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Faces No-Poach Enforcement Question After Fines
The ’s decision to fine and a combined €329 million in for entering into has pushed competition law into new territory: labour markets. For years, antitrust enforcers focused on and in product markets, leaving employers’ coordinated hiring restraints largely outside their reach. Now, with that landmark penalty in hand, the is facing a pointed question—should Indian antitrust law follow suit and treat no-poach arrangements as ?
A detailed analysis by law students at makes the case that it should. Drawing on the EU enforcement action, economic studies, and financial data from India’s food-delivery platforms, the analysis argues that suppress wages, curtail worker mobility, and weaken bargaining power in ways that are functionally indistinguishable from classic cartels. The authors’ central claim is stark: Indian labour law is structurally incapable of addressing , and competition law must fill the gap.
A Historic First for Labour Markets
, also known as , are pacts under which firms agree not to recruit or hire each other’s employees. They can be written or informal, and they are frequently justified as necessary to protect proprietary knowledge or maintain workforce stability. The , however, took a far more sceptical view when it examined arrangements between and .
Rather than focusing on price effects in downstream markets, the examined how the conduct restricted competition in the labour market itself. In doing so, it recognised workers as participants in a market that is capable of being distorted through collusive conduct. The fines sent a clear signal across Europe: agreements that eliminate competition for employees can be treated as even when consumers never see a price increase.
That theoretical shift matters enormously for India. The Commission’s approach recognised that labour is not merely an input into production but a market in its own right. Workers offer labour, and employers bid for it. When competitors agree not to bid, the market fails.
“When firms agree not to hire each other’s employees, they effectively eliminate wage bidding between themselves.”
Why Are Economically Harmful
The analysis draws a direct economic parallel between and traditional cartels. In a cartel, firms coordinate to avoid competing on price, leading to higher prices and reduced consumer welfare. In a , firms coordinate to avoid competing for workers, leading to suppressed wages and reduced worker welfare. The core feature is the same: suppression of competition through coordination between competitors.
The evidence cited for this proposition is compelling. A study by Matthew Gibson, analysing the investigation into no-poach arrangements among major technology companies—including , , , , , , , and —found that employees at colluding firms earned around 6% less than employees at non-colluding firms. Once the agreements were discontinued, salary levels at the colluding firms began to align with those offered elsewhere. The study concluded that the Silicon Valley had a significant negative effect on worker compensation.
The significance of this finding is hard to overstate. It shows that the damage caused by is measurable and real. Workers with fewer outside options lose bargaining power, and firms can keep wages artificially low without fear of losing talent to competitors. Over time, this leads to wage stagnation, reduced labour mobility, and inefficient allocation of skilled workers across the economy.
“The fact that the harm is suffered by workers rather than consumers does not alter the anti-competitive nature of the conduct.”
The Enforcement Gap in India
Indian competition law has historically concentrated on cartels in product markets. Labour market distortions have rarely been examined as a competition law issue. This is partly because the harm caused by does not easily fit within a price-centric framework. There is no direct consumer price effect, no obvious output restriction, and no traditional cartel marker that regulators are trained to detect.
The existing labour law architecture in India is also ill-equipped for the problem. Labour and employment laws focus primarily on wages, working conditions, , trade unions, grievance redressal, strikes, and lock-outs. They operate on an employer-employee axis and do not contemplate a scenario involving structural collusion among employers to bring down production costs. The unfair labour practice framework, largely contained in the , does not explicitly cover no-poach or arrangements across establishments.
This regulatory lacuna ignores the detrimental impact of such agreements on worker mobility and wage progression. The absence of immediate consumer price effects has often been used to justify inaction, but competition policy is not only about consumer prices. It also seeks to promote efficiency, prevent concentration of economic power, and maintain a competitive process. Labour is a critical factor of production, and limiting the flow of labour and its price can distort competition at a fundamental level.
Data From India’s Food-Delivery Sector
The analysis uses publicly available financial data from India’s two dominant food-delivery platforms, and , to illustrate the concern. ’s consolidated adjusted revenue increased by approximately 714% between and , yet its employment benefit expense did not show a similar increase. registered a 444% increase in profits over the same period, while its employee benefit expense rose by only 73.33%.
The authors describe the growing plateau in employment benefit expenses as evidence of a possible no-poach understanding, one that would have the effect of suppressing wages. They acknowledge that such data alone does not prove collusion, but it highlights a pattern worth scrutiny. In a competitive labour market, one might expect employment costs to track revenue and profit growth more closely, particularly in a rapidly expanding sector. The analysis argues that this divergence, combined with the concentration of employment opportunities in a handful of dominant firms, makes the food-delivery industry a natural candidate for competition law attention.
A Path Forward: Recommendations for the CCI and Labour Regulators
The analysis sets out a series of concrete recommendations aimed at strengthening the ability of the and labour regulators to address employer coordination.
First, the , which deals with , should be amended to include a clause covering:
“Entering into, or enforcing, any agreement, arrangement, or understanding with another employer, associations of employers, or entity, that, directly or indirectly, restricts, limits, or suppresses the mobility, recruitment, wage negotiation, hiring or employment terms of workers, including no-poach or arrangements across establishments.”
Second, the should conduct and release its own market study identifying practices that constitute labour market collusion, and issue a guidance note or policy brief addressing such conduct under .
Third, the role of recognised trade unions should be expanded to allow them to challenge coordinated practices across establishments. Currently, unions primarily raise disputes against individual employers. A strengthened legal framework could permit unions to challenge collective employer practices that negatively affect workers across an entire sector.
Fourth, the should take active steps to spread awareness. It can organise workshops and issue advisories for human resources departments, employer associations, and industry bodies explaining how informal or wage coordination can harm workers. The analysis also encourages employers to protect legitimate business interests through alternatives such as non-disclosure agreements and minimum service periods.
Finally, the burden could be shifted to companies by requiring them to disclose, in annual compliance filings under labour laws, whether they have entered into any inter-employer hiring restrictions or coordination arrangements.
A Blind Spot India Can No Longer Afford
Labour laws have long been concerned with managing the interface between employers and employees—salaries, working conditions, dispute resolution, and job security. Yet in a contemporary, labour-intensive economic system, that approach is no longer sufficient. Labour markets do not operate in a vacuum. They are shaped by how firms compete with each other for workers.
Workers are not only consumers whose welfare improves when prices fall. They are also suppliers of a critical resource: human capital. When a labour market is distorted, the damage is severe and enduring. are an obvious candidate for the regulatory blind spot. They may be presented as a business practice aimed at maintaining stability and protecting proprietary knowledge, but when firms enter into an understanding with their competitors not to hire each other’s workers, the effect is to lessen wage competition and hamper workers’ flexibility, which in turn hurts workers’ bargaining power.
The economic damage caused by such agreements is neither theoretical nor speculative. The ’s €329 million fines show that competition enforcers can and should act. The question now is whether the will turn its attention to labour-market before the practice becomes further entrenched in India’s fast-growing digital economy.
