Fundamentals of Human Resource Management 5th Edition by Raymond Noe, John Hollenbeck, Barry Gerhart, Patrick Wright

Exercise 20

Sued for Fixing Pay Rates
Just two years after settling a probe by the U.S. Department of Justice, several giants of the high-tech industry again found themselves in court, defending claims that they were interfering with competition in the labor market. The latest charges found their way to a federal district court after five software engineers filed a complaint that five companies had agreed not to try to recruit away talent from one another. The impact, said the engineers, was that companies would keep pay lower by conspiring rather than competing in the labor market.
The companies charged in this lawsuit-Apple, Adobe Systems, Google, Intel, Intuit, and Pixar-had previously settled an investigation into their hiring practices. The Justice Department said promises not to cold-call one another's employees amounted to restraints on competition, and the companies agreed to stop.
Evidence filed with the court included an e-mail from Steve Jobs at Apple to Eric Schmidt of Google, complaining about an HR staffer trying to lure away an Apple engineer. Subsequent correspondence within Google tells Schmidt that the offending HR staffer would be terminated. In an early ruling in the case, the judge determined that the five engineers' complaint could not proceed as a single lawsuit against all the companies, but that it could be broken up into cases alleging specific misconduct.
The companies have denied they did anything wrong, but as of this writing, future litigation appears likely. Potentially, hundreds of millions of dollars in damages are at stake.
Why do you think high-tech companies might be tempted to recruit talent away from one another? What impact would this practice have on overall pay rates?