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Data Center Construction Firms Face EU Raids Over Potential No-Poach Agreements

By  |  November 18, 2024

The European Commission has initiated a series of unannounced inspections at companies operating within the data center construction sector, signaling a closer look into potential anticompetitive practices in this rapidly growing industry. These inspections are accompanied by formal requests for information sent to other firms in the same sector, as the Commission seeks to gather relevant data to support its inquiry, according to a statement.

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    The Commission is examining possible violations of EU antitrust regulations, particularly Article 101 of the Treaty on the Functioning of the European Union (TFEU), which prohibits restrictive business practices and collusion among companies. The investigation is focused on potential “no-poach” agreements between firms in the data center construction industry—an arrangement that could limit employee movement between companies and ultimately impact competition and employee wages.

    Assisting the Commission’s officials are national competition authority representatives from the countries in which these inspections are taking place. These joint efforts reflect a preliminary step in gathering evidence related to suspected collusion but do not imply that the companies involved have engaged in illegal activity or that the investigation will necessarily result in formal charges.

    “Unannounced inspections” are a standard component of the Commission’s antitrust inquiries, used to collect information that might otherwise be unavailable. However, as noted in the Commission’s statement, these inspections do not assume the companies’ guilt and are only the initial phase of what could be an extensive review.

    Related: EU Issues Major Antitrust Fine Against Meta for Facebook Marketplace

    The timeline for investigations into potential antitrust violations varies significantly. Each inquiry’s duration depends on multiple factors, including the complexity of the case and the level of cooperation from the companies under scrutiny. Furthermore, the Commission prioritizes respecting companies’ rights to a defense, particularly their right to respond to any findings before any conclusions are drawn.

    The Commission also offers incentives for companies to self-report involvement in prohibited practices through its leniency program. Under this program, companies that disclose details of illegal cartel activities may be eligible for reduced fines or, in some cases, full immunity from penalties if they provide critical information and cooperate fully throughout the investigation. Additionally, the Commission’s whistle-blower tool enables individuals and employees to anonymously report knowledge of anticompetitive activities, including no-poach or wage-fixing agreements.

    The leniency program and whistle-blower tool have been central to the EU’s approach to dismantling cartels and restricting unfair competitive practices across industries. Information about both resources is available on the Directorate-General for Competition’s website.

    Source: EC Europa