The European Commission’s guidelines on collective agreements are another example of the return of the concept of “fairness” in competition policy. The fine line between illegal wage-fixing arrangements and legal collective bargaining may have spooked solo self-employed persons from collectively negotiating their working conditions.
The guidelines aim to end this uncertainty. They clarify the room to manoeuvre that solo self-employed persons have under the EU competition rules to collectively boost their working conditions. Similar to the guidelines by the Authority for Consumers and Markets, the Commission promises in its guidelines not to take enforcement action against certain collective agreements that would normally be caught by the EU competition rules.
Within the guidelines’ boundaries, solo self-employed persons, including digital labour platform workers, can now act fearlessly when collectively taking a stand against their counterparties to achieve better working conditions. Digital labour platforms are also advised to explore these boundaries, now that a Directive on improving working conditions in platform work is on the way.
A variety of self-employment formats have emerged under the rapidly growing platform economy. This has increased the need for more flexibility in the labour market.
Unlike employees, self-employed persons generally conduct their activities as independent economic operators and therefore qualify as ‘undertakings’ under the EU competition rules. As a result, self-employed persons may run the risk of infringing the EU competition rules when collectively bargaining for better working conditions. At the same time, a significant number of self-employed persons face poor working conditions, for instance because they have a weak bargaining position and their situation is often comparable to that of workers, but without the comparable perks (‘false self-employed’).
To resolve this ‘false self-employed’ status in the context of platform work, the Commission has proposed the Platform Work Directive, listing a number of criteria to determine the employment status of platform workers. In addition, the Commission has adopted guidelines to clarify the application of the EU competition rules to collective agreements relating to working conditions of solo self-employed persons. Unlike the proposed Directive, the guidelines cover solo self-employed persons in both the online and the offline economy.
Guidelines on collective agreements: no application of EU competition rules
Building on earlier EU case law, the guidelines explain that the EU competition rules do not apply to collective agreements relating to working conditions of solo self-employed persons when their situation is ‘comparable to that of workers’. The following three categories of solo self-employed people are considered to fall within this qualification:
economically dependent solo self-employed persons – this category includes solo self-employed people who provide their services exclusively or predominantly to one counterparty. ‘Economic dependence’ is presumed if at least 50% of a solo self-employed person’s total work-related income is derived from a single counterparty.
solo self-employed persons working ‘side-by-side’ with workers for the same counterparty – this category includes solo self-employed persons performing the same or similar tasks ‘side-by-side’ with the counterparty’s workers and without bearing any of the commercial risks.
solo self-employed persons working through digital labour platforms – this category includes solo self-employed persons who provide services to or through a digital labour platform. A ‘digital labour platform’ is a provider of a commercial service that (i) is provided at a distance through electronic means; (ii) is provided at the request of a recipient of the service; and (iii) involves the organisation of work performed by individuals (such as transport of persons or goods, or cleaning).
Guidelines on collective agreements: no enforcement action
Furthermore, even if a collective agreement infringes the EU competition rules, the Commission will not take any enforcement action if the collective agreement is concluded by solo self-employed persons who are in a weak negotiating position.
According to the guidelines, this refers to:
collective agreements concluded between solo self-employed persons and their economically stronger counterparties, whereby ‘economic strength’ is presumed if (a) the counterparty represents the whole sector or industry; or (b) the aggregate annual turnover or annual balance sheet total of the counterparty (or the counterparties jointly) exceeds EUR 2 million or if its staff headcount is at least 10 persons; and
situations where national or EU legislation specifically addresses an imbalance in bargaining power either (a) by granting solo self-employed persons the right to collective bargaining or (b) by excluding from the scope of national competition law collective agreements concluded by self-employed persons in certain professions.
The guidelines create more legal certainty for a growing number of self-employed persons by building on the past (earlier EU case law) whilst anticipating the future (the platform economy).
They are another example (comparable to the interaction between competition law and sustainability) of a more social approach to competition law (see our January 2022 newsletter) or, as Competition Commissioner Verstager puts it, a return of the concept of “fairness” in competition policy.