Competition law and collective bargaining
July 1, 2016
Self-employed people who are engaged for gain in the provision of goods or services are subject to EU and Irish competition law. This ensures that the persons in question, who range from doctors, lawyers and other professionals, through to plumbers, electricians and people operating in the arts, media and culture sector, compete with each other in the market in which they are active. Such competition promotes efficiency, lower prices, wider choice and a higher standard of service, and works for the benefit of customers, clients and consumers generally.
The CCPC (and previously the Competition Authority) as enforcers of competition law also have a role in giving guidance to businesses and trade associations on how to comply with competition law. One area in which such guidance might be of assistance is that of “collective bargaining”. Under competition law, self-employed people are classified as “undertakings” (i.e. businesses). Competition law generally forbids all agreements that prevent, restrict or distort competition between businesses. In particular, competition law specifically prohibits agreements which directly or indirectly fix purchase or selling prices or any other trading conditions. If permitted, “collective bargaining” with customers – who may themselves be individual consumers – by self-employed competitors would eliminate competition between those self-employed competitors and would have the same detrimental effect on consumers as any other form of collusion between competitors, whether price-fixing cartels or agreements not to “poach” customers from each other. Such collusive arrangements are generally prohibited by competition law and – because of their clear detrimental effect on consumers – are treated as a serious form of anti-competitive conduct.
It is important to note that the position is different where employees are concerned. Competition law does not apply to employees because they are not independent traders competing with each other – they work in accordance with directions given by their employers. Competition law therefore does not in any way inhibit collective bargaining by employees.
A complicating factor is in relation to individuals who appear to be self-employed service providers but may, in fact, be “false self-employed” and are, in reality, employees. In the “Dutch Musicians” Case (C-413/13 FNV Kunsten Informatie en Media v Staat der Nederlanden, 4 December 2014), the Court of Justice of the European Union (CJEU) emphasised that self-employed service providers are, in principle, “undertakings” and are therefore subject to EU competition law. However, the Court also acknowledged the importance of examining the particular circumstances, in each case, to determine whether individuals who appear to be self-employed are actually employees. The Court made it clear that it is for national courts to examine the facts of particular cases in order to determine the appropriate classification of individual workers. In this particular instance, which involved musicians who were filling in as substitutes in an orchestra, the Dutch Civil Court subsequently found, on a detailed examination of the facts, that substitute musicians who were soloists were genuinely self-employed and were therefore prohibited by EU and Dutch competition law from engaging in collective bargaining. Others, who were ordinary members of the orchestra, should be classified as “false self-employed” – and therefore be deemed to be employees and entitled to engage in collective bargaining in the same way as any other employee.
In the CCPC’s view, the judgment in the Dutch Musicians case was a restatement of well-established principles of EU law regarding the application of competition law to collective labour agreements.
For “false self-employed” individuals to benefit from collective bargaining rights, no specific exemption from competition rules is needed so long as it can be shown that their true status is that of employees. A number of factors may need to be considered in each particular case, but one of the key elements will be whether the individuals concerned are, in reality, subject to the detailed direction of an employer in carrying out their daily tasks and do not have the degree of independence of action that are characteristic of the self-employed trader.
Competition law protects consumers from businesses that might otherwise get together to set the price of their goods or services. It ensures that independent traders – including sole traders and self-employed individuals – actively compete with each other. This benefits consumers by helping to keep prices down and driving improvements in quality and innovation. Self-employed individuals must be free to set the price of the goods or services they supply, and the conditions under which they supply them, and are subject to competition law in the same way as any other business.