The study of demand-side concentration in the labour market could therefore be at odds with the traditional role of competition authorities. In fact, non-poaching agreements allow companies to reduce their costs by reducing their personnel costs, and they can pass this reduction on to end users. Thus, non-poaching clauses prevent employees and consultants from reintersing into the protected business and employing employees and consultants with their new business. Starr noted that a fast food worker may want to change jobs because the new job offers a promotion or other factors. “Maybe it`s because it`s closer to home, maybe they like the boss or their friends work there, or it`s a better work environment. All this will not be reflected in the salaries themselves. There could be what economists would call “balancing differences” – other workplace conveniences that will satisfy them outside of compensation. The practice of “non-poaching” deals in the fast food industry is under review with a group of 11 Democratic attorneys general who announced last week that they were getting information about them from eight fast food chains such as Arby`s, Burger King, Dunkin` Donuts, Wendy`s and Panera Bread. Franchisors entered into these agreements with their franchisees to prevent employees from leaving one franchise to join another within the same chain. According to Maura Healey, A.G. of Massachusetts, who is leading attorneys general in this case, “the agreements limit the ability of low-wage workers to seek promotions and earn a better living,” according to a New York Times report.
Attorneys General claim that 80% of fast food chains have no-poaching agreements. The eight channels have until August 6 to intervene. Focusing on labour market demand is not part of the traditional approach of competition policy. However, as explained above, non-poaching agreements can affect competition in the labour market. In the United States, this damage has been the subject of some recent cases; in Europe, it is not yet clear whether competition authorities will investigate such cases or whether labour market concerns will continue to be secondary to product market investigations. Starr said the evidence was contradictory in the impact on costs of non-compete clauses. “If you look at the people who have signed non-compete clauses compared to those who don`t, it seems that those who sign them actually make a little more money,” he said. This may be because these workers are not low-wage workers, but executives or technology workers, he explained. At the same time, his research showed a wage increase of up to 10% for workers who are informed of non-compete obligations when they receive the job offer, not on the day they start the job. What is a “no poaching” clause? A “no poaching” clause is a written or oral promise made by one or both parties to an agreement not to compete for employees, either during the term of the contract or for a period after the termination of the employees of the other party or of either party.