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Did Samsung and LG conspire to keep employee wages low?

Samsung and LG have allegedly reached an illegal arrangement in the US to not hire each other's employees, allowing them to maintain non-competitive wages.

Published onSeptember 12, 2016

samsung-logo-x-x-mwc-2015 (1)

You’re probably most familiar with Samsung and LG in the mobile industry, but in addition to being competitors in the smartphone realm, the two Korean-centric companies also find themselves going toe to toe in a slew of other tech businesses. That’s why it’s such a big deal that the two allegedly struck an arrangement in which they agreed not to poach each other’s employees.

If such an arrangement was in fact reached, this would be in drastic violation of anti-competitive laws. The evidence that this deal exists comes to us via a recruiter representing Samsung. The recruiter reached out to a promising applicant in 2013 regarding a position, but reneged when they learned that the applicant was currently working as an LG sales manager.

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“I made a mistake!” the recruiter said via a LinkedIn message. “I’m not supposed to poach LG for Samsung!!! Sorry! The two companies have an agreement that they won’t steal each other’s employees.”

While this seems like a simple misunderstanding on the part of the recruiter, it has massive legal implications for Samsung and LG. Arrangements like the one alluded to are illegal in the US because they allow companies to pay employees lower wages due to a lack of competition.

The two companies have an agreement that they won't steal each other's employees.

Right now the case is currently under investigation in the Northern District of California, Frost vs. LG Corporation, LG Electronics Inc, Samsung Electronics Co Ltd et al., 16-5206. There’s currently no evidence that this alleged arrangement exists on a global scale, but even if it is only an actuality in the US market it could have massive legal ramifications for the two companies.

What do you think of Samsung and LG’s alleged arrangement to avoid recruiting employees from each other? Business as usual or a serious breach of anti-competitive laws? Sound off in the comments below!

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