Competition law applies to the labour market too

Agreements between competitors to fix wages or not to hire each other’s employees may constitute serious infringements of competition law. This is the key finding in the joint report on competition and labour markets in the Nordics published by the Nordic Competition Authorities today.

The report explains how agreements between companies not to hire each other’s employees or agreements to fix wages can lead to less efficient allocation of resources and have negative effects on employees’ working conditions. It also looks at evidence indicating that it is not uncommon for Norwegian companies in a range of different industries to enter into agreements not to hire each other’s employees.

Agreements between competitors to fix wages or not to hire each other’s employees may constitute an infringement of competition law. This is consistent with the approach taken by other European competition authorities which in recent years have sanctioned wage-fixing and no-poach agreements either as stand-alone infringements or infringements co-existing with other infringements of competition law, such as price fixing.

Moreover, the report finds that a relatively high proportion of employees and employers in the Nordic countries are members of trade unions and business organisations. This might mitigate some of the potential negative effects of wage-fixing and no-poach agreements.

While no-poaching and wage-fixing agreements may harm competition, the memorandum recognises that there may be alternative underlying motivations for firms to engage in these agreements, such as reducing labour costs, protecting investment in training, or preserving trade secrets and proprietary information.

Moreover, the competition laws in the Nordic countries contain exemptions for collective bargaining agreements on wages etc. from the general prohibition of anti-competitive agreements between companies in the laws. The exemptions imply that agreements or arrangements related to collective bargaining agreements negotiated by organised social partners (trade unions and employers’ organisations) are not breaching competition law.

This is a joint press release from the Nordic countries’ competition authorities. If you have any questions regarding the report, please contact The Norwegian Competition Authority.


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