The Portuguese Competition Authority (AdC) has issued a warning regarding the impact of talent shortages and labor mobility restrictions on competition within the artificial intelligence (AI) sector. In a newly published study, the AdC highlights that companies may adopt talent retention strategies that could harm competition, particularly when implemented by firms with significant market power.

The AdC's analysis focuses on various competitive effects stemming from practices such as mass hiring of rival teams, known as 'acquihires', and the use of restrictive labor clauses and agreements between firms to avoid hiring each other's employees. These strategies, which can potentially exclude rivals or limit the mobility of specialized workers, are under scrutiny from a competition policy perspective.

Notably, the study points out that non-compete and confidentiality clauses are commonly found in the digital and AI sectors. While these clauses may comply with labor laws, their application by dominant firms to restrict competition could violate competition law. The AdC emphasizes the need for careful examination of such practices.

Additionally, the report discusses 'reverse acquihires', where a company hires an entire team from another firm without formally acquiring it, which may be classified as a concentration under merger control regulations. The AdC advocates for increased scrutiny of these strategies to safeguard competition.

The risks identified by the AdC include reduced access to essential personnel, limitations on labor mobility, and barriers to innovation. The authority underscores the importance of labor mobility in facilitating knowledge dissemination and fostering innovation, particularly in the rapidly evolving AI sector.

This publication is part of the AdC's ongoing efforts to analyze competitive implications arising from generative AI, following previous papers on data access and AI model openness. The series aims to identify emerging risks in digital markets and support the AdC's proactive enforcement strategy.