for what's called ‘leniency’ which, again, is basically self-reporting. So, whilst admitting that you have breached competition law it is very valuable for the company concerned because it allows you to, hopefully, get immunity from both director disqualification, criminal prosecution, and 100% immunity from penalties, but only if you're the first through the door to report that particular breach and it can be very significant. When we look at the sort of fines that we've seen imposed on businesses across the EU, leniency can actually be a valuable tool.”

The CMA’s guidance is very brief, so it won’t take long to read in full, and we do recommend HR professionals to read it. We have put a link to it in the transcript of this programme.

LINKS
- Link to CMA guidance for employers
- CMA press release