DOJ Settlement Prohibits Knorr and Wabtec from Maintaining Employee “No-Poach” Agreements and Requires Cooperation in Ongoing Antitrust Division Investigation of Such Agreements
On April 3, 2018, the U.S. Department of Justice (“DOJ”) announced that it reached a settlement with Knorr-Bremse AG (“Knorr”) and Westinghouse Air Brake Technologies Corporation (“Wabtec”), two of the world’s largest rail equipment suppliers, to resolve a lawsuit alleging that the companies had for years maintained unlawful agreements not to compete for each other’s employees. The lawsuit further alleges that the companies entered into similar “no-poach” agreements with rail equipment supplier Faiveley Transport S.A. (“Faiveley”) before Faiveley was acquired by Wabtec in November 2016.
The Justice Department’s Antitrust Division filed a civil antitrust lawsuit in United States District Court for the District of Columbia to challenge Knorr and Wabtec’s no-poach agreements. At the same time, DOJ filed a proposed settlement that, if approved by the Court, would resolve DOJ’s competitive concerns and restore competition for employees, to the benefit of U.S. workers.
Assistant Attorney General Makan Delrahim stated, “The unlawful no-poach agreements challenged today restrained competition for employees and deprived rail industry workers of important opportunities, information, and the ability to obtain better terms of employment.”
WERE YOU EMPLOYED AS A PROJECT MANAGER, ENGINEER, SALES EXECUTIVE, BUSINESS UNIT HEAD OR CORPORATE OFFICER BY KNORR-BREMSE AG, WABTEC (WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION), FAIVELEY TRANSPORT S.A., NEW YORK AIR BRAKE CORPORATION, KNORR BRAKE COMPANY, OR FAIVELEY TRANSPORT NORTH AMERICA BETWEEN 2009 AND THE PRESENT?
If so, then you may have a claim for compensation arising from the anticompetitive conduct. Please contact Kehoe Law Firm, P.C. to discuss your potential legal claims. If you wish to discuss your concerns privately with an attorney, please contact Michael Yarnoff, Esq., (215) 792-6676, Ext. 804, [email protected].
The Civil Antitrust Complaint Against Knorr-Bremse AG and Wabtec (Westinghouse Air Brake Technologies Corporation)
According to DOJ’s complaint:
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.
Beginning no later than 2009, Knorr and Wabtec reached agreements not to solicit, recruit, hire without prior approval, or otherwise compete with one another for employees. For example, in a letter dated January 28, 2009, a director of Knorr Brake Company wrote to a senior executive at Wabtec’s headquarters, “[Y]ou and I both agreed that our practice of not targeting each other’s personnel is a prudent cause for both companies. As you so accurately put it, ‘we compete in the market.’”
Beginning no later than 2011, Knorr Brake Company (a wholly-owned subsidiary of Knorr) and Faiveley Transport North America (the U.S. subsidiary of Faiveley before Faiveley was acquired by Wabtec) agreed to get the other’s permission before pursuing each other’s employees. For example, in October 2011, a senior executive at Knorr Brake Company explained that he had a discussion with an executive at Faiveley’s U.S. subsidiary that “resulted in an agreement between us that we do not poach each other’s employees. We agreed to talk if there was one trying to get a job[.]”
Beginning no later than 2014, Wabtec Passenger Transit, a U.S. business unit of Wabtec, and Faiveley Transport North America similarly agreed not to hire each other’s employees without prior approval. For example, in an e-mail to his colleagues, a Wabtec Passenger Transit executive explained that a candidate for employment “is a good guy, but I don’t want to violate my own agreement with [Faiveley Transport North America].”
The no-poach agreements between Knorr, Wabtec, and Faiveley restricted competition for U.S. rail industry workers, which limited their access to better job opportunities, restricted their mobility, and deprived them of competitively significant information that they could have used to negotiate for better terms of employment.
Under the terms of the proposed settlement, Wabtec and Knorr are prohibited from entering, maintaining, or enforcing no-poach agreements with any other companies, subject to limited exceptions. The settlement also requires Knorr and Wabtec to implement rigorous notification and compliance measures to preclude their entry into these types of anticompetitive agreements in the future.
Project Managers, Engineers, Sales Executives, Business Unit Heads, and Corporate Officers employed by Knorr-Bremse AG, Wabtec (Westinghouse Air Brake Technologies Corporation), Faiveley Transport S.A., New York Air Brake Corporation, Knorr Brake Company, or Faiveley Transport North America between 2009 and the present are encouraged to contact Kehoe Law Firm, P.C. to discuss their potential legal claims and options.