In recent research, Christian Bergqvist argues that the European Union’s approach to wage-fixing, no-hire, and no-poach agreements reveals a lack of nuance that may end up harming competition.
In recent years, it has become increasingly common among antitrust authorities to promote—or to propose promoting—workers’ interests through the application of competition law. The European Commission, the principal antitrust enforcer in the European Union, has, for example, signaled a more proactive stance against wage-fixing agreements and no-poach agreements.
According to the Commission, such practices harm workers and constitute serious infringements of Article 101 TFEU, the EU’s primary law prohibiting anticompetitive agreements such as wage-fixing cartels, which set worker salaries at an artificially low rate, and no-hire and no-poach agreements. No-hire agreements prevent employees from moving between firms, whereas no-poaching clauses merely prohibit the active solicitation of another firm’s staff.
The Commission’s position broadly aligns with those of other enforcement agencies from around the world. However, the Commission’s rhetoric thus far has exceeded its actual enforcement efforts, and as I argue in a recent paper, its rigid treatment of these agreements appears imprudent.
Not only does the aggressive posturing fail to accept that non-compete clauses might serve a legitimate purpose, but they also rest on the false assumption that all employees are competitors in the upstream market for labor. This only holds in the broadest sense for markets involving unskilled labor, where workers can easily switch between jobs like janitorial work or stocking shelves. In markets for highly skilled labor, competition typically occurs within much narrower submarkets.
Increased enforcement may even undermine the right to collective bargaining—an activity expressly permitted under EU competition law—if employer-side discussions are required to operate within an increasingly narrow exemption, or otherwise risk infringing Article 101 TFEU.
The call for restraints when reviewing labor-market restrictions is not a path to enforcement holidays. Three recent cases and one from the 1990s have defined labor competition law in the EU, including setting the limits on collective bargaining—for which the EU had carved out a worker-centric bargain for firms to discuss remuneration—to ensure that it could not be construed as a license to form cartels.
Pre-insulated Pipes: a masked cartel remains a cartel
In the 1999 case Pre-insulated Pipes, a cartel arrangement in the pipe-fitting market extended beyond the traditional (illegal) price-fixing and market allocation, and included an agreement to actively poach senior executives from a non-member firm. This practice was intended both to discipline and exclude the non-member as a competitive threat and to obtain sensitive internal information. The presiding court included this in the cartel infringement, offering no leniency. The case demonstrates that masking a cartel as an employment arrangement does not allow one to elude condemnation, and that Article 101 remains available where warranted.
Royal Antwerp Football Club: sports clubs must respect competition law
In 2023, the Court of Justice—the EU’s highest judicial authority—held that Article 101 TFEU applied in Royal Antwerp Football Club, which concerned the Union of European Football Associations (UEFA), the governing body of European football, and its “home-grown player” rule. The rule required each club to maintain on its roster a certain number of players that the club had trained. The Court of Justice found that this rule effectively limited the players’ movements and restricted competition between football clubs. The rule, therefore, had the potential to distort competition both in the upstream market for players and in the downstream market for inter-club matches. This case similarly confirmed the application of Article 101 to agreements distorting competition, even if it involves the management of employees.
Food Delivery Services: non-compete clauses can be illegal
Recently, the European Commission has taken its enforcement efforts a step further by singling out no-hire clauses as intrinsically problematic. This position has been articulated most forcefully in a 2024 Policy Brief, which condemns all no-hire clauses unless they are negotiated directly between an individual firm and an individual employee. The Commission has been less explicit in its formal decisions, which continue to follow a more traditional analytical framework. Food Delivery Services illustrates this.
In Food Delivery Services, Delivery Hero—active in online food, grocery, and retail delivery—had made a series of non-controlling investments in its competitor, Glovo. Delivery Hero used its acquisitions to impose various reciprocal no-hire and no-poach agreements upon both Glovo and some of the investors.
These restrictive covenants were not stand-alone measures but formed part of a broader set of anticompetitive practices, including the exchange of sensitive commercial information and the allocation of geographic markets. As they all served the same anticompetitive objectives, they were not only treated as a single continuous infringement resulting in an online food delivery cartel, but also anticompetitive “by object.” From a practical perspective, this designation is comparable to the American legal notion of per se illegality, allowing enforcers to establish an infringement without extensive further analysis.
Fundamentally, Food Delivery Services adheres to the principles set out in Pre-insulated Pipes, where a traditional cartel included employment-related elements, and similarly, no leniency was shown—or warranted. This likely also explains why the parties chose not to contest the Commission’s findings but instead elected to settle the case, thereby obtaining a reduction of the fine in exchange for their cooperation and acknowledgement of the infringement. The settlement procedure enables the Commission to expedite the proceedings and to forgo the need for extensive legal argumentation beyond the essential elements.
Food Delivery Services: a new enforcement direction?
Although Food Delivery Services appears broadly aligned with orthodox principles, it nonetheless signals a potential shift in enforcement priorities. Both the decision and accompanying press release are loaded with strong statements, asserting that no-poach agreements restrict competition for talent and depress wages and career opportunities. Yet, unlike in Royal Antwerp Football Club, the underlying antitrust concern is considerably less clear.
In Royal Antwerp, the rules at issue restricted access to football players, an essential input for competitive success in that sector, making their anticompetitive effect self-evident. By contrast, it is far from obvious how a contractual limitation on hiring unskilled delivery workers would impede competition, assuming that alternative labor pools remain readily accessible. Although some of the clauses in Food Delivery Services may have extended to managerial staff, the legal assessment asserts that all such provisions are inherently harmful to competition.
A further nuance absent from the European Commission’s reasoning concerns the distinction between no-hire and no-poach clauses. The hard rhetoric appears to treat both categories as equally restrictive, but this approach is contestable, as no-poach arrangements are intrinsically less severe. Moreover, employers might have adopted such clauses for specific and legitimate reasons. Examples include clauses used in the context of research and development collaborations or vertical distribution agreements, when intellectual property and proprietary information are at stake. Where such clauses are narrowly tailored—for instance, limited to key employees—condemnation would be unjustified. At least under competition law.
CD Tondela: revisiting non-compete clauses
Despite its forceful rhetoric and uncompromising tone, Food Delivery Services ultimately rests on traditional infringements of Article 101 TFEU, namely market allocation and the exchange of sensitive internal commercial information.
Yet this should not obscure the broader policy implications of a more aggressive enforcement stance toward labor-market restrictions, or the way in which enforcers have taken a progressive, more vocal position against such.
A more balanced approach may nevertheless be achievable, particularly through the development of a more nuanced understanding of the “by object” category, as suggested by the advocate general in the pending case CD Tondela.
CD Tondela once again considers football. In this case, the main Portuguese football clubs and national football associations agreed to a temporary no-poach rule. The rule arose during the Covid-19 lockdown, which forced the Portuguese football season to be extended. This created a contractual dilemma, as many players’ contracts expired mid-season. The agreement was intended to ensure an orderly conclusion to the season and prevent wealthier clubs from exploiting the situation by poaching players from smaller, less affluent clubs.
The measure was adopted only after the clubs’ unsuccessful efforts to reach a collective agreement with the players’ union. Nonetheless, the Portuguese National Competition Authority intervened, and the matter ultimately reached the Court of Justice, raising questions about both the scope of the “by object” concept as applied by the Authority and the possible applicability of the Meca-Medina sports exemption. Under the Meca-Medina exemption, restrictions aimed at safeguarding the integrity of sport may be treated as ancillary to the organization of the sporting activity and thus fall outside Article 101 TFEU, provided they do not constitute “by object” restrictions and are necessary and proportionate.
Given that the clubs acted only after efforts to conclude a collective agreement with the players’ union had failed, one might argue that the arrangement should be treated as analogous to collective bargaining. However, the advocate general—who prepares cases for the Court of Justice, and their opinions, issued prior to the judgment, often provide indications of the direction the Court may take—proposed a different and more forward-looking approach.
The advocate general suggests a more balanced approach
While acknowledging that no-poach agreements between competitors are, by default, anticompetitive, the advocate general emphasized that the analysis cannot stop there: context matters. In this light, he suggested that the specific no-poach arrangement was more appropriately assessed under a “by effects” analysis, shifting the burden of anticompetitive proof back to regulators. A doctrine akin to the rule of reason in the U.S., where courts ruled on the anticompetitiveness of an action based on a cost-benefit analysis.
According to the advocate general, the agreement functioned, in practice, as a temporary postponement of the regular transfer window. Moreover, it could arguably fall outside Article 101 TFEU altogether under the Meca-Medina exemption, as it was motivated by a legitimate aim—ensuring a fair and orderly completion of the season—and constituted the least restrictive measure available. The advocate general even noted the difficulty of identifying feasible alternatives.
If the Court of Justice were to adopt the advocate general’s recommendation—rebutting applying the “by object” designation and making the Meca-Medina sports exemption available—its reasoning would offer a more balanced framework for addressing wage-fixing cartels and no-poach arrangements where appropriate.
Under such a framework, wage cartels would likely lose relevance—though it is doubtful that they ever held significant practical importance. Either such an arrangement would fall under the worker-centric collective bargaining exemption, or it would be seen as a classic cartel, as in Pre-insulated Pipes.
Clauses such as those examined in Royal Antwerp Football Club would continue to fall within the scope of Article 101 TFEU, as they applied to an entire sector and concerned a critical input—namely, highly skilled players.
By contrast, no-poach arrangements of the kind addressed in Food Delivery Services should fall under Article 101 TFEU only where they regulate access to key employees. Even then, it remains uncertain whether they satisfy the threshold for a by-object restriction when they are narrowly tailored to what is necessary to protect an underlying investment or a limited partnership. That was not the case in Food Delivery Services, as discussed above, leading to the same outcome but against a different line of reasoning.
This suggests that the weakness of Food Delivery Services lies not in its conclusion but in the reasoning underpinning it and in the principles it stands for. However, since the matter was resolved by settlement, the reasoning remains underdeveloped, which may explain this shortcoming
It remains to see what path the Court will take in CD Tondela
CD Tondela is still pending, and it remains to be seen which direction the Court will take. A ruling is expected in 2026. Regardless of the outcome, it is evident that enforcement authorities have increasingly converged on the use of competition law as a means to improve the working conditions of European citizens.
This trend has facilitated the emergence of concepts such as “wage cartels” and enforcement actions targeting no-poach agreements. Nonetheless, a misalignment persists between the strong rhetoric found in policy statements and the cases actually pursued.
Should enforcers, however, bring their practice into closer alignment with the advocate general’s recommendation, a legal path for intervening against non-compete clauses would be available where truly warranted, without disturbing the careful balancing of interests.
Author Disclosure: Dr. Christian Bergqvist is an Associate Professor at the University of Copenhagen and Senior Fellow at the GW Competition and Innovation Lab at The George Washington University. The author declares no conflicts of interest and can be reached at cbe@drbergqvist.dk. You can read our disclosure policy here.
Articles represent the opinions of their writers, not necessarily those of the University of Chicago, the Booth School of Business, or its faculty.
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