The Competition and Markets Authority (CMA) has issued new guidance, Competing for talent, to help those involved in recruiting and retaining workers understand how competition law applies to their work. This builds on the guidance published by the CMA in February 2023, which we covered in our earlier alert: Anti-competitive behaviour: Guidance issued.
Facts
The introduction to the new guidance points out that HR professionals, recruiters and employers may be in touch as part of professional networks and industry forums, and that many of these interactions will not be problematic from a competition law perspective. However, the guidance goes on to explore the three main types of anti-competitive behaviour that may occur in labour markets pointing out that all are forms of business cartels and can involve freelancers and contracted workers as well as permanent employees. These are:
- No-poaching: this happens when a business agrees not to hire or poach another business’s employees, including a no-hire agreement, or an agreement not to solicit another business’s employees by approaching them with a job opportunity, or an agreement not to approach or hire another business’s employees without the other business’s consent. These arrangements do not need to be mutual to breach competition law.
- Wage-fixing: this happens when businesses that compete for the same type of employees agree to fix pay, benefits or other terms and conditions of employment including agreeing the same wage increase rates or setting caps on pay (which could occur when a trade association recommends pay rates for roles within a sector).
- Exchange of competitively sensitive information and benchmarking: the guidance highlights that exchanging information between competing businesses is only problematic when it involves information that is ‘competitively sensitive’ (for example, decisions relating to hiring workers or setting pay or benefits which: i) reduce uncertainty as to the operation of the market in question; and/or ii) influence the competitive strategy of other businesses. Whether an exchange of information between businesses breaks competition law will depend on the nature of the information, how the information is exchanged and market characteristics. The guidance uses a real life example from March 2025, when the CMA issued an infringement decision to five businesses involved in the production and broadcasting of sports content and imposed fines on four businesses totalling over £4 million. The CMA found 15 instances where a pair of companies unlawfully shared sensitive information about pay with each other, including day rates and pay rises.
The guidance goes onto look at collective negotiations between workers and employers, making it clear that the CMA will not seek to enforce competition law whenever workers and employers reach a genuine collective bargain.
The guidance repeats the practical steps recommended in 2023 which employers should take to avoid breaking competition law:
- Understanding how competition law applies to labour markets
- Not agreeing to fix wages
- Not agreeing with another organisation not to approach or hire each other’s employees
- Not sharing sensitive information about their business or employees with a competitor (either directly or indirectly, e.g. through an independent third-party provider)
- Providing recruitment staff with training on competition law and how it applies in the recruitment context
- Ensuring solid internal reporting processes are in place, and that staff are aware of these and how they can use them (including raising issues under a whistleblowing procedure)
The guidance also addresses the consequences of breaking the law for both businesses and individuals. For businesses these include being fined up to 10% of worldwide annual turnover and being ordered to change behaviours. Individuals could be sentenced to up to five years in prison and/or a fine, and directors can be disqualified from managing a company for up to 15 years.
Finally, the guidance gives contact details for reporting suspected anti-competitive behaviour to the CMA.
What does this mean for employers?
This guidance is a helpful practical reminder to employers of the prohibition on anti-competitive behaviour in labour markets which those recruiting or seeking to retain employees or sharing information in a market sector with competitors need to be mindful of. Failure to do so could lead to professional and personal consequences for both businesses and the employees involved. The practical steps to avoid breaking competition law set out in the guidance should be revisited and heeded.
