Economic Undertakings

(Solo Freelancer) Workers of the world, unite! – Draft EC Guidance on the application of competition law to collective bargaining | Hogan Lovells

[co-author: Marta Powolny]

The European Commission has published draft guidelines on the application of competition law to collective bargaining concerning the working conditions of ‘self-employed workers’. The draft guidelines clarify the Commission’s position on when collective bargaining is permitted or will not result in Commission intervention. By bringing more clarity and certainty to this issue, the Commission hopes to ensure that competition rules do not stand in the way of efforts (by this large and growing category of workers) to find “a better deal”.

On 9 December 2021, the European Commission (Commission) published draft Guidelines on collective agreements concerning the working conditions of “individual self-employed” – i.e. people who do not have a contract of work or who are not in an employment relationship, but who depend primarily on their own personal labor to provide services. The draft guidelines take a broad approach based on the economic and practical nature of the relationship between the self-employed person(s) and the counterparties with whom they seek to negotiate.

The draft guidelines follow initial public consultations during which the Commission sought comments on a number of policy options – details of which can be found in our previous article: Collective bargaining for the self-employed – a hard work ?

If formally adopted, the guidelines will clarify the categories of collective agreements that:

  • do not fall within the scope of the prohibition of anti-competitive agreements contained in Article 101(1) TFEU; Where
  • will in no way justify the intervention of the Commission.

The Commission has requested views on the proposed guidelines by February 24, 2022.

Legal background – why is competition law even potentially relevant?

It has long been recognized that collective bargaining between employers and employees aimed at improving employment and working conditions is excluded from the scope of Article 101(1) TFEU – a principle otherwise known as “Albanian exception”.

However, this is not the case for the self-employed. Under existing EU competition rules (and indeed the laws of many jurisdictions around the world), self-employed workers are classified as “businesses”. Therefore, the prohibition of anti-competitive agreements between undertakings contained in Article 101(1) TFEU applies to cooperation between self-employed workers, and the possibilities for self-employed workers to organize and engage collectively (through trade unions or other associations) have therefore been limited.

Why now?

The motivation behind these guidelines is the Commission’s observation that labor markets have undergone a paradigm shift in recent years. Digitization and the growth of the online economy (as well as the trend towards outsourcing and outsourcing) have led to a substantial increase in self-employment in the EU.

In short, the Commission is concerned that the growing number of individuals working in the “gig economy” may be unable to obtain favorable wages or working conditions due to an alleged lack of bargaining power. These concerns are seen as particularly acute when individuals act as a customer interface (delivery) through digital platform services (many of whom are self-employed).

However, the Commission’s concerns go beyond the platform economy. For example, the Commission considers that certain activities of the self-employed also pose problems where they have entered into commercial service contracts under which the terms and conditions of employment may, according to the Commission, not be as secure as they would be for an “employed person”. As such, the Commission aims to ensure that, in certain cases, self-employed persons can protect their interests by participating in a collective engagement with employers in a manner compatible with the requirements of labor law. competition.

Commission proposals

The Commission’s view (informed by the contributions received in the context of the ongoing consultation process, but also in the context of its public consultation on the “Digital Services Act package”) is that security legal system enjoyed by “salaried” workers should be formally extended, in certain cases, to self-employed workers.

In this regard, the Commission is following a number of countries that have already taken steps to address this issue. For example, the Dutch competition authority amended its guidelines in 2019 to clarify that workers in the gig economy can bargain collectively in certain circumstances without violating competition law. The Australian Competition Authority has also proposed an exemption for the self-employed and small businesses.

To this end, the draft Guidelines specify that:

  • Certain types of collective agreements will not fall within the scope of Article 101(1) TFEU where the self-employed are effectively in a comparable situation to “employees”. In this regard, the Commission draws attention to self-employed workers who find themselves in a situation of economic dependence vis-à-vis a counterparty to which they provide their services exclusively or predominantly. Another example is freelancers performing the same or broadly similar tasks as employees of the counterparty, or freelancers working through digital labor platforms; and
  • Even where it cannot be presumed that a collective agreement does not fall within the scope of Article 101(1) TFEU, the Commission will not intervene where certain other factors are present – for example where self-employed workers may nevertheless find themselves in a bargaining position vis-à-vis their counterparts and, therefore, unable to significantly influence their working conditions.

Once finalized, the draft guidelines will apply to all agreements negotiated and/or concluded collectively between certain categories of “single self-employed persons” and their counterparties insofar as, by their nature and their object, they concern the conditions of work of these isolated freelancers. -employees. Despite the focus on platform workers, the guidelines would be applicable to workers in the online and offline world.

The Commission clarified that, among other things, the initiative would only apply to collective bargaining with the aim of improving working conditions, including wages. Any negotiation or agreement between independent players regarding, for example, the prices charged to end customers would not be covered and, as such, could in principle be considered a serious breach of competition law. Genuine independents will also not benefit from the position set out in the draft guidelines.

Comment

Beyond the Commission’s determination to (re)shape (competition and other) policy to ensure it is fit for the digital age, this development underlines the Commission’s growing attention to the interplay between competition law and employment issues (noting the recently expressed intention to tackle no-poaching and wage-fixing agreements – see Wage Watchers in Brussels – European Commission focuses on labor market agreements).

The initiative also shows the Commission’s willingness to consider non-economic factors – apparently allowing the concept of ‘equity’ and other social policy objectives to creep into the analysis. This reflects the move towards non-traditional valuation standards on other fronts, particularly with respect to sustainability and environmental considerations.

In addition, the Commission hopes that these guidelines will mitigate the risk of “false positives”, i.e. situations where the alleged violation of competition law does not, in fact, lead to competitive harm. This should allow the Commission to focus its enforcement resources on the behaviors most likely to cause real harm.

And after?

The Commission’s deadline for comments is 24 February 2022. The Commission will then assess the input received from stakeholders with the aim of publishing the final version of the guidelines, together with an impact assessment report during from the second quarter of 2022. Once finalised, the guidelines will be binding on the Commission in its interpretation and application of EU competition rules.

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