No-Poach Agreements Under Indian Competition Law: Can Employers Be Penalised for Restricting Employee Mobility?
India's competition regulator is examining whether no-poach agreements between competing employers can violate competition law by restricting employee mobility and suppressing competition in labour markets.
No-Poach Agreements Under Indian Competition Law: Can Employers Be Penalised for Restricting Employee Mobility?
Competition law has traditionally focused on markets for goods and services. However, modern competition concerns increasingly extend beyond traditional product markets and into the labour market.
One emerging issue is the use of no-poach agreements, where competing employers agree not to recruit or hire each other's employees.
Such arrangements may appear to be employment-related agreements on the surface. However, they can potentially reduce competition between employers for skilled workers, restrict employee mobility, and affect wages.
India is now facing this question directly through an investigation involving major international fragrance companies.
What Is a No-Poach Agreement?
A no-poach agreement is an arrangement between competing employers under which they agree not to recruit, hire, or approach each other's employees.
For example, two companies competing for the same specialised workforce may agree that neither company will hire employees working for the other without prior permission.
Such an arrangement can reduce competition for workers because employees may have fewer opportunities to move between competing businesses.
Why Are No-Poach Agreements a Competition Law Concern?
Competition does not exist only between companies selling products.
Employers also compete with one another to attract skilled employees.
If competing businesses collectively agree not to recruit each other's workforce, the available employment opportunities may decrease. This can potentially affect:
- Employee mobility
- Wage competition
- Recruitment opportunities
- Labour-market efficiency
- Career growth for skilled workers
This is why competition authorities in several jurisdictions have increasingly started examining no-poach arrangements through an antitrust lens.
India's First Major Labour Antitrust Investigation
The issue gained particular significance in India in August 2025, when the Competition Commission of India (CCI) ordered an investigation into three major fragrance companies:
- Givaudan SA
- DSM-Firmenich AG
- International Flavors & Fragrances Inc. (IFF)
The investigation concerns allegations of a long-standing arrangement under which the companies agreed not to recruit each other's employees without approval.
According to the source article, the CCI's investigation was initiated after a leniency application provided evidence regarding the alleged arrangement. The investigation is therefore significant because it could become India's first major competition-law examination of a no-poach arrangement.
The Alleged Arrangement
The investigation concerns an alleged understanding dating back to 2002.
The CCI reportedly examined evidence including emails suggesting that the companies had agreed not to hire or poach employees from one another, including employees of certain shared customers, without prior approval.
If established, such an arrangement could raise an important legal question: Can competing employers be treated as competitors in the labour market for the purposes of the Competition Act?
Delhi High Court Allows the Investigation to Continue
International Flavors & Fragrances challenged the CCI's investigation before the Delhi High Court.
One of the arguments raised was that the investigation was barred by the limitation period under Section 19(1) of the Competition Act, 2002.
In April 2026, the Delhi High Court dismissed the challenge and allowed the CCI investigation to proceed.
Importantly, the Court's decision did not finally determine whether the alleged no-poach arrangement violates competition law. The substantive competition-law questions remain for the CCI to examine.
How Could Section 3 of the Competition Act Apply?
The central legal question is whether a no-poach agreement can fall within Section 3(3) of the Competition Act.
Section 3(3) deals with certain agreements between enterprises operating at the same level of the market.
The fragrance companies involved in the investigation compete in their product markets, but they may also compete for specialised employees such as perfumers, flavourists and fragrance chemists.
This creates the possibility of viewing the labour market as another market in which competing enterprises interact.
Section 3(3)(b): Restricting the Supply of Labour
One possible approach is Section 3(3)(b).
This provision addresses agreements that limit or control production, supply, markets, or the provision of services.
A no-poach arrangement could potentially be viewed as restricting the availability of labour by preventing employers from competing for workers employed by other businesses.
This interpretation would treat skilled employees as an important input into business operations.
Section 3(3)(c): Allocation of Labour Sources
Another possible provision is Section 3(3)(c), which deals with agreements involving market or source allocation.
Under this approach, competing employers could potentially be viewed as allocating sources of labour between themselves.
However, applying this provision to labour markets presents a more complicated interpretive question because the statutory language primarily refers to allocation by geographical area, products, or customers.
The broader phrase concerning other similar forms of allocation could therefore become relevant.
Appreciable Adverse Effect on Competition
If a no-poach arrangement falls within Section 3(3), the agreement may attract the statutory presumption that it causes an Appreciable Adverse Effect on Competition (AAEC).
The assessment can involve considering factors such as:
- Creation of barriers to entry
- Foreclosure of competition
- Consumer benefits
- Improvements in production or distribution
- Technical or economic development
The parties may therefore need to demonstrate that any legitimate efficiency benefits outweigh the competition-related harm.
An industry-wide agreement covering employees broadly could face greater difficulty in establishing such justification.
What About Earlier Indian Competition Cases?
India does not yet have extensive jurisprudence specifically dealing with no-poach agreements.
One earlier decision often discussed in this context is Air India v. InterGlobe Aviation.
In that matter, the CCI characterised certain allegations concerning pilot recruitment as an employment issue rather than a competition-law violation.
However, the factual circumstances were different.
The earlier matter concerned alleged recruitment conduct by an individual airline, whereas the present investigation involves an alleged agreement between competing employers.
This distinction could become important when the CCI determines whether labour-market agreements fall within the Competition Act.
What Can India Learn From Other Countries?
India is not the first jurisdiction to examine no-poach agreements.
United States
The United States has investigated several agreements between competing employers involving restrictions on hiring.
The Department of Justice has previously pursued cases involving technology companies and other employers.
However, criminal enforcement has faced significant challenges, and American courts have examined whether particular agreements actually eliminated meaningful competition in labour markets.
European Union
The European Union has taken a more explicit approach.
The EU's revised Horizontal Guidelines addressed labour-market agreements, while the European Commission has identified certain no-poach arrangements as potential restrictions of competition.
In 2025, the European Commission also imposed a major fine in the Delivery Hero–Glovo labour-market cartel case.
In 2026, the Court of Justice of the European Union considered the issue in the context of an agreement between Portuguese football clubs and examined whether restrictions concerning the allocation of human resources could amount to market-sharing.
Why This Case Matters for Indian Employers
The outcome of the CCI investigation could have implications well beyond the fragrance industry.
If the regulator concludes that no-poach agreements can violate Indian competition law, businesses may need to reconsider employment arrangements that restrict hiring between competitors.
Potentially affected sectors could include industries where employees possess highly specialised skills and frequently move between competing companies.
This could make competition-law compliance increasingly relevant to:
- HR departments
- Corporate legal teams
- Senior management
- Recruitment policies
- Employment agreements
- Industry-wide arrangements
Impact on Employees
From an employee's perspective, competition between employers can create opportunities for:
- Better salaries
- Career advancement
- Improved working conditions
- Greater bargaining power
- Access to competing employers
A widespread no-poach arrangement could reduce these opportunities by limiting the ability of employees to move freely between competing businesses.
This is one reason labour-market competition has increasingly become part of the broader antitrust debate.
What Happens Next?
The Delhi High Court's decision only allows the CCI investigation to proceed. It does not establish that the companies have violated competition law.
The CCI will ultimately have to examine the evidence and determine whether the alleged arrangement falls within the Competition Act.
The final outcome could provide India's first significant guidance on the treatment of no-poach agreements under competition law.
Key Takeaways
- No-poach agreements restrict competing employers from recruiting each other's employees.
- Such arrangements can potentially reduce competition in labour markets.
- The CCI is investigating an alleged long-term no-poach arrangement involving Givaudan, Firmenich and IFF.
- The Delhi High Court has allowed the investigation to proceed.
- Section 3(3) of the Competition Act could become central to the legal analysis.
- India currently has limited direct jurisprudence on no-poach agreements.
- Developments in the US and EU show that labour-market competition is becoming an important antitrust issue.
- The CCI's eventual decision could significantly influence competition-law compliance for Indian businesses.
Conclusion
The debate surrounding no-poach agreements marks an important expansion of the competition-law conversation in India.
Competition does not stop at the point where a company sells its product. Businesses also compete for talented employees, particularly in specialised industries.
If competing employers agree to restrict employee movement, the arrangement may have consequences for wages, career opportunities and labour-market competition.
The ongoing CCI investigation therefore has significance far beyond the companies involved. Its eventual outcome could determine whether Indian competition law is prepared to treat labour markets as genuine markets worthy of antitrust protection.
For employers, the case is also a reminder that agreements concerning recruitment and employee mobility may increasingly attract competition-law scrutiny.
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