(Solo self-employed) Workers of the World Unite! – EC draft guidance on application of competition law to collective bargaining

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[co-author: Marta Powolny]

The European Commission has published draft Guidelines on the application of competition law to collective bargaining involving the working conditions of the “solo self-employed”. The draft Guidelines clarify the Commission’s position on when collective bargaining is permissible, or will not prompt intervention from the Commission. By providing greater clarity and certainty on this issue, the Commission hopes to ensure that the competition rules do not stand in the way of efforts (by this significant and growing class of worker) to strike “a better deal”.

On 9 December 2021, the European Commission (Commission) published draft Guidelines on collective agreements regarding the working conditions of the “solo self-employed” – ie persons who do not have an employment contract, or who are not in an employment relationship, but who rely primarily on their own personal labour to provide services. The draft Guidelines adopt a broad approach based on the economic and practical nature of the relationship between the self-employed worker(s) and the counterparties they seek to negotiate with.

The draft Guidance follows initial public consultations in which the Commission sought feedback on a number of policy options – details of which can be found in our previous piece: Collective bargaining for the self-employed – a tough gig?

If formally adopted, the Guidelines will bring clarity on the categories of collective agreements that:

  • fall outside the scope of the prohibition on anticompetitive agreements contained at Article 101(1) TFEU; or
  • will not, in any event, prompt the Commission’s intervention.

The Commission has invited views on the proposed Guidelines by 24 February 2022.

Legal backdrop – why is competition law even potentially relevant?

It has long been recognised that collective bargaining between employers and employees intended to improve employment and working conditions is excluded from the scope of Article 101(1) TFEU – a principle otherwise known as the "Albany exception".

However, that is not the case for the self-employed. Under existing EU competition rules (and indeed the laws of many jurisdictions globally), the self-employed are classed as "undertakings". As a result, the prohibition on anticompetitive agreements between undertakings contained at Article 101(1) TFEU applies to cooperation between the self-employed, and the possibilities for the self-employed to organise and collectively engage (through unions or other associations) have therefore been limited.

Why now?

The motivation behind the guidance is the Commission’s observation that labour markets have experienced a paradigm shift in recent years. The digitalisation and growth of the online economy (as well as the trend towards subcontracting and outsourcing) has seen self-employment in the EU increase substantially.

In short, the Commission is concerned that the increasing number of individuals deriving work in the “gig economy” might be unable to secure favourable pay or work conditions due to an alleged lack of bargaining power. Such concerns are seen to be particularly acute where individuals act as the customer (delivery) interface via digital platform services (many of whom are solo self-employed).

However, the Commission’s concerns go beyond the platform economy. For example, the Commission believes there are also issues for certain activities of the self-employed where they have entered into commercial service contracts under which terms and conditions of work may not, the Commission believes, be as secure as they would be for an "employed" individual. As such, the Commission aims to ensure that, in certain cases, the self-employed can protect their interests by taking part in collective engagement with employers in a way that is compatible with competition law requirements.

Commission’s proposals

The Commission's view (informed by input received from the proceeding consultation process but also as part of its public consultation on the "Digital Services Act Package") is that the legal certainty enjoyed by "employed" workers should be formally extended, in certain cases, to the self-employed.

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

To this end, the draft Guidelines clarify that:

  • Certain types of collective agreements will fall outside the scope of Article 101(1) TFEU where the self-employed are effectively in a position comparable to that of “employees”. In this regard, the Commission draws attention to the self-employed that are in a position of economic dependence towards one counterparty to which they provide their services exclusively or predominantly. Another example concerns the self-employed performing the same or largely similar tasks as employees of the counterparty, or the self-employed working through digital labour platforms; and
  • Even where it cannot be assumed that a collective agreement falls outside 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 be in a weak bargaining position vis-à-vis their counterparties and, therefore, unable to significantly influence their working conditions.

Once finalised, the draft Guidelines will apply to all agreements negotiated and/or concluded collectively between certain categories of “solo self-employed” and their counterparties to the extent that, by their nature and purpose, they concern the working conditions of such solo self-employed persons. Despite the strong focus on platform workers, the Guidelines would be applicable to workers in both the online and offline world.

The Commission has made it clear that, amongst other things, the initiative would only apply to collective bargaining for the purposes of improving working conditions, including wages. Any negotiations or agreements between self-employed actors in relation to, for example, prices charged to end-customers would not be covered and, as such, could in principle still be considered a serious breach of competition law. The genuinely self-employed will also not benefit from the position set out in the draft Guidance.

Comment

Beyond the Commission’s determination to (re)shape policy (competition and otherwise) to ensure it is fit for the digital age, this development underscores the Commission’s growing focus on the interaction between competition law and employment-related issues (noting the recently expressed intention to address no-poach and wage fixing agreements – see Wage Watchers in Brussels - European Commission focuses on agreements in the labour market).

The initiative also shows the Commission’s willingness to entertain non-economic factors – permitting, it would seem, the concept of ‘fairness’ and other social policy goals to creep into the analysis. This mirrors moves towards non-traditional standards of assessment on other fronts, most notably in relation to sustainability and environmental considerations.

Further, the Commission hopes that these Guidelines will mitigate the risk of so-called “false positives” – ie situations where the alleged violation of competition law does not, in fact, result in competitive detriment. This should free up the Commission to focus its enforcement resources on conduct more likely to result in actual harm.

What's next?

The Commission's deadline for comments is 24 February 2022. The Commission will then assess input received from stakeholders with the goal of publishing the final version of the Guidelines, along with an impact assessment report in the second quarter of 2022. Once finalised, the Guidelines will bind the Commission in its interpretation and enforcement of the EU competition rules.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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