When Hiring Becomes Collusion: What Employers Need To Know About The CMA's 'Competing For Talent' Guidance

For years, competition law has lived in the boardroom, not the HR suite. It was about prices, supply chains and markets, but rarely about people. But the Competition and Markets Authority's new guidance, "Competing for Talent," published in September 2025, makes one thing unmistakably clear – that competition law applies just as rigorously to recruitment, pay and retention as it does to pricing and procurement.

The publication signals a decisive cultural shift. Employers must now view labour markets as fully within the CMA's enforcement scope. It means that the way businesses discuss, agree, or even informally share information about pay and hiring could, if done with competitors, amount to unlawful collusion under the Chapter I prohibition of the Competition Act 1998.

In publishing its guidance, the CMA has been clear that the recruitment of talent can indeed be classed unfair competition if approached underhandedly, and that the law protects that market just as fiercely as it protects consumers.

Why the CMA has acted now

The CMA has been warning since 2023 that anti-competitive conduct in labour markets would be a growing enforcement priority. Its 2025–26 Annual Plan crystallised that intention, citing "employer power" and "fair competition for workers" as headline focus areas.

The timing is not coincidental. Over the past few years, UK employers have faced unprecedented competition for skilled labour, while global regulators have become increasingly alert to wage-fixing and "no-poach" arrangements. In 2025 alone, the European Commission fined two delivery companies over €300 million for no-poaching agreements, and the CMA fined five sports broadcasters more than £4 million for unlawfully exchanging information about freelance pay rates.

The CMA's guidance is therefore both preventive and deterrent. It is designed to help HR leaders and businesses understand where the line lies – and to warn that ignorance of competition law will not be a defence if that line is crossed.

The legal foundation

The relevant law is the Chapter I prohibition, which makes it unlawful for businesses to enter into agreements or concerted practices that have as their object or effect the prevention, restriction or distortion of competition within the UK.

Traditionally, that provision applied to price-fixing, market-sharing and supply chain coordination. But as the CMA now makes clear, the same principles apply in employment markets. If two employers agree, or even tacitly coordinate, on pay, recruitment or employment terms, they may be colluding in a market for labour.

There is no need for a written agreement. The CMA can infer a "meeting of minds" from behaviour, correspondence, or consistent patterns of conduct. Nor does intent need to be proven; if the effect of coordination is to restrict competition, the prohibition applies.

The consequences are severe. Breaches can attract fines of up to 10% of global group turnover, director disqualification for up to 15 years, and even criminal prosecution for cartel conduct. Plus, because the CMA also publishes its infringement decisions, it can mean that the reputational damage of such breeches can eclipse the financial penalties.

The three behaviours most likely to breach the law

The CMA's guidance identifies three key categories of risk for employers: no-poaching, wage-fixing, and the sharing of competitively sensitive information. Each may arise innocently, but each can have the same restrictive effect as a cartel in a traditional goods or services market.

1. No-poaching and no-hire agreements

A no-poaching agreement is any arrangement where businesses agree not to approach, hire or recruit each other's employees. The CMA treats these as equivalent to market-sharing, which is a clear restriction of competition.

These can take many forms. They might be express "gentlemen's agreements" between HR leads at competing firms, or they might be embedded in commercial contracts as "no-cold-call" clauses requiring consent before hiring another company's staff. Even one-sided undertakings (where only one employer agrees not to hire from another) can be unlawful.

There is, however, a narrow exception for ancillary restraints – restrictions that are objectively necessary to support a legitimate commercial transaction, such as a merger, joint venture, or consultancy agreement. To be lawful, these restraints must be strictly limited in scope, duration and geography, and demonstrably necessary for the commercial purpose.

2. Wage-fixing and coordination on employment terms

The CMA's second focus is wage-fixing, which is where agreements between employers seek to align, cap, or fix pay, benefits, or other employment conditions. This includes coordination on salary bands, bonus structures, or annual pay awards.

The prohibition extends to indirect coordination, such as discussions through trade bodies, HR forums or recruitment agencies, if these effectively align pay strategies. Even an informal assurance that "we don't want to start a bidding war" could be construed as a signal to avoid competition for staff.

3. Sharing of competitively sensitive information

Finally, the CMA targets the exchange of non-public, sensitive information between employers. That includes current or future pay levels, planned increases, bonus pools, or recruitment intentions. Even if no explicit agreement follows, the exchange alone may breach the law, because it reduces uncertainty and allows competitors to coordinate behaviour.

The risk is not confined to formal meetings. Information shared in confidence between HR professionals, disclosed through benchmarking exercises, or discussed casually at conferences may all be problematic if it reveals future pay strategy.

The guidance does acknowledge that anonymised and aggregated benchmarking can serve legitimate business purposes, but only where data cannot be "reverse-engineered" to identify specific employers. HR teams should therefore treat pay benchmarking with the same caution as commercial price benchmarking, ensuring it is independently gathered, anonymised, and legally vetted.

Collective bargaining

The CMA draws a vital distinction between anti-competitive coordination and genuinecollective bargaining. Where employers negotiate pay and conditions with trade unions or employee representatives, such activities are typically exempt from the competition rules. The rationale is that collective bargaining serves a social purpose: to balance power between employers and workers.

However, that exemption is narrow and context-specific. Coordination between employers in advance of, or outside, collective bargaining processes must still meet the test of necessity and proportionality. Sharing detailed pay information between companies to "prepare" for a negotiation is not automatically lawful. Nor may employers use collective bargaining as a vehicle for wage-fixing across an industry.

Fundamentally, it should be understood that lawful collaboration must be strictly limited to what is required for collective bargaining, and nothing more.

Enforcement

The CMA's recent cases demonstrate that labour market collusion is not theoretical. Its 2025 decision against the five sports broadcasters – the first UK infringement decision in a labour market context – marked a turning point. The investigation found that producers of sports content had exchanged confidential information about freelancer pay rates over several years, effectively aligning their pricing.

In announcing that decision, the CMA stated plainly: "This type of collusion cheats workers of fair pay and employers of a level playing field." That language is significant. It reframes competition law as a mechanism to protect workers as well as consumers.

The CMA's enforcement tools are extensive. It can issue compulsory information requests, search business and domestic premises, interview individuals under caution, and impose interim measures. Companies under investigation must cooperate fully; obstruction can itself be penalised.

In parallel, directors involved in anti-competitive conduct may face disqualification proceedings under the Company Directors Disqualification Act 1986, and any individual who dishonestly agrees to fix pay or suppress competition could, in principle, face criminal prosecution under the Enterprise Act 2002.

The risk therefore extends well beyond fines to personal liability, reputational damage, and regulatory scrutiny can follow swiftly.

What employers should do now

The CMA is not seeking to discourage legitimate talent management. Its aim is to ensure that competition for staff remains open, fair and merit-based. Employers that act proactively now will not only reduce risk but also demonstrate good corporate governance.

The first step is education. HR teams, hiring managers and senior leadership need to understand that competition law is no longer confined to commercial teams. Recruitment, retention and reward strategies are now part of the compliance landscape.

A prudent starting point is to:

• Audit existing practices. Review any inter-employer arrangements, industry bodies, benchmarking exercises, or shared databases where pay or recruitment information circulates. If information is exchanged in a form that could reveal strategy or reduce competitive uncertainty, it should be re-evaluated.
• Review contractual clauses: Check for "no-hire" or "non-solicitation" clauses in commercial agreements and ensure they meet the "ancillary restraint" test. If they go beyond what is strictly necessary, they risk breaching competition law.
• Train HR professionals: Develop internal training modules so that staff recognise high-risk discussions, especially at industry events, networking forums, or trade association meetings.
• Establish internal reporting routes: Encourage employees to raise concerns if they are approached about sensitive discussions or benchmarking initiatives. Prompt legal advice can often prevent inadvertent breaches.
• Design safe benchmarking frameworks: Where pay comparisons are commercially useful, ensure that data collection is outsourced, anonymised, and aggregated, with legal oversight.

In practice, compliance in this area depends less on written policies and more on cultural awareness. HR professionals often operate collaboratively and collegially across industries, which makes them more susceptible to inadvertent risk. Fostering a culture of discretion and legal awareness can therefore be the most effective safeguard.

Common Grey Areas in Practice

Even with the CMA's guidance, several scenarios remain nuanced.

• Benchmarking and salary surveys: Participation in salary surveys is not automatically unlawful, but the risk depends on methodology. If individual contributors can be identified, or if the data reveals current or future pay decisions, the exercise may fall foul of competition law. Employers should insist on large sample sizes, anonymisation, and aggregation before participating.
• Cross-company consent for hiring: Some sectors have historically used informal "permission" arrangements – particularly in professional services or sports – before recruiting someone from another firm. These are almost always unlawful. Even if framed as "professional courtesy", such arrangements restrict mobility and constitute a no-poaching agreement.
• Trade associations and industry guidelines: Where an association circulates recommended pay bands, "market rate" guidance, or recruitment best practice templates that influence member behaviour, those materials may facilitate wage-fixing. Associations should focus on anonymised statistical data and avoid anything that looks like a pay standardisation tool.
• Social or informal conversations: Casual discussions about pay or hiring at conferences, networking events or social occasions can create risk if they disclose non-public information. The CMA has been explicit in the fact that context does not neutralise illegality.

The broader policy picture

The guidance also reflects a philosophical evolution in UK competition law. For decades, the focus was on protecting consumers through lower prices and innovation. Now, the CMA is extending that logic to workers. If businesses collude to suppress wages or restrict movement, workers, and the economy, lose out.

This shift aligns the UK with enforcement trends in the EU and the US, where labour market cases have multiplied. It also dovetails with wider government policy on "fair pay and mobility" as levers of productivity growth. In this sense, the CMA's approach is not just punitive but developmental: it seeks to make labour markets more transparent and dynamic.

For employers, that presents both a compliance challenge and a reputational opportunity. Organisations that act transparently, compete fairly for staff and avoid restrictive practices will not only stay on the right side of the law but may also gain an advantage in attracting and retaining talent.

Consequences of getting it wrong

While the CMA's tone in Competing for Talent is largely educational, its enforcement powers are anything but gentle. Businesses found to have breached the Chapter I prohibition may face:

• Fines of up to 10% of worldwide group turnover, including parent entities.
• Director disqualification for individuals directly involved, up to 15 years.
• Civil damages claims from affected employees or rival employers.
• Criminal prosecution in the most serious cartel cases.
• Severe reputational damage – the CMA publishes infringement decisions, which are widely reported.

These sanctions are not theoretical. Recent investigations have already produced multimillion-pound fines, and more are anticipated as the CMA ramps up its labour market enforcement. For directors and HR leaders, the reputational harm alone can be devastating; allegations of wage-fixing or collusion strike at the heart of a company's values.

A culture of compliance

For most employers, the risk lies not in deliberate wrongdoing but in cultural habit. HR teams are naturally collegial; they share insights, collaborate and benchmark. Those instincts are healthy, but they now require boundaries.

A compliant HR culture will rest on three pillars:

• Understanding – staff at every level must recognise that pay and recruitment information are commercially sensitive.
• Empowerment – HR professionals should feel comfortable disengaging from questionable conversations and escalating concerns internally.
• Governance – boards should integrate labour market compliance into their wider competition law framework, with documented oversight and regular review.

This is not about stifling collaboration or isolating HR from the market. It is about ensuring that collaboration takes place safely, transparently, and within lawful limits.

The Buckles view

The CMA's Competing for Talent guidance marks a watershed moment for employment compliance in the UK. For the first time, HR and recruitment decisions occupy the same legal territory as pricing and procurement.

For employers, that means competition compliance is now everyone's responsibility, not just the legal team's. The practical steps are achievable: awareness, auditing, and clear internal guidance will go a long way to mitigating risk.

More broadly, the guidance reflects a positive shift. It encourages businesses to compete for people on merit, not through coordination or constraint. In doing so, it aligns the goals of fair competition and fair work.

Handled thoughtfully, this is not a threat to good employers. It is an opportunity to reaffirm ethical recruitment and transparent reward as cornerstones of competitive strength.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.