The U.S. Justice Department is investigating possible pacts by big tech businesses not to poach one another's talent, a tech industry source with direct knowledge of the matter told Reuters on Wednesday.
Search engine rivals Google and Yahoo, computer and music player maker Apple and biotech company Genentech, now owned by Roche Holding AG, have received notices that the Justice Department has a formal probe under way, according to the source, who declined to be identified because the investigation is ongoing.
Microsoft was also contacted by the Justice Department as part of the probe, according to a second source, who also could not be identified because the investigation was ongoing.
Genentech said it was cooperating with the probe.
Our understanding is that a number of companies received this request for information from the U.S. Department of Justice. Genentech is cooperating and will respond to the request in due course, the company said in a statement.
Representatives of Google and Yahoo said that they had been contacted by the Justice Department and were cooperating.
Neither Microsoft nor Apple responded to telephone calls seeking comment.
The Justice Department declined to comment.
The investigation into potential deals to refrain from head hunting each other's top talent was first reported on the Web site TheDeal.com.
My sense of it is that there are as many as a dozen companies that have been sent CIDs (civil investigative demands), the first source said, referring to requests for information sent out as part of a formal probe. There's an open question of who are the other companies.
The move is the latest evidence that the Justice Department's antitrust division under its new head, Christine Varney, will be more aggressive than President George W. Bush's antitrust team.
In a speech last month laying out her antitrust philosophy, Varney pledged a more aggressive approach to dealing with dominant companies that use their market power to crush competition and lamented a lack of recent scrutiny of mergers by companies in the same supply chain.
The Justice Department is also looking at Google's deal to digitize millions of books, and the U.S. Federal Trade Commission, which also has antitrust responsibilities, has a probe into Google and Apple Inc's overlapping board members.
The first source said that the frequent shifting of Silicon Valley executives from one company to another cast doubt on the probe. Silicon Valley technology companies poach each others' employees all the time, the source said.
Jeff Modisett, managing partner of Los Angeles office of Bryan Cave LLP, said that he was surprised that this was Varney's first major probe but added: She's aggressive and she's creative and we're probably going to be surprised again.
(Reporting by Diane Bartz; Editing by Steve Orlofsky, Gary Hill, Phil Berlowitz)