European Commission Investigates Data Centre Builders for Alleged Cartel Practices in Surprise Antitrust Raids

The European Commission launched unannounced inspections into data centre construction firms, investigating alleged anticompetitive practices, including no-poach agreements and cartel behaviour, under EU antitrust rules.

European Commission Investigates Data Centre Builders for Alleged Cartel Practices in Surprise Antitrust Raids

EU Investigates Data Centre Construction Firms for Antitrust Violations

On 17 November 2024, the European Commission conducted surprise inspections at several data centre construction companies, probing potential breaches of EU antitrust laws, particularly concerning alleged no-poach agreements.

Commission carries out unannounced antitrust inspections in the data centre construction sector
The European Commission is carrying out unannounced inspections at the premises of companies active in the data centre construction sector. In parallel, the Commission has sent out formal requests for

Understanding No-Poach Agreements

No-poach agreements involve companies mutually agreeing not to hire or solicit each other's employees. While such arrangements might seem to promote stability, they can suppress employee mobility and wage growth, undermining fair competition.

The Commission's focus on these agreements demonstrates their commitment to maintaining a competitive labour market.

Scope of the Investigation

The Commission's unannounced inspections, often referred to as "dawn raids," are a preliminary step in antitrust investigations.

These actions do not imply guilt but indicate the Commission's serious concerns about potential anti-competitive practices in the data centre construction sector.

In addition to on-site inspections, formal information requests have been sent to other companies in the industry.

Industry Context

The data centre construction industry has experienced significant growth, driven by the increasing demand for cloud services and digital infrastructure.

This expansion has attracted scrutiny regarding business practices, especially concerning labor agreements that could hinder competition.

The Commission's investigation reflects a broader effort to ensure that rapid industry growth does not come at the expense of fair market practices.

The investigation centres on potential violations of Article 101 of the Treaty on the Functioning of the European Union (TFEU), which prohibits agreements that restrict competition.

If companies are found to have engaged in no-poach agreements, they could face substantial fines and be required to alter their employment practices to comply with EU competition laws.

The duration of the investigation will depend on various factors, including the complexity of the case and the level of cooperation from the companies involved.

The Commission has emphasised that the inspections are a preliminary step and do not prejudge the outcome of the investigation.

Companies found in violation of antitrust rules may face significant penalties, including fines and orders to cease the infringing practices.

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