As long as they're operating in the best interests of the shareholders of their company (and not breaching any statutory regulations on discrimination, e.g. by race or gender) an employer is free to appoint staff by whatever criteria, and by whatever means, they so choose.
I used to work in a school where the headteacher was a firm believer that no teacher should stay in the same school for more than a few years. For that reason his strict policy was that he would never promote anyone internally if he could appoint someone from outside. (He couldn't prevent staff from seeing promoted posts advertised, because they were listed on a circular which was sent round to all schools in the city, but he'd seek out anyone in our school who might be eligible to apply and tell them not to bother even trying to). Such a policy, while unusual, is perfectly lawful, as is the one operated by your own employer.