Not too long ago, the FTC launched a probe to determine whether the close ties between Apple and Google senior management (hack hack, Eric Schmidt) via the board of executives violated antitrust laws. Before that, Apple faced an antitrust suit regarding their domination of the digital music hardware and software market with iTunes and the iPod. Now, as reported by the Washington Post yesterday, Apple, along with Silicon Valley behemoths Yahoo, Google, and Genentech, could be facing an investigation from the Department of Justice that alleges that they signed non-compete clauses as a group to refrain from cross-recruiting senior talent.

This "talent fixing" is connected to price fixing, as companies can cut down on bidding wars with other large companies that could afford the senior employees, and as a result, have an unfair advantage over their markets. The court, in Todd vs. Exxon, acknowledged that a similar case could be classified as an unlawful information exchange under the Sherman Antitrust Act. However, such an interpretation is a bit of a stretch, so it will be harder for anyone to prosecute the companies. Furthermore, the people hurt the most by these practices are the employees themselves, who do not know that their options are being limited, and suing on these grounds would not be an antitrust case. That said, the Obama Administration has been substantially tougher on antitrust cases than previous administrations, and you can never be sure about the results of these investigations.

Companies can traditionally implement non-compete clauses in contracts with their employees (except in California), where employees cannot work for any company in a competing industry for a certain period after being terminated, and can explicitly prohibit employees from sharing company secrets and proprietary technology, but the limitations stop there. If the Department of Justice finds that there are antitrust implications for this incident, and that limiting the hire-ability of certain employees is actually anti-competitive, it could have profound implications for non-compete clauses as well. In fact, this is the same reason that non-compete clauses are illegal and unenforceable in California.

Allegedly the DOJ has requested (not nicely) several of the involved parties for certain documents that will help resolve the issue. Unfortunately for Apple, large tech companies are often indicted rather than acquitted in such antitrust lawsuits, and unless they can quickly prove that this is merely a rumor, a lot of lawyers are going to get a LOT of money.