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Silicon Valley firms, Justice Department near agreement on hiring investigation

Several high-tech firms are nearing an agreement on hiring practices that would appease federal antitrust regulators who have been investigating allegations that those firms have agreed not to poach one another's employees to keep wages down.

The Justice Department has been investigating such alleged practices at Silicon Valley firms, including Apple, Google, Intel and Adobe. The companies, described as a handful in total, have made significant progress in talks with Justice to change anti-hiring agreements to avoid a lawsuit by the agency in federal courts, according to a source familiar with the talks.

The Washington Post reported in June 2009 that the Justice review was underway. The review has been lengthy because of the complexity in determining whether companies had made anti-poaching agreements in a way that hurt competition and employees.

The coordination on hiring by the firms points to the competitive landscape for engineering and executive talent at high-tech firms. Mark Hurd, former CEO of Hewlett-Packard, was sued earlier this month by his former employee for taking a job with competitor Oracle. HP said Hurd’s departure would put the printer and computer giant’s trade secrets at risk.

Antitrust experts said anti-poaching agreements are not uncommon or problematic, per se. But when companies agree not to hire from one another to keep wages down, the practice becomes anticompetitive and harmful to employees and the marketplace.

The Wall Street Journal first reported Thursday that an agreement was near.

The talks could fall apart, but the companies are motivated to reach a private agreement in cooperation with Justice to avoid a federal lawsuit. A battle in courts with Justice could also open a floodgate of private individual and class action complaints against the firms.

The probe looked into anti-hiring agreements of executives and lower level employees, according to a source.

By Cecilia Kang  | September 16, 2010; 11:40 PM ET
Categories:  Antitrust, Apple, Google  
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Next: House lawmakers close to net neutrality bill

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