COVER STORY
ment contract did not allow staff leaving a company to work for a
competitor in the whole of Southeast Asia for two years, a clause
that could seriously affect the agency side career of the employee
if they wanted to stay in the region. The challenge to the company
(who seeks to impose these clauses), is to demonstrate in a court
of law that this is reasonable, but even more challenging is trying
to get these conditions enforced in overseas jurisdictions. In most
cases, they probably would not even try, but these contracts can be
used as a means to bully or intimidate the staff leaving the company.
Another element of restrictive trade practices is in agreements
between industry players themselves. There has been a lot of
publicity in recent years about rate-rigging between the banks (e.g.
LIBOR), and also within other commoditised industries such as oil,
industrial components, and building materials (as featured recently
in the Economist, 29 March–4 April 2014). Governments are now
coming down much harder on companies who break the rules, as
shown by the hefty fines imposed and even prison sentences for
trade collusion.
But how much of this goes on in the market research industry?
It has been reported that a Singapore-based research agency had
tried to seek a trade agreement directly with a competitor for the
purpose of protecting “long term profit margins” and even had the
audacity to put this in writing. While the research industry is too
fragmented to make cartels a reality, the Singapore 2004 Competition Act ensures that anti-competitive practices, even among
the smallest private entities, are prohibited. Section 34 of the Act
prohibits “agreements, decisions and practices which prevent,
restrict or distort competition”, which would make any such trade
agreements between competitors illegal. The Competition Commission of Singapore has even set up a whistle-blowing facility as a
means of deterring such activities.
In some jurisdictions, agreements between competitors not to
compete for certain clients or markets can be an infringement
of competition rules, and even just the exchange of information
between competitors can be construed as “collusion”.
It has also been reported that in some emerging markets where
there is often a shortage of market researchers, firms have reached
agreements not to poach staff from each other. But anti-poaching
agreements have actually come back to bite organisations. Only
very recently, Apple, Google, Intel, and Adobe settled a class action
law suit in the US brought by 64,000 workers alleging conspiracy to
hold down salaries by agreeing not to poach staff from each other.
Such agreements are a form of restrictive trade practice, since they
stifle competition for staff in what should be an open market for
talent.
On the flip side, companies might try to use the law to deter competitors from poaching. In Singapore, research firms have tried to bring
claims against competitors for poaching their staff and even “attempting to poach”. In one case, a research firm brought a poaching
claim against a rival company, but had done this only after they had
fired the member of staff in question (on the grounds that they were
talking to this rival company). A further irony was that the claim was
brought against an individual in the rival company who they themselves had tried to poach in previous years. When this was pointed
out, they soon dropped their legal action.
The vagueness of restrictive trade practice laws means that employment contracts need to be dealt with on a case-by-case basis.
Where employment is brought about through company acquisitions
or the hiring of very senior staff, these can sometimes make restrictive covenants enforceable. Lawyers can advise the employee on
the enforceability of certain clauses in their contracts (at a cost), but
the best advice is to question employment contracts and restrictive
covenants with potential employers before you sign them. If they
seem too draconian, then the best judgment one can make is to
simply not work for the firm in the first place.
Be free, and may the force be with you! ■
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4 ASIA RESEARCH | JUNE 2014
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