Collective bargaining and competition law: Platform workers left colluding in the grey zone?

“Of course, the competition rules are not there to stop workers forming a union. So we need to make clear that those who need to can negotiate collectively, without fear of breaking the competition rules.”

Margrethe Vestager, 2 March 2020

Do collective (price) agreements between platform workers infringe EU competition law? Commissioner Vestager has repeatedly said that platform workers should be able to negotiate collectively. So far, the European Commission has not provided clarity on this issue, leaving platforms and platform workers in the dark. But this is likely to change. The EC is revising its Horizontal Cooperation Guidelines and the EC’s public consultation questionnaire for the Digital Services Act focuses on “self-employed individuals and platforms”. The EC has also recently announced that it will assess the impact of policy options for collective bargaining for the self-employed. So which options does the EC have to address the position of platform workers?

Collective bargaining agreements under EU competition law

Two cases are worth recalling because they define the scope of possible policy options:

• Albany (1999): Widely cited in the context of the current debate about whether sustainability objectives can override competition rules, this case is about the balancing of the EU’s internal market policy against the EU’s social policy and whether collective agreements constitute measures that nullify the effectiveness of competition law. The European Court of Justice ruled that the activities of the Community “are to include not only a ‘system ensuring that competition in the internal market is not distorted’ but also ‘a policy in the social sphere’”. According to the ECJ, certain restrictions of competition are inherent to collective agreements between employers and workers, but the social policy objectives pursued by such agreements would be seriously undermined if they were subject to the prohibition on engaging in cartel behaviour. Therefore: “agreements concluded in the context of collective negotiations between management and labour in pursuit of such objectives must, by virtue of their nature and purpose, be regarded as falling outside the scope of Article [101(1)] of the Treaty”.
• FNV Kunsten (2014): The Netherlands Musicians’ Union and the Association of Foundations for Substitutes in Dutch Orchestras (an employers’ association) had concluded a collective labour agreement on minimum fees for self-employed substitutes for orchestra players. The ECJ ruled that competition law does not apply to collective agreements among self-employed individuals as long as such individuals can in fact be qualified as actual employees, or in the ECJ’s words as “false self-employed”.

The ECJ’s case law therefore provides some guidance to distinguish between false self-employed (who should be treated as employees and are part of the economic unit of their ‘employer’) and self-employed service providers (who on the contrary are independent companies and subject to competition law). But the criteria are not clear enough for those platform workers that have characteristics of both an employee and a genuinely self-employed service provider and risk falling between two stools. This is a clarity issue. And there is also an issue of scope of application of competition law. The EC has to decide to what extent competition law should be applicable to genuinely self-employed workers, since legislators and competition authorities are yet to reach a common understanding (see some examples below).

Policy options

The EC has at least five different options to address the clarity issue and the scope of application issue:

1. Exemption: Similar to sustainability agreements, collective bargaining with self-employed workers may affect competition (by raising prices for customers) but at the same time may genuinely pursue social goals (enabling gig economy workers to negotiate employment benefits more commensurate with those of employees). This could allow for (guidance on) the application of Article 101(3) TFEU or even a formal block exemption. But the EC’s approach to exemptions to date has been strict and currently leaves little room to take into account social benefits (the “fair share to customers” criterion requires benefits to be ensured for customers of the agreement in question rather than society at large). The Dutch Competition Authority has suggested that the protection of employees and self-employed workers can be considered as an improvement of production, referring to the Metro (1977) case. However, this case concerned a distribution agreement that clearly had economic benefits for the supply of goods. So, it is at least questionable to what extent it provides a basis for exemptions for collective agreements.
   
   In new guidance on the application of Article 101(3) TFEU or a formal block exemption, the EC could clarify ambiguous terms and it could extend collective bargaining rights to genuinely self-employed workers. By way of example for how the EC might proceed, the Competition (Amendment) Act that was adopted in Ireland in 2017 to exempt collective bargaining by workers applies to the “false self-employed” and “fully dependent self-employed workers” and gives definitions for these two categories of workers.
2. De minimis exemption: The cartel prohibition is not applicable where the impact on competition is not appreciable (2014 De Minimis Notice). The scope of this safe harbour could be widened to cover collective agreements for platform workers. In Australia, the ACCC has proposed a class exemption for businesses and independent contractors with an annual turnover of less than $10 million to collectively bargain with customers or suppliers. A de minimis exemption can be extended to genuinely self-employed workers and would, at least within the scope of the safe harbour, remove the need to address the clarity issue. The ACM has similarly given specific guidance on the application of the Dutch de minimis exemption to self-employed persons.
3. Non-enforcement: The EC could publicly state that it will not take action against (certain) collective agreements. A non-enforcement statement could include collective bargaining by genuinely self-employed workers and be accompanied by additional clarifications. The main drawback of this option is that it would not bind national competition authorities or national courts. However, according to the OECD, national competition authorities in France, Italy and Spain do not enforce competition rules against unions of platform workers that negotiate employment conditions on behalf of self-employed workers.
4. Regulation: Another option is to regulate the relationship between online platforms and platform workers in such a way that platform workers receive ‘fair’ compensation. The EC’s DSA questionnaire aims to understand this relationship better. This option is, in the end, not so different from the balancing exercise in Albany, because it will also involve weighing up social policy objectives against internal market policy objectives. Regulation will not solve the clarification issue or the scope of application issue, but it might decrease the need for collective bargaining and, therefore, the need to resolve these issues would be less urgent.
5. Guidance: The ACM introduced the ‘side by side’ approach endorsed by FNV Kunsten. Any worker who works in the same way as employees should be treated the same as those employees. However, this approach may not be helpful as platform workers often do not work side by side with employees. Guidance on the basis of case law could potentially solve the clarity issue, but it would not solve the scope of application issue as the ECJ’s case law does not seem to allow for any interpretation other than that competition law applies to genuinely self-employed workers.

What’s next?

The EC is expected to publish its proposals for the DSA package at the end of this year and the results of the consultation on the Horizontal Cooperation Guidelines in early 2021. The impact assessment on collective bargaining will be kicked off this autumn and will be followed by a public consultation. But platforms and platform workers in the EU may not have the luxury of waiting until then. As millions of workers lose their jobs in the wake of the Covid-19 crisis, the need for clarity is more urgent than ever.