Anonymised, illustrative composite. Two bidders in the same sale process, and competitors for the same specialty technicians, agreed to hold pay at one number after the deal closed — whichever of them won.
At a glance
An industrial-controls integrator went to a competitive sale process, and two of the bidders — both operating companies backed by different private-equity sponsors, both employers of SCADA and instrumentation technicians in the same metropolitan labour market — found themselves competing head to head through two rounds of bidding. Between rounds, principals from each bidder held an informal call, ostensibly to compare notes on integration planning in case either of them was later approached about a joint arrangement.
The call started as ordinary market colour: what each firm currently paid its senior technicians, how tight the labour market for that skill set had become, how much wage inflation each was absorbing. That kind of conversation happens constantly in specialty industrial sectors where the pool of qualified people is genuinely small and everyone already roughly knows what everyone else pays.
It did not stay there. By the end of the call, the two principals had reached an informal understanding: whichever of them won the auction would hold technician pay at the region’s current going rate for eighteen months post-close, rather than bidding it up to retain staff who might otherwise be poached by the loser’s remaining operations. The stated reasoning was mutual self-interest — neither wanted a wage war for the same small pool of technicians regardless of which of them ended up owning the target.
That crossed the line the earlier conversation had not. Competition Act s.45(1.1) provides: “Every person who is an employer commits an offence who, with another employer who is not affiliated with that person, conspires, agrees or arranges (a) to fix, maintain, decrease or control salaries, wages or terms and conditions of employment…”. Two employers, not affiliated, reaching a mutual understanding to hold wages at a set level for a defined group of workers is the paradigm case the paragraph was written for. The offence turns on the agreement, not on whether it is ever formally documented — an oral understanding on a phone call is enough, and s.45(3) lets a court infer one from circumstantial evidence, with or without direct evidence of the communication itself.
Neither bidder’s ultimate purchase price for the target moved because of the call — the exchange was about the two firms’ own existing technician workforces, not about the target’s employees or the auction price itself. That is exactly why it is easy to mistake for harmless colour: it looked like it belonged to the deal, when the conduct that mattered was between the two bidders’ own businesses and had nothing to do with the target changing hands.
The maximum exposure is the same as any other s.45 conspiracy conviction — imprisonment up to 14 years or a fine at the court’s discretion, under s.45(2) — and it attaches to the individuals who reached the understanding, not merely to the corporate employers.
Paragraph (a) is the operative text, and it is worth separating cleanly from the no-hire paragraph beside it. s.45(1.1)(a) reaches an agreement or arrangement “to fix, maintain, decrease or control salaries, wages or terms and conditions of employment”; s.45(1.1)(b) reaches a separate agreement “to not solicit or hire each other’s employees.” Nothing in this file involved a no-hire promise at all — the two bidders never discussed not recruiting from each other. The offence here is wage-fixing, full stop, and it does not need a no-poach element to be complete.
The line the call crossed is the agreement itself, not the underlying data. Comparing what each firm currently pays, in isolation, is market intelligence — the kind of information competitors legitimately gather from public postings, recruiters and industry surveys. What converts it into an offence is reaching a mutual understanding to act on it together going forward. The moment the principals agreed to hold pay at a common level rather than independently decide what each firm would pay after closing, the conduct moved from information to arrangement.
Once counsel for the losing bidder learned of the call during a later, unrelated review, both firms were advised to treat the understanding as void and to instruct their technician-pay decisions independently going forward, with no reference to what the other had said on the call. There is no clause here to redraft, unlike the no-hire covenant in a letter of intent — the arrangement lived entirely in a conversation, so the remedy was to stop acting on it and to route any future legitimate integration or synergy analysis through an independent clean team, with aggregated or anonymised data only, and no direct exchange of current rates between the bidding principals themselves.
Had the arrangement held and either firm won the auction, both companies’ technicians in the shared labour market would have been paid below what independent competition for the same scarce skill set would have produced — the harm the offence exists to prevent, and precisely the kind of conduct that, unlike a narrow no-hire covenant tied to a real transaction, has no ancillary-restraints defence available to it, because there is no broader legitimate agreement between two rival bidders in an auction that this wage understanding could plausibly be necessary to give effect to.
The tell was that the fix, once discovered, could not be a redline. A no-hire clause in a signed document can be narrowed, dated and tied to a stated purpose — there is always a document to amend. A wage understanding reached on a call has nothing to narrow; it either stopped or it did not. A deal team that starts asking how to word an information exchange so it is defensible, rather than asking how to stop it, has already misread which of the two problems it has.
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