Friday, January 25, 2013

EBay Moves to Dismiss DOJ Antitrust Complaint

Last November, I posted about the Department of Justice suit against eBay for its alleged illegal hiring pact with Intuit. The DOJ contended that the eBay-Intuit agreement not to poach each other's employees violated both the rule of reason and a per se analysis under Section 1 of the Sherman Act.

Predictably, eBay struck back, filing on Tuesday a broad motion to dismiss the case. The motion sets forth a three basic problems with the DOJ theory: (1) the Complaint did nothing more than allege a conspiracy between eBay officers and directors, which is not actionable; (2) the DOJ never attempted to establish any economic harm or anticompetitive impact from the hiring pact; and (3) the pact does not meet the test for a per se Sherman Act violation.

The last point is the most relevant as it relates to non-compete law. EBay's point seems to be that traditional no-hiring pacts have to be judged by a reasonableness standard, and that there is no precedent to equate them with price-fixing or bid-rigging schemes. Essentially, eBay is saying that a no-hiring pact is akin to a non-compete arrangement (though, in fact, it's narrower and rarely subject to marketwide abuse). Non-competes are judged according to whether they're reasonable. And that should be the standard in the DOJ's case. It's pretty clear under the Complaint the DOJ is bypassing any sort of market analysis for why the hiring pact was impermissibly anticompetitive.

A copy of eBay's motion is embedded below.

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