The Fine Line: where pay transparency regulation and competition law risk intersect

Regulatory obligation on pay transparency is gaining momentum globally. It aims to keep employers accountable and to change the conversation within businesses, creating a level playing field where pay and pay progression systems are fair and transparent.     

Europe is leading the charge with the roll out of the EU’s Pay Transparency Directive (the “Directive”). As many multinationals work towards pay transparency readiness, a topic we have been considering recently is the intersection between pay transparency and competition law.  

Competition law applies to labour markets and anti-competitive behaviours including (i) wage-fixing (ii) no-poach agreements and (iii) the exchange of sensitive information are serious infringements subject to enormous fines. 

Is there a potential hidden pay transparency risk? At what point could you cross the fine line between pay transparency compliance and into anti-competitive collusion? 

A regulatory recap 

Article 5 of the Directive establishes pay transparency rights for job applicants across the EU. It requires employers to provide information to applicants about the initial pay or pay range for the advertised position. This should be provided in such a way to ensure informed and transparent pay negotiation, such as in job vacancy notices, prior to interviews, or otherwise. 

This obligation applies to all EU employers, irrespective of size, and must be implemented by all member states by 7 June 2026.  Poland has already implemented this particular requirement into Polish law, meaning for employers in Poland, the Directive’s obligations on pre-employment transparency applied from 24 December 2025.  

Whilst the Directive does not apply in the UK, it will apply to UK companies with employees based in the EU. Big multinationals may wish to match EU standards for consistency and simplicity. If your business operates in the EU compliance is at your doorstep, warranting closer attention to this topic.

The competition law angle 

Competition law applies to agreements between employers about wages or working conditions. In fact, authorities both in the UK and EU have recently shifted their focus to labour markets. 

In the UK, March 2025, saw the CMA’s first labour market infringement decision, a £4.24 million fine was imposed on sports broadcasters for collusion on rates paid to freelancers and future wage increases. The CMA’s 2025-26 Annual Plan indicates labour markets will continue to be a focus point, emphasising that functioning labour markets are an “important driver of economic growth and productivity”. In September 2025, the CMA also published guidance, Competing for talent, expanding on previous guidance dating back to 2023 and sending a clear message to businesses: agreements or practices between firms (regardless of whether they directly compete with one another for customers) on how they hire or set pay and benefits or other employment terms can amount to cartels, bringing in contention the severe consequences attached to such infringements. 

In the EU, the European Commission published a Competition Policy Brief in May 2024 classifying wage-fixing and no-poach agreements as serious "by object" infringements, emphasising that enforcement against restrictive labour market agreements has become a priority for many competition authorities worldwide. The European Commission conducted its first dawn raids into suspected labour market agreements in 2023 in the online food delivery sector, culminating in June 2025 with its landmark first labour market infringement decision, imposing fines of €329 million for no-poach agreements and unlawful information exchange. Just as businesses compete for customers, they also compete for talent.

This creates an intersection between pay transparency and competition law, and a potential compliance challenge for employers. Whilst pay transparency requires information transparency to promote equal and fair pay practices, exchanges of sensitive pay data could amount to the unlawful exchange of competitively sensitive information which can restrict competition between employers competing for talent. In a world where pay information becomes publicly available, it is important to remind employers that any form of collusion on the same is strictly prohibited. For organisations operating across EU markets, understanding this potential tension against the pay transparency backdrop is important.

The core tension: When does pay transparency cross into collusion?  

The Directive, as mentioned above, requires pay or pay range disclosure to job applicants. The intention being to improve the individual’s bargaining position during salary negotiations.  There does not appear to be a strict obligation under the Directive itself to publicly state this in a job advert. Exactly where and when in the recruitment process pay information is disclosed for these purposes is therefore a matter for local legislation. However, the new Polish law which implemented this obligation in December 2025 does not appear prescriptive either in terms of when or how pay information is shared. The requirements appear to be that information is shared in writing before the employment contract is signed, provided it is shared sufficiently in advance to enable informed and transparent salary negotiations. 

Under competition law, not all exchanges of information are unlawful. Information exchanges become unlawful when they involve commercially sensitive information that reduces strategic uncertainty in the market or influences rivals' competitive conduct. Information is more likely to be considered competitively sensitive if it is: 

• Confidential rather than publicly available
• Individualised rather than aggregated
• Current or forward-looking information

Pay information and salary data (particularly during the recruitment process) is generally not readily available to the public, and tends to be considered competitively and commercially sensitive.  Apart from pay and cost data, the UK CMA recognises in its guidance that hiring decisions and information on benefit packages and other working conditions can also be considered competitively sensitive. Tensions and legal risks may therefore arise when transparency obligations become a pretext or catalyst for anti-competitive behaviours. 

Employers should be careful to avoid discussing, agreeing or capping standardised pay ranges for similar roles, or otherwise sharing their future pay intentions, whether through bilateral or multilateral information exchange. Importantly, even one-way exchanges of sensitive information can infringe competition law. Under both EU and UK law, recipients of competitively sensitive information (even if unsolicited) are presumed to have taken that information into account in their own decision-making unless they clearly and promptly distance themselves from the disclosure or report the contact to the relevant authority. For example, in its March 2025 decision, the CMA emphasised that even though ITV could have obtained the pay-rate information received from Sky indirectly or through gathering publicly available sources, the direct disclosure of this sensitive information from Sky contravened UK competition law.

While competition authorities acknowledge that employers may need to discuss legitimate issues relevant to their industry at trade association and industry forum meetings, competitors should avoid straying into sharing individualised, current or forward-looking information about pay, planned salary increases or recruitment strategy. Authorities are unlikely to be sympathetic to justifications that businesses want to benchmark their rates or avoid a bidding war for talent – rather, in the sports broadcasting case, when rejecting such motives, the CMA found there was an explicit aim to coordinate how much to pay freelancers and the parties must have, or should have been aware their conduct had the object of restricting competition. 

Consequences of non-compliance 

A significant aspect of the Directive is its enforcement mechanisms. Breach of equal pay rights and obligations may lead to uncapped fines and employees can claim compensation and full back pay (including bonuses). 

The consequences of breaching UK and EU competition law through anti-competitive information exchange are well established and severe. In the EU and the UK, businesses can be fined up to 10% of their worldwide annual turnover. Businesses may also face private damages actions brought by customers (here it could be former employees) or other private litigants. In the UK, companies can be excluded from public procurement procedures for up to five years and company directors involved in such infringements can also be subject to disqualification orders preventing them from acting for up to fifteen years and face criminal liability including custodial sentences of up to five years and unlimited fines. 

Complying with legal obligations to disclose pay ranges to job applicants is distinct from competitor-to-competitor sharing of current or future wage levels or using public disclosure to affect competitor conduct. These severe penalties underscore the importance of ensuring any information exchange between competitors complies with competition law. 

What risk mitigation strategies should you consider?  

• Avoid sharing or discussing competitively sensitive information with competitors including salary and benefits information whether in formal or social settings.
• Benchmarking only using third party data or public data that ensures information is anonymised and sufficiently aggregated.
• Targeted training for HR, Reward and Recruitment teams on competition compliance that addresses the distinction between lawful transparency compliance and unlawful anti-competitive practices.
• Establish clear protocols for attendees of industry forums and trade association meetings.
• If a competing employer or industry contact discloses competitively sensitive information, seek legal advice and take appropriate steps to clearly and promptly distance from the disclosure.

Please contact us if you would like to discuss any aspect of this article in further depth.