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From Antitrust Law Daily, July 13, 2018

Justice Department settlement in ‘no-poach’ case against rail equipment suppliers approved

By Jeffrey May, J.D.

The federal district court in Washington, D.C. approved a consent decree prohibiting Knorr-Bremse AG and Westinghouse Air Brake Technologies Corporation (Wabtec), two of the world’s largest rail equipment suppliers, from agreeing not to compete for employees. The settlement also required Knorr and Wabtec to implement notification and compliance measures intended to preclude their entry into these types of agreements in the future. The consent decree settled Department of Justice Antitrust Division allegations that Knorr and Wabtec entered into unlawful agreements not to poach each other’s employees. The government contended that the so-called "no-poach" agreements unlawfully allocated employees between the companies and were per se unlawful restraints of trade that violated Section 1 of the Sherman Act (U.S. v. Knorr-Bremse AG, July 11, 2018, Kollar-Kotelly, C.).

According to the government’s complaint filed in April, Knorr and Wabtec compete with each other to attract, hire, and retain various skilled employees, including project managers, engineers, executives, business unit heads, and corporate officers. Since at least 2009, Knorr and Wabtec had in place agreements not to solicit, recruit, hire without prior approval, or otherwise compete with one another for employees, it was alleged. The complaint also alleged that Knorr and Wabtec separately entered into no-poach pacts with Faiveley Transport North America, a U.S. subsidiary of Faiveley Transport S.A., before that company was acquired by Wabtec in November 2016. The agreements were purportedly enforced by high-level executives.

Private suits. Since the announcement of the government’s complaint and settlement, a number of private actions have been filed against Knorr and Wabtec on behalf of employees of the companies during the relevant period. Among the first such actions filed was a suit by a signal line engineer for Wabtec’s wholly-owned subsidiary Railroad Controls L.P. From 2013 through 2016, the plaintiff alleged that he earned less than he would have absent the alleged conspiracy.

The case is No. 1:18-cv-00747-CKK.

Attorneys: Doha Mekki, U.S. Department of Justice, for the United States. Mark Hamer (Baker & McKenzie LLP) for Knorr-Bremse AG. Craig Waldman (Jones Day) for Westinghouse Air Brake Technologies Corp.

Companies: Knorr-Bremse AG; Westinghouse Air Brake Technologies Corp.

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