Solo self-employed persons can bargain collective agreements: European Commission Guidelines

On September 29, 2022, the European Commission adopted guidelines on the application of EU competition law to the collective agreements of solo self-employed persons (hereinafter referred to as the “Commission Guidelines”), with the aim of defining when solo self-employed persons can collectively negotiate better working conditions without infringing EU competition law^[1].

Preliminarily, and according to the Commission Guidelines, a “solo self-employed person” is a “person who does not have an employment contract or who is not in an employment relationship, and who relies primarily on his or her own personal labor for the provision of the services concerned”.

LEGISLATIVE BACKGROUND

On the one hand, Article 101 of the Treaty on the Functioning of the European Union (known by TFUE) prohibits agreements between independent “undertakings” which restrict competition. On the other hand, Art. 3, para. 3 of the Treaty on the European Union (known by TUE) provides that the EU shall promote “a highly competitive social market economy, aiming at full employment and social progress”.

The Commission Guidelines quoted a previous decision of the Court of Justice of the European Union in Albany^[2] (codifying the so-called “Albany exception”) which points out that certain restrictions of competition are inherent in collective agreements between organizations representing employers and workers and are necessary for the improvement of working conditions. Consequently, said agreements fall outside the scope of Art. 101 TFUE and do not infringe EU competition law.

This decision is the starting point in the analysis of collective agreements that fall outside the scope of Art. 101 TFUE, including, as explained in detail below, collective agreements of self-employed persons.

In principle, genuine self-employed persons are considered independent “undertakings” for antitrust purposes, considering that the definition of “undertaking” covers any entity engaged in an economic activity with an autonomous organization, regardless of its legal status and the way in which it is financed^[3]. Indeed, self-employed persons offer their services for remuneration on a given market and perform their activities as independent economic operators^[4]. By contrast, employees cannot be deemed “undertakings” because they have no autonomous economic organization, which is independent from that of their employer, and not bear any of the financial or commercial risks arising out of the principal’s activity; rather, they operate as an auxiliary organ within the principal’s undertaking and therefore are integral part and expression of their employer’s economic organization.

However, the Court of Justice^[5] clarified that the “Albany exception” also covers “false self-employed”, such as persons who (i) act under the direction of their employer, as regards e.g. the freedom to choose their working hours; (ii) do not share the employer’s commercial risks and (iii) form an integral part of the employer’s undertaking for the duration of the relationship. In these cases, there is no risk that workers will infringe Art 101 TFUE by entering into collective negotiations and agreements to improve their working conditions. However, the Court was not as clear with respect to collective agreements between genuine self-employed workers with no bargaining power towards their principals.

The Commission Guidelines now expressly acknowledge that solo self-employed persons may not be entirely independent of their principal, or they may lack sufficient bargaining powers; and that collective negotiations may provide an important means to improve the working conditions of these solo self-employed persons. Further, the Commission Guidelines provide a framework to assess under what circumstances self-employed persons may enter into collective agreements to improve their working conditions without falling foul of Article 101 TFEU (or national equivalents, like Article 2 of law 287/90 in Italy).

COMMISSION GUIDELINES

The Commission Guidelines identify the categories of persons who can bargain collective agreements that fall outside the scope of Art. 101 TFUE. However, the guidelines also state that collective agreements entered into by these persons (including the negotiations that precede them) must be genuinely aimed at (and necessary or proportionate to) regulating their working conditions and cannot go beyond this objective. For instance, to fall within the safe harbor established by the guidelines, the negotiations and the resulting collective agreements cannot have as their object or effect the coordination of the conditions (in particular, the prices) under which services are offered by solo self-employed persons or the counterparties to consumers, or the restriction of the freedom of undertakings to hire the labor providers that they need.

Economically dependent solo self-employed persons

These are solo self-employed persons who are likely to be in a situation of economic dependence vis-a-vis the counterparty. This issue has been considered by some national laws which recognize that such solo self-employed persons have the right to bargain collectively. Specifically, the Commission considers as economic dependence cases where a person earns on average at least 50% of their total work-related income from a single counterparty over a period of one or two years (e.g. architects earning 90% of their income from one single Company who negotiate and conclude an agreement with the Company for a maximum of 45 hours’ work per week).

Solo self-employed persons working “side-by-side” with employees

These are solo self-employed persons who perform the same or similar tasks “side-by-side” with employees for the same counterparty in a situation comparable to those employees, i.e. under the direction of the counterparty and without commercial risks linked to the activity. This is the case e.g. of an orchestra composed of both employees and self-employed persons who are instructed by the director regardless of their status when the two organizations representing the categories conclude a collective agreement which establishes a maximum of 45 working hours per week.

Solo self-employed working through digital labor platforms

Digital labor platforms are usually able to unilaterally impose the terms and conditions of the relationship without previously informing or consulting the solo self-employed persons. They differ from other online platforms in that they organize work performed by individuals at the one-off or repeated request of the recipient of a service provided by the platforms. This definition should be limited to providers of a service for which the organization of work is an essential part of the service and not merely minor and purely ancillary.

A typical example is drivers or riders working for ride-hailing platforms who enter into negotiations with the relevant regional association of ride-hailing platforms with the aim of concluding a collective agreement to improve their working conditions and coordinate their negotiation strategy to this end. These negotiations and the resulting collective agreements fall outside the prohibition of Article 101 TFEU or national equivalent. However, it may happen that while discussing their strategy for negotiating with the drivers, the ride-hailing platforms also discuss the possibility of agreeing on a minimum price per ride to be charged on consumers/customers: these negotiations or exchanges of information do not fall within the Commission Guidelines’ safe harbor and are likely to infringe Article 101 TFEU.

Solo self-employed persons in a weak negotiating position

Finally, other examples analyzed by the EU Guidelines cover solo self-employed persons who are not in a situation comparable to those workers previously but who nevertheless face difficulties in influencing their working conditions because of their weak position. The Commission Guidelines clarifies that the Commission will not intervene against the categories of collective agreements concluded by solo self-employed persons with counterparties that have a certain level of economic strength; or pursuant to national or European Union legislation, establishing e.g social objectives. The latter is the case e.g. of a national competition law of a Member State, which excludes from its scope the agreements concluded by certain self-employed persons in the cultural sector. These agreements are not considered to be anticompetitive under national competition law, therefore the Commission will not intervene against collective agreements entered into by solo self-employed persons that are covered by the national measure.

CONCLUSIONS

In conclusion, the Commission Guidelines ultimately aim at improving the working conditions of solo self-employed persons, whether working for digital platforms or active in the offline economy. To achieve this goal, the Commission will monitor how the Guidelines are applied at national level through the European Competition Network (which gathers all the national competition authorities of Member States, plus the Commission) and with ad hoc meetings with European social partners^[6]. The review of the Guidelines is planned for 2030.

This article has been published also on Concurrences.com on September 29, 2022.

[1] Communication from the Commission – Guidelines on the application of Union competition law to collective agreements regarding the working conditions of solo self-employed persons, in OJ C 374 of 30 September 2022.

[2] Judgment of 21 September 1999, Albany International BV v Stichting Bedrijfspensioenfonds Textielindustrie, C-67/96, EU:C:1999:430, paragraph 59.

[3] Judgment of 23 April 1991, Klaus Höfner and Fritz Elser v Macrotron GmbH, C-41/90, EU:C:1991:161, paragraph 21; judgment of 16 November 1995, Fédération Française des Sociétés d’Assurance, Société Paternelle-Vie, Union des Assurances de Paris-Vie and Caisse d’Assurance et de Prévoyance Mutuelle des Agriculteurs v Ministère de l’Agriculture et de la Pêche, C-244/94, EU:C:1995:392, paragraph 14; judgment of 11 December 1997, Job Centre coop. arl., C-55/96, EU:C:1997:603, paragraph 21.

[4] Judgment of 4 December 2014, FNV Kunsten Informatie en Media v Staat der Nederlanden, C-413/13, EU:C:2014:2411, paragraph 27; judgment of 28 February 2013, Ordem dos Técnicos Oficiais de Contas v Autoridade da Concorrência, C‑1/12, EU:C:2013:127, paragraphs 36 and 37; judgment of 14 December 2006, Confederación Española de Empresarios de Estaciones de Servicio v Compañía Española de Petróleos SA, C‑217/05, EU:C:2006:784, paragraph 45.

[5] Judgment of 4 December 2014, FNV Kunsten Informatie en Media v Staat der Nederlanden, C-413/13, EU:C:2014:2411, paragraphs 30, 31 and 42.

[6] Social partner organizations represent the interests of European workers and employers. The main cross-industry organizations representing social partners at EU level are: (i) the European Trade Union Confederation (ETUC); (ii) the Union of Industrial and Employers’ Confederations of Europe (BUSINESSEUROPE); (iii) the European Association of Craft, Small and Medium-sized Enterprises (UEAPME); (iv) the European Centre of Enterprises with Public Participation (CEEP).