Collusion in Labour Markets: Developments in UK and EU Policy & Enforcement

Arrangements between businesses concerning the recruitment and compensation of employees and the exchange of competitively sensitive information with rivals have become an enforcement priority for the EU and UK competition authorities. This LawFlash explains the HR practices that are illegal under competition law, the approach taken by the European Commission (EC) and the UK Competition and Markets Authority (CMA), and the limited circumstances when such practices may be justified.

It is illegal under UK and EU competition law for businesses to have any kind of formal or informal understanding not to hire, approach, or solicit each other’s employees, which includes agreeing to consent requirements before such actions are taken (No-Poach Agreements). It is also illegal for businesses to collude with each other to align, cap, or coordinate employees’ terms of employment—such as salaries, day rates, and bonuses (Wage-Fixing Agreements).

These prohibitions extend to written contracts, informal understandings, verbal arrangements, and “gentlemen’s agreements.” The restrictive obligations within No-Poach Agreements and Wage-Fixing Agreements need not be mutual or reciprocated. Lastly, it is illegal for companies to share competitively sensitive information, such as hiring intentions and terms of employment (Information Exchange).

The consequences of infringement are significant. Companies may face fines of up to 10% of annual worldwide turnover, as well as private damages actions and exclusion from participating in public procurement contracts. Should the arrangement comprise cartel conduct, the executives and directors may face criminal sanctions and director disqualification.

COMPETITION POLICY & ENFORCEMENT IN THE UK

The labour market is an enforcement priority for the CMA. In January 2024, the CMA published research on competition and market power in UK labour markets. The CMA publicly stated that its findings—one of which included that up to 3% of businesses use No-Poach Agreements justified its focus on labour markets.

That position was reinforced in the CMA’s 2025 guidance, Competing for talent, in which the CMA underscored the application of competition law to labour market arrangements and highlighted the illegality under competition law of No-Poach Agreements, Wage-Fixing Agreements, and Information Exchange. The CMA also emphasised that businesses may compete for labour even where they do not compete for customers, and that the rules apply to freelancers and contracted workers as well as employees.

As regards Information Exchange, the CMA flagged that even unilateral disclosures of current or future pay intentions may give rise to competition law concerns, particularly where the information is confidential, attributable to a specific business, or relevant to future competitive conduct. By contrast, benchmarking in respect of wages is less likely to be problematic where it uses genuinely public or sufficiently anonymised and aggregated data.

The CMA has already taken formal enforcement action in this area. In March 2025, the CMA fined five sports broadcasters £4.2 million after finding that they had unlawfully shared competitively sensitive information relating to the rates of pay for freelance workers and aligned aspects of their approach to remuneration. A separate investigation into (among other things) suspected arrangements relating to the hiring or recruitment of certain employees between fragrance and fragrance ingredient suppliers is ongoing.

COMPETITION POLICY & ENFORCEMENT IN THE EU

In its May 2024 Competition Policy Brief, the EC stated that it considers that Wage-Fixing Agreements and No-Poach Agreements will generally qualify as restrictions “by object” under Article 101(1) of the Treaty on the Functioning of the European Union (TFEU). This is important because, once an arrangement is so characterised, the investigating competition authority does not need to prove that the arrangement had an effect on competition in order to establish an infringement.

That said, the position is not absolute. In his opinion from May 2025 in Case C-133/24, Advocate General Nicholas Emiliou stated that, although No-Poach Agreements between actual or potential competitors will generally qualify as restrictions by object, that conclusion should not always be automatic. The opinion concerned an agreement between Portuguese professional football clubs, concluded during the COVID-19 pandemic, under which clubs agreed not to sign players who had unilaterally terminated their contracts during that exceptional period. Because the arrangement was said to be aimed at preserving the fairness and integrity of the competition and enabling the season to be completed, the Advocate General considered that the national court was entitled to examine the agreement’s specific context, limited scope, rationale, and necessity before deciding whether it was unlawful.

On 30 April 2026, the European Court of Justice (ECJ) decided Case C-133/24, and in so doing, it broadly accepted Advocate General Emiliou’s opinion. The ECJ determined that the agreement between the clubs was formed in a “very unique” economic and legal context caused by the COVID-19 pandemic and that the No-Poach Agreement may have achieved an objectively pro-competition aim; ensuring the stability of player rosters in the First and Second Divisions. The case had been returned to the Portuguese competition authority for a final decision in the light of this guidance by the ECJ. This case shows that the circumstances when No-Poach Agreements may be permissible are limited and will be highly fact- and context-specific.

A business seeking to defend a No-Poach Agreement will usually argue that the agreement is legitimate because, for example, the restriction imposed is ancillary to a legitimate wider M&A transaction. No-Poach Agreements may also be defended on the basis that they produce objectively pro-competitive efficiencies. However, the EC’s 2024 policy brief is clear that these arguments will rarely succeed. In its view, no-poach restrictions are unlikely to qualify as ancillary restraints unless they are objectively necessary and strictly proportionate and will unlikely deliver pro-competitive efficiencies where the stated objective could be achieved by less restrictive means, such as confidentiality obligations, proportionate training-cost repayment provisions, or garden leave.

As to enforcement, national competition authorities of EU member states are likely to remain the principal enforcers because labour markets are often national, regional, or local in scope. But the EC is actively investigating labour-market restrictions and will intervene where conduct has a broader cross-border dimension. That was illustrated by its June 2025 decision in Case AT.40795 fining two major online delivery platforms a total of €329 million for cartel conduct that included a No-Poach arrangement, alongside an Information Exchange and market allocation. The EC described that case as its first labour-market cartel decision.

EU national competition authorities are now taking enforcement action against No-Poach Agreements across several sectors and forms of conduct:

• In June 2025, the French competition authority, in Decision No. 25-D-03, fined engineering and IT consulting companies €29.5 million for informal no-poach “gentlemen’s agreements”
• In January 2026, the Romanian competition authority fined eight companies €32.15 million for agreeing not to compete for specialised workers and not to recruit each other’s staff without prior consent
• In March 2026, a Portuguese court in Case IDF/2025/2 upheld separate fines of €3.09 million imposed on three companies for agreeing not to recruit or approach each other’s employees
  • In the same month, the Portuguese competition authority, in Case PRC/2025/2, fined two temporary employment agencies €4.5 million over a no-poach clause in an industry code of ethics
  • Codes of ethics appear to be vulnerable, with Slovakia’s competition authority, in July 2025, fining a trade association $10,000 for no-poach clauses contained within the association’s code of ethics
  • The above cases show that authorities are pursuing not only bilateral clauses but also restrictions found in trade association rules, codes of ethics, and informal understandings

PRACTICAL STEPS FOR BUSINESSES

• Businesses should audit contracts and any other informal arrangements including outsourcing agreements, secondment arrangements, joint ventures, consultancy terms, and supplier contracts for clauses that restrict hiring or solicitation of staff
• M&A documents warrant particular attention: no-poach provisions are frequently embedded in share or asset purchase agreements and shareholder arrangements, which may never have been reviewed by competition counsel
• Trade association membership rules and codes of ethics should also be checked—recent cases show that industry body rules can be treated as No-Poach Agreements in their own right
• Businesses should also be cautious when benchmarking pay or benefits: data-sharing exercises should use genuinely public information or properly anonymised and aggregated data from an independent intermediary and should not reveal current or future competitive intentions
• Where a non-solicitation clause is thought to be necessary, it should be reviewed by competition counsel to ensure it is justified clearly, tied to a legitimate commercial arrangement, and kept no broader than reasonably required in scope, duration, and coverage

Trainee associate Jack Manton contributed to this LawFlash.