First Reference company logo

Inside Internal Controls

News and discussion on implementing risk management

machine cogs image

Competition law issues for HR Professionals in Canada

A company’s HR functions, such as recruitment and compensation, are not typically regarded as antitrust “hot spots” (as opposed to sales and marketing). Recent cases in the United States, however, highlight how hiring practices can create the risk of competition law violations for companies and their HR personnel. Since Canadian competition law is similar to U.S. antitrust law in these respects, it is important that Canadian HR professionals be aware of these risks and protect themselves and their companies from exposure.

Competition lawOn October 20, 2016, the United States Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice jointly issued special compliance guidelines (HR Guidelines) [1] for human resource (HR) professionals and others involved in hiring and compensation decisions. The HR Guidelines focus attention on an area that is not typically regarded as an antitrust “hot spot” but has been the subject of several high-profile proceedings in recent years in the United States. In particular, the HR Guidelines discuss the potential antitrust risks when employers agree (i) not to hire each other’s employees (non-poaching agreements); (ii) not to compete on wages/other terms of employment (wage-fixing agreements); and (iii) to share information regarding compensation and other sensitive employment-related matters.

Considering the high profile that U.S. authorities are now giving to employment-related issues and the close similarities between U.S. and Canadian laws on point, Canadian businesses should also be wary of coordinating hiring practices and sharing information with competitors and should carefully assess any such ongoing conduct to determine its legality.

It is also important for businesses considering the ambit of potential risk to recognize that they may be competitors with other companies in an “employment” market even if they do not compete with those companies in the products and services they respectively provide. Similarly, not-for-profit entities could be competing with other entities for employment services even if they do not operate in commercial markets.

Here are a few compliance steps that businesses operating in Canada should consider in light of the risks identified above:

(i) Review the practices and procedures of the company’s HR department to determine if any of the following red flags exist:

  • agreements with other companies about employee salaries or other terms of compensation, either at a specific level or within a range;
  • agreements with other companies about employee benefits or other terms of employment;
  • agreements with other companies about soliciting or hiring employees;
  • exchanges of information with other companies about employee compensation or terms of employment; and
  • discussions of the above topics with other companies, including during trade association meetings, social events or in other non-professional settings.

(ii) Ensure that internal compliance policies incorporate a discussion of the potential application of Canadian competition law to HR issues.

(iii) Expand compliance training to include HR personnel.

For additional information, please download our memorandum for a more detailed discussion of this evolving area of competition law.

Author: Mark C. Katz, Davies Ward Phillips & Vineberg LLP

1 Antitrust Division, U.S. Department of Justice/Federal Trade Commission, Antitrust Guidance for Human Resource Professionals (October 2016).

Occasional Contributors

In addition to our regular guest bloggers, Inside Internal Controls blog published by First Reference, provides occasional guest post opportunities from various subject matter experts on the topics of risk management and best practices in finance and accounting, information technology, environmental issues, corporate governance, sales/marketing and operations, not-for-profits and business related issues in Canada. If you are a subject matter expert and would like to become an occasional blogger, please contact Yosie Saint-Cyr at If you liked this post and would like to subscribe to Inside Internal Controls blog click here.

, , , , , , , , , , , , , , ,

Comments are currently closed.