Cartelisation in Hiring Practices

Cartelisation in hiring practices refers to coordination between competing employers to reduce or eliminate competition for employees. It may involve agreements or understandings not to hire each other's employees, agreements to maintain wage levels, allocation of employees between employers, or exchange of sensitive information about salaries and recruitment.

A typical example is a “no-poach” or “no-hire” agreement, where two competing companies agree that they will not recruit each other's employees without permission.

This can harm employees because employers normally compete for skilled workers by offering higher salaries, better benefits, promotions and working conditions. When competing employers agree not to compete for workers, employees may have fewer employment opportunities and reduced bargaining power.

The Competition Commission of India (CCI) treats cartelisation as a form of horizontal anti-competitive conduct under Section 3 of the Competition Act, 2002.

Important current Indian position

India is now seeing significant competition-law scrutiny of alleged no-poach arrangements. In 2025, the CCI ordered an investigation concerning alleged no-poach arrangements involving Givaudan, DSM-Firmenich and IFF. The Delhi High Court subsequently allowed the investigation to proceed. This does not yet establish that the alleged conduct is ultimately illegal; the substantive competition-law issue remains under investigation.

1. Meaning of Cartelisation in Hiring

Hiring cartelisation may occur when competing employers coordinate instead of independently competing for employees.

Examples include:

• Company A agrees not to hire employees of Company B.
• Company B agrees not to recruit employees of Company A.
• Several employers agree to maintain similar salary ceilings.
• Employers divide recruitment territories or categories of workers among themselves.
• Companies agree that an employee can be hired only after obtaining permission from the employee's existing employer.
• Employers exchange sensitive information concerning salaries, bonuses or hiring plans.
• Companies collectively discourage employees from moving between them.

A no-poach agreement is therefore potentially comparable to a market-allocation arrangement: instead of allocating customers, competing businesses may effectively allocate employees or agree not to compete for them.

2. Why Hiring Cartels Are Harmful

Competition among employers benefits employees because employers have an incentive to attract talent.

If employers compete freely:

Employer A → higher salary → attracts workers ← Employer B → better benefits

But if they collude:

Employer A ↔ agreement not to hire from B ↔ Employer B

The employee loses an important source of bargaining power.

Possible consequences include:

• Suppressed wages
• Fewer job opportunities
• Reduced employee mobility
• Lower bargaining power
• Reduced incentives for employers to improve working conditions
• Artificial salary ceilings
• Difficulty changing employers
• Reduced innovation and efficient allocation of skilled labour

Recent competition-law analysis has increasingly recognized that the labour market itself can be a market in which competition may be restricted.

3. No-Poach Agreements

A no-poach agreement is an arrangement between employers not to recruit each other's employees.

For example:

Company A and Company B are competitors. They agree that neither company will approach or hire the other's employees.

This can be particularly problematic where the companies are major employers in a specialized labour market.

A broader arrangement might say:

“No employee of Company A can be hired by Company B unless Company A gives prior approval.”

Such an arrangement can substantially reduce an employee's freedom to seek better employment.

4. Wage-Fixing Agreements

Another form of labour-market cartelisation is wage fixing.

For example:

Five competing companies agree that they will not offer software engineers more than ₹10 lakh per year.

The companies are no longer independently competing for employees.

Even though the agreement concerns wages rather than the price of a product, its economic effect may be similar to traditional price-fixing: competitors coordinate instead of competing.

5. Exchange of Sensitive Employee Information

Cartelisation can also involve exchanging information such as:

• Current salaries
• Proposed salary increases
• Bonuses
• Recruitment budgets
• Hiring plans
• Employee retention packages
• Benefits
• Compensation structures

Information exchange becomes particularly problematic where it facilitates coordination between competing employers.

6. Indian Competition Law

Section 3 of the Competition Act, 2002 prohibits agreements that cause or are likely to cause an appreciable adverse effect on competition (AAEC).

Section 3(3) specifically deals with horizontal agreements between competitors and includes arrangements involving:

• Price fixing
• Limiting supply
• Market allocation
• Bid rigging/collusive bidding

Such agreements are generally presumed to cause an appreciable adverse effect on competition, subject to the statutory framework.

The important legal question for hiring cartels is whether coordination concerning labour recruitment and remuneration falls within the competition-law framework. Indian enforcement in this area is developing, and the recent fragrance-industry investigation is particularly significant.

Important Case Laws

1. Wipro Ltd. v. Beckman Coulter International S.A.

This is one of the most important Indian cases concerning employee non-solicitation.

The Delhi High Court examined a contractual arrangement concerning solicitation of employees. The Court recognized that a commercial agreement containing restrictions against actively inducing employees could, in appropriate circumstances, be enforceable.

Principle: A contractual restriction concerning solicitation of employees may be enforceable depending on its language, purpose and surrounding circumstances.

However, this case should not be confused with a competition-law finding that competing employers have formed an illegal cartel. It primarily concerns contractual non-solicitation, rather than a completed finding of labour-market cartelisation.

2. All India Film Employees Confederation & Ors. v. Film and Television Producers Guild of India & Ors. — CCI Case No. 19 of 2014

This is a particularly relevant Indian competition-law decision.

The CCI examined arrangements involving film-industry employee associations and producer associations. Certain provisions restricted producers to engaging members of specified associations and imposed restrictions concerning employment.

The CCI found certain provisions contrary to Section 3 of the Competition Act and issued a cease-and-desist direction. Importantly, the CCI rejected the argument that trade-union status automatically provided immunity from competition law.

Principle: Collective arrangements concerning access to employment opportunities can raise competition-law concerns, and labour-related status does not automatically place anti-competitive conduct outside competition law.

3. Air India Ltd. v. InterGlobe Aviation Ltd.

The CCI considered allegations concerning recruitment of pilots and whether the conduct amounted to an anti-competitive practice.

The CCI treated the particular dispute substantially as an employment/recruitment issue, rather than establishing a cartel between competing employers.

Principle: Merely hiring employees from another company, without evidence of an agreement or concerted action between competing employers, does not automatically establish cartelisation.

This distinction is extremely important:

Poaching by one company ≠ cartelisation.

Cartelisation generally requires some form of agreement, arrangement or concerted action between competitors.

4. Astrotalk Services Pvt. Ltd. — CCI, 2024

In this matter, allegations were made that Astrotalk had recruited consultants/employees who had previously been associated with another entity and offered them better remuneration.

The CCI observed that employees/consultants are generally free to move to another entity for better remuneration and treated the particular allegations primarily as matters of contract rather than a violation of Section 3.

Principle: Competitive recruitment by itself is not cartelisation. The critical distinction is between unilateral recruitment and coordinated conduct between competing employers.

5. European Commission — Delivery Hero / Glovo

Although this is not an Indian case, it is highly relevant to understanding the modern treatment of labour-market cartels.

The European Commission found that Delivery Hero and Glovo had engaged in anti-competitive coordination that included an agreement not to poach each other's employees, alongside other forms of coordination.

The Commission treated the conduct as a cartel in the labour market and imposed a substantial fine.

Principle: A no-poach arrangement between competing businesses can constitute a serious competition-law infringement because it restricts competition for employees.

6. United States v. Knorr-Bremse AG and Westinghouse Air Brake Technologies Corp.

In the United States, the Department of Justice challenged agreements under which competing companies allegedly agreed not to recruit one another's employees.

The case involved allegations of no-poach agreements affecting employee mobility. The companies ultimately agreed to substantial settlements.

Principle: Agreements between competing employers not to recruit employees can be treated as antitrust violations because they restrict competition in labour markets.

7. United States v. Adobe, Apple, Google, Intel, Intuit and Pixar/Lucasfilm-related cases

The U.S. technology-sector investigations concerning no-poach arrangements are important examples of how agreements restricting employee mobility can attract antitrust scrutiny.

The alleged arrangements involved companies agreeing not to recruit certain employees from one another.

Principle: Competing employers cannot necessarily avoid antitrust scrutiny merely because the restricted “market” concerns employees rather than customers or products.

8. Keshav Bihani v. Competition Commission of India, 2026

This recent competition-law litigation concerned traditional cartelisation rather than hiring practices. The court discussed the evidentiary requirements for establishing an agreement and the statutory presumption applicable to specified horizontal agreements.

Principle: Evidence of an agreement or concerted arrangement is central to establishing cartelisation, and once the statutory conditions for the presumption are satisfied, the evidentiary burden can shift to the party seeking to rebut the presumption.

This principle is relevant to labour-market cartel cases because authorities would similarly need evidence demonstrating coordination rather than merely showing that several companies independently adopted similar hiring practices.

7. Difference Between Legitimate Recruitment and Cartelisation

The existence of an agreement or coordinated conduct is therefore a critical factor.

8. No-Poach vs Non-Compete

These concepts should not be confused.

Non-compete

An employer and employee agree that the employee will not work for a competitor after leaving.

No-poach

Two or more employers/competitors agree that they will not recruit each other's employees.

The second arrangement directly concerns competition between employers in the labour market and therefore raises a distinct competition-law question.

9. Role of HR Departments

HR professionals can unintentionally become involved in labour-market cartelisation.

Risky conduct may include:

• HR heads agreeing on salary ceilings with competitors;
• Sharing confidential salary data;
• Creating informal “do not hire” lists;
• Agreeing not to approach employees of particular companies;
• Obtaining competitor approval before hiring an employee;
• Coordinating recruitment dates or compensation;
• Sharing future hiring plans with competing employers.

Therefore, HR departments should have clear competition-law compliance policies.

10. Defences and Legitimate Arrangements

Not every restriction concerning employees is automatically unlawful.

For example, a limited non-solicitation clause may arise in a legitimate commercial agreement, particularly where it protects genuine business interests.

The legal analysis may depend upon:

• Duration of the restriction
• Scope of employees covered
• Geographic scope
• Purpose
• Market power
• Whether the parties are competitors
• Whether there is an actual agreement
• Whether the arrangement produces legitimate efficiencies
• Whether less restrictive alternatives exist

Consequently, a narrow contractual restriction between two parties cannot automatically be equated with a broad labour cartel involving competing employers.

Conclusion

Cartelisation in hiring practices occurs when competing employers coordinate their recruitment, compensation or employee-mobility practices instead of competing independently for labour.

The most important examples are no-poach/no-hire agreements, wage-fixing arrangements, employee-market allocation and coordinated exchange of sensitive compensation information.

Indian law in this area is developing. Earlier CCI decisions sometimes treated individual recruitment disputes as employment or contractual matters, but the recent investigation into alleged no-poach arrangements in the fragrance industry represents a significant development. The Delhi High Court has allowed that investigation to proceed, but there has not yet been a final determination that the alleged arrangement violated the Competition Act.

The central distinction is therefore:

Independent hiring = generally legitimate competition.
Agreement between competing employers to restrict hiring = potential labour-market cartelisation.

Such coordination can suppress wages, restrict employee mobility and reduce competition for talent, making it an important emerging area of Indian competition and employment law.