1. CMA guidance: labour markets are not an HR carve-out
In recent years, competition authorities have turned their attention to anticompetitive practices in labour markets. Competition authorities have come to view businesses as being in competition to recruit and retain human capital. They are concerned that these competing purchasers of human capital could collude to rig the market, making it harder for individual workers to negotiate for higher wages or move to other firms (which often include competitors of their current employer) in order to secure better terms[1].
In pursuit of this concern, competition authorities across Europe have pursued cases involving salary fixing agreements, no-hire and no-poaching agreements between competing and non-competing firms. There have also been cases where sharing sensitive employment related data has also been investigated and penalised.
In the UK, the Competition and Markets Authority (“CMA”) has already done the conceptual work for employers. In its guidance “Competing for Talent”[2], it states directly that competition law applies when businesses coordinate on pay or working conditions, and that businesses may be labour market competitors even if they are not competitors in selling products.
The guide identifies three classic “labour market cartel” behaviours: no‑poaching, wage‑fixing and the exchange of competitively sensitive information. It emphasises that unlawful arrangements need not be written and may arise through informal understandings, including social or industry contacts.
The practical takeaway is that HR benchmarking and “market sounding” are not competition‑neutral. They can become the mechanism by which competition is softened, especially where information relates to current or future pay intentions.
This article also addresses another type of restriction affecting employee mobility: restrictive covenants agreed between an employer and a worker as part of an employment contract. These do not always fall within the prohibition on anti‑competitive agreements because competition law is primarily concerned with agreements between undertakings, rather than restrictions agreed in an employment relationship. However, they can still suppress mobility and are under active policy scrutiny in the UK..
2. The Sky / freelance pay decision: what enforcement looks like in real life
The CMA’s 21 March 2025 decision on anti‑competitive behaviour in the purchase of freelance services in sports broadcasting is the UK’s clearest enforcement marker in this space. The CMA’s decision in Freelance Services[3] records multiple instances of information exchange about pay, treated as Chapter I infringements, and it explicitly frames the conduct as reducing uncertainty and substituting cooperation for the risks of competition.
This is important for two reasons.
First, it shows that labour inputs are treated as competitive parameters. The decision is not a footnote. It is a statement that pay‑related information exchange is capable of being “by object” harmful, with no need for a downstream consumer harm narrative.
Second, it shows how ordinary behaviour becomes unlawful. Internal emails talking about not getting into a “bidding war”, wanting to “be aligned”, or presenting a “united front” are treated as evidence of coordination. In other words, language that businesses often use casually is precisely the language authorities treat as incriminating.
3. Government consultation: non-competes, mobility, and the CMA’s view
3.1 The policy move: reforming non-competes as a growth intervention
The UK government has published a working paper on options for reform of non‑compete clauses[4]. The paper frames the key issue as revolving around labour market dynamism, knowledge diffusion and the risk that restraints reduce movement and wage progression. It also sets out a number of policy options Government could pursue to address these challenges (see Section 6 below).
Key options include:
- introducing statutory limits on the length of non-compete clauses
- banning non-compete clauses in employment contracts
- banning non-compete clauses below a salary threshold
- combining a ban below a salary threshold with a statutory limit
The significance here is not merely that non‑competes may be narrowed. It is that the policy logic treats mobility as an economic input. That is the same logic that sits behind labour market competition enforcement.
The Government consultation closed on 18 February 2026.
3.2 The CMA response: a “combined” reform model
The CMA has responded to the consultation process. Its response paper gives a window into the likely future direction of antitrust enforcement in the UK with regard to the domain of hiring and salary practices.
The CMA’s response is direct and, for employers, significant. In the CMA states that healthy, competitive labour markets are a driver of growth and that non‑competes are prevalent and can inhibit mobility. It supports reform and endorses a “combined” approach: a ban below an income threshold plus a statutory time restriction above that threshold[5].
The CMA’s core reasoning is worth stating plainly because it is the kernel of the future story.
- Time limits alone are unlikely to help workers who cannot afford a period out of the labour market.
- A blanket ban may go too far where pro‑innovation justifications are more plausible for higher‑paid roles.
- More targeted alternatives already exist and are often preferable, such as NDAs, training clawbacks, and garden leave.
This is not just consultation commentary. It is the CMA positioning itself as a policy actor on labour market mobility and thereby tightening the link between competition policy and employment policy.
4. Competition law reform in parallel: refining the UK regime
Running alongside labour market scrutiny is a wider competition reform agenda. The Department for Business and Trade has consulted on “Refining our competition regime”[6], with the stated aim of improving pace, predictability, proportionality and process, while maintaining CMA independence.
The consultation proposes structural changes including a new decision‑making model for markets and mergers to increase CMA Board involvement and accountability, streamlining the markets regime, and increasing certainty around merger review triggers.
This matters for employers for a simple reason: the CMA is being asked to move faster and to be more engaged. That is likely to increase the velocity of enforcement and the expectation of earlier compliance positioning by businesses, including in labour market conduct.
5. Employment law reform in parallel: the Employment Rights Act rollout
At the same time, employers are dealing with the phased rollout of the Employment Rights Act 2025 and the “Plan to Make Work Pay”[7]. The government’s timeline update makes clear that changes take effect in staged tranches through 2026 and beyond, including day‑one family leave rights, statutory sick pay changes and consultation-driven implementation.
This is relevant here for two reasons.
First, it increases operational and litigation risk in core HR processes at exactly the same time that competition authorities are scrutinising recruitment and pay practices.
Second, it increases the likelihood that employers will use “market” intelligence to manage cost, retention and workforce planning. That is precisely where the CMA warns the risk lies.
6. What this means for business: three scenarios and the practical risks
6.1 Scenario 1: Statutory cap only (soft reform)
If non‑competes are merely capped, many employers will treat this as a drafting exercise. That is a mistake. A cap reduces one tool, but leaves employers more reliant on retention strategies, pay benchmarking and informal market information. Those are the behaviours the CMA treats as high risk.
Practical implication: compliance programmes must extend into HR, recruitment and senior management discussions. Training must cover wage‑fixing, no‑poach risk, and information exchange, not only classic customer‑facing competition issues.
6.2 Scenario 2: Income-threshold ban plus time limit (the CMA’s preferred model)
If the combined model is adopted, businesses face two linked consequences.
- Lower‑paid and mid‑paid roles may be largely carved out from enforceable non‑competes.
- Employers will be pushed toward alternative protections (confidentiality, non‑solicitation, garden leave, training repayment clauses) and toward better internal controls.
Practical implication: the compliance challenge shifts from drafting to governance. Employers will need clearer rules on what can be shared in salary surveys, how benchmarking is run, and what internal escalation looks like when a competitor raises pay alignment in an industry setting.
6.3 Scenario 3: Broader restrictions on restraints and increased enforcement cadence
If reform is more aggressive, the combination of employment rights expansion and competition scrutiny will compress the margin for error. Businesses will face tighter legal constraints on mobility restraints and more scrutiny of how they manage hiring and retention.
Practical implication: employers should assume that “this is how the industry works” is no longer a safe narrative. The Sky freelance pay decision shows the CMA will treat industry norms as part of the problem, not a defence.
7. Conclusion
The UK is not dealing with a single reform. It is dealing with a reset on two fronts.
Employment reform widens rights and alters HR risk. Competition reform aims to change how the CMA functions and how quickly it acts. Labour market enforcement sits at the point where these two agendas meet.
For employers, the correct response is not to wait for a landmark labour market cartel case in the UK. The CMA’s guidance and enforcement signals already make clear what it considers unacceptable. Businesses that treat recruitment and pay practices as competition‑neutral will be structurally behind the curve.
[1] See generally “Antitrust in Labour Markets ”Competition Policy Brief No 2/2024, May 2024 available at adb27d8b-3dd8-4202-958d-198cf0740ce3_en.
[2] CMA, “Competing for Talent”, 9 September 2025, available at: Competing for talent – GOV.UK.
[3] Decision of the Competition and Markets Authority Anti-competitive behaviour relating to the purchase of freelance services supporting the production and broadcasting of sports content Case 51156, 21 March 2025 available at: Non-confidential decision
[4] Department for Business and Trade: “Working paper on options for reform of non-compete clauses in employment contracts” 26 November 2025
[5] Competition and Markets Authority, “Working paper on options for reform of non-compete clauses in employment contracts – response from the Competition and Markets Authority” dated February 2026 available at CMA response to working paper on options for reform of non-compete clauses in employment contracts.
[6] “Refining our competition regime”, Department of Business and Trade (20 January 2026), Refining our competition regime – GOV.UK. The consultation closes on 31 March 2026.
[7] See for example “Make Work Pay: Employment Rights Bill”, UK Parliament Briefing Paper (February 2026), available at: Make Work Pay: Employment Rights Bill – Committees – UK Parliament.
Paul Henty
Beale & Company Solicitors LLP
