Businesses and HR professionals unfamiliar with competition law may assume that it only prohibits collusion when it comes to customer pricing. However, it is becoming increasingly apparent that competition law extends further than this. In particular, in-house employment counsel and HR professionals should be aware that competition law has relevance to employment practices, with potentially serious consequences for non-compliance.
Since 2020, several competition authorities in Europe, including the UK’s own authority, the Competition and Markets Authority (CMA), have shown the law and their powers can apply to a much wider range of ways in which businesses compete, including competing for talent. The authorities would describe this as competition between business in the “market for labour.”
Competition authorities around Europe have now brought investigations into alleged collusion on labour markets in a wide array of sectors; for example: footballers, information technology professionals, basketball players, lorry drivers, supermarket workers, and TV sports production staff. It is now apparent that authorities suspect that some business sectors may be prone to colluding on recruitment practices with their rivals when it comes to hiring workers. In some cases, this has been caused by a scarcity of suitable candidates; in other cases, there has been a desire to reduce costs, or sometimes both.
Whatever the justification, competition authorities have made it clear that they see the competition for talent between businesses as just another aspect of competition between businesses. Therefore, businesses must compete in this respect in compliance with competition law.
To raise awareness and to help businesses in the UK, the CMA published its own detailed guidance in September 2025, called “Competing for talent,” which explains how competition law applies to recruitment and employment practices.
This GT Alert provides a summary of key laws and considerations and where to go for more information.
Competition Law and the Labour Market
Under the Competition Act 1998, UK law prohibits agreements and practices between two or more businesses that prevent, restrict, or distort competition. Known as “Chapter I prohibition,” this law applies to both formal and informal agreements, arrangements, and information sharing where this may result in a restriction of competition.
Having the best staff is of course one way in which businesses compete to offer the best products or services to their own customers. Therefore, activities between businesses that may restrict this form of competition may infringe UK competition laws. The CMA notes that such practices can restrict employee mobility, bargaining power, and limit a business’s ability to grow.
Key Types of Anti-Competitive Practices
The CMA identifies several potentially restrictive practices in the labour market that may affect freelancers, temporary staff and permanent employees:
- No-poaching agreements, where businesses agree not to recruit or approach each other’s employees. These are unlawful, whether formal or informal.
- Wage-fixing, where businesses agree to set wage levels, benefits, or other employment terms, such as aligning salaries or capping wage increases.
- Exchanging competitively sensitive information, such as salary details or hiring plans, between competitors. Whether shared unilaterally, bilaterally, multilaterally, or even informally, this can reduce market uncertainly and harm competition.
For instance, in March, the CMA issued infringement proceedings and fined four sports production companies over £4 million for unlawfully exchanging pay information about freelancers. The businesses coordinated day rates and pay rises, aiming to align on how much to pay freelancers. According to the CMA, this was clear evidence of exchange of competitively sensitive information between employers.
Understanding the Legal Boundaries
Employers may wish to distinguish no-poaching agreements from no-solicitation clauses in commercial agreements (e.g., secondment or consultancy agreements), where a client agrees not to hire or solicit the service provider’s employees during or for a period after the contract is terminated. These clauses may raise competition concerns and businesses should consider whether they are necessary, sufficiently proportionate, and limited in scope, duration, and geography to not give rise to anticompetition concerns.
The CMA has also clarified that collective agreements with trade unions are generally exempt from competition law enforcement. However, if such agreements go beyond what is necessary for collective bargaining, such as coordinating non-anonymised pay rates or hiring strategies, they may still breach competition law.
Practical Considerations for Compliance
To enhance compliance with competition law, businesses may wish to:
- Educate HR and recruitment teams about the implications of competition law through internal training and compliance programmes,
- Put in measures to detect potential breaches,
- Protect competitively sensitive information and use anonymised data for benchmarking, and
- Report concerns to the CMA and seek leniency where appropriate.
- Fines up to 10% of annual worldwide turnover,
- Director disqualification (up to 15 years),
- Criminal prosecution (up to five years’ imprisonment), and
- Exclusion from public tenders and exposure to private damages claims.
Consequences of Breach
Penalties for breaching competition law may be severe and include:
Conclusion
Competition for talent is just as exposed to competition law enforcement as any other aspect of a business’s activities. Employers must understand and comply with competition law. By proactively addressing potential restrictive practices, businesses may avoid legal consequences and promote a fairer labour market for employees.