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Regulating the New Self-Employed in the Uber Economy: What Role for EU Competition Law?

Published online by Cambridge University Press:  06 March 2019

Abstract

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This paper discusses the role that EU competition law can play in regulating the “new self-employed”—precarious workers formally considered to be micro-enterprises. Specific attention is paid to the newest type of “new self-employed,” namely those engaged via matchmaking platforms arranging for work to be contracted on demand. Despite their unequal bargaining position, self-employed individuals are barred from collective bargaining due to the EU competition rules. This Article argues that the problem will not be solved by modifying the respective tests for “worker” and “undertaking” in EU law, or by introducing exceptions under Article 101 TFEU. This Article then adopts a regulatory approach to canvass the different legal instruments available to address exploitation concerns in the context of the Uber economy, and discusses the role that EU competition law can play in such a regime.

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Articles
Copyright
Copyright © 2018 by German Law Journal, Inc. 

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We are employed as “independent contractors” but that's just ridiculous legal mumbo-jumbo, to allow the company to duck its responsibilities. It's not flexible either. We used to have a system where you could swap shifts with people but they said it was too chaotic. Now you do the same shifts every week. [Deliveroo says that while work sessions are booked in advance in London, its riders prioritise flexibility and are free to tell Deliveroo when they wish to work and for how long. They say this flexibility would be lost if riders had to fit into the current structures for employees, resulting in benefits such as sick pay.]

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107 Competition Act 2002 (Competition Authority Decision No E/04/002 Case COM/14/03) (Ir.), https://www.ccpc.ie/business/wp-content/uploads/sites/3/2017/04/E_04_002-Actors-Fees-Enforcement-Decision.pdf (agreements between Irish Actors' Equity SIPTU and the Institute of Advertising Practitioners in Ireland concerning the terms and conditions under which advertising agencies will hire actors).Google Scholar

108 See Case C-413/13 FNV Kiem; see also Dutch Competition Authority 2007 (Nederlandse Mededingingsautoriteit), Cao-tariefbepalingen voor zelfstandigen en de Mededingingswet: visiedocument (Collective labor agreements determining fees for self-employed and the competition law: a reflection document) (Neth.), http://docplayer.nl/23777662-Cao-tariefbepalingen-voor-zelfstandigen-en-de-mededingingswet.html.Google Scholar

109 Case C-22/98 Becu and Others [1999] ECLI:EU:C:1999:419, Case C-309/99 Wouters and others [2002] ECLI:EU:C:2002:98; Case C-413/13 FNV Kiem. Google Scholar

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111 There exists so called de minimis exceptions from the competition rules. These are linked —particularly in the case of Article 101 TFEU—to the notion of “appreciability” of the restriction of competition and not to the concept of undertaking as such. See infra section D.I.Google Scholar

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117 Case C-413/13, FNV Kunsten Informatie en Media v. Staat der Nederlanden, 2014 ECLI:EU:C:2014:2411 (Dec. 4, 2014).Google Scholar

118 Case C-413/13, FNV Kunsten Informatie en Media v. Staat der Nederlanden, 2014 ECLI:EU:C:2014:2411 (Dec. 4, 2014).Google Scholar

119 Id. at para. 89.Google Scholar

120 Id. at para. 92.Google Scholar

121 Case C-413/13, FNV Kunsten Informatie en Media v. Staat der Nederlanden, 2014 ECLI:EU:C:2014:2411 (Dec. 4, 2014). In the words of the Court:Google Scholar

[…O]n a proper construction of EU law, it is only when self-employed service providers who are members of one of the contracting employees' organisations and perform for an employer, under a works or service contract, the same activity as that employer's employed workers, are ‘false self-employed’, in other words, service providers in a situation comparable to that of those workers, that a provision of a collective labour agreement, such as that at issue in the main proceedings, which sets minimum fees for those self-employed service providers, does not fall within the scope of Article 101(1) TFEU. It is for the national court to ascertain whether that is so.

122 See e.g. Rombouts, Sebastian, ‘European Court of Justice – 18/12/2014 – fnv Kunsten Informatie en Media v. Staat der Nederlanden’ International Labor Rights Case Law, Volume 1, Issue 2, pages 147–158; See also Ankersmit, Laurens, Albany Revisited: The Court Directs NCA to Carry a More Social Tune, European Law Blog (March 3, 2015), http://europeanlawblog.eu/?p=2695.Google Scholar

123 Joost Huidijk, De toepasselijkheid van cao's op zelfstandigen: wat zegt het mededingingsrecht?, AKD Blog (April 16, 2015), http://blogs.akd.nl/2015/de-toepasselijkheid-van-caos-op-zelfstandigen-wat-zegt-het-mededingingsrecht/. The author—a lawyer practicing EU and competition law at a Dutch law firm—notes that there is much uncertainty over whether a self-employed worker will be considered “false self-employed” or genuine self-employed. See also Pennings, supra note 68.Google Scholar

124 Importantly, the criteria are based on a comparison with what a typical worker does, but in many cases, there will be no immediately available comparison. The challenge is for those self-employed engaged in novel types of work for which no clear equivalents in terms of salaried labor exist. One could compare the work done by a regular worker under an employment contract and compare it to the work done by a substitute.Google Scholar

125 In this case, the cartel would be vertical, so employers would also be liable if they enter into the agreement.Google Scholar

126 Case C-413/13 FNV Kiem, Opinion of Advocate General Wahl, [63]. In his view, the distinction between self-employed and worker was workable, and despite the heterogenous nature of the class of self-employed he did not recommend carving out an exception.Google Scholar

127 Id. at para. 64.Google Scholar

128 For instance, in 2017, the British Department for Business, Energy & Industrial Strategy and the UK Office for National Statistics released figures showing plummeting union membership over the past decades. The item made international news. See Topping, Alexandra, Union Membership has Plunged to an All-Time Low, Says DBEIS, The Guardian (June 1, 2017) https://www.theguardian.com/politics/2017/jun/01/union-membership-has-plunged-to-an-all-time-low-says-ons. See also Kelly, Gavin, Trade Unions — Adapt to the Modern World or Die, Financial Times (June 1, 2017) https://www.ft.com/content/f65a8510-4626-11e7-8d27-59b4dd6296b8. According to data from Eurofound, between 2003 and 2008, ten Member States recorded an overall increase in union membership while 12 Member States recorded an overall decrease. According to the study, “Overall membership for all 97 trade union centres and sets of ‘other’ trade unions, for which data are available, declined by about 1.9% over the 2003–2008 period. In the EU15 [Members of the EU before 2004] and Norway, the decline in union membership stood at about 0.4%, while in the NMS [new member states] it amounted to around 10.6%.” See EurWork (European Observatory of Working Life), Trade Union Membership 2003–2008 (Report published on Sept. 21, 2009) https://www.eurofound.europa.eu/observatories/eurwork/comparative-information/trade-union-membership-2003-2008#hd2.Google Scholar

129 Green Paper on Modernising Labour Law to Meet the Challenges of the 21st Century, supra note 26. The European Union has been striving to achieve “flexicurity”—a combination of flexible labor markets with a generous safety net and active labor policy to encourage employment.Google Scholar

130 For an extensive discussion of the merits of a third category and a comparison of the experiences of Canada, Italy, and Spain with such a third category of rights; see Cherry, MA and Aloisi, A, “Dependent Contractors” in the Gig Economy: A Comparative Approach, 66 Am. U. L. Rev. 635 (2017).Google Scholar

131 Labor law professor Frans Pennings argues that the AG's approach is quite difficult for the national courts and, furthermore, of limited practical usefulness. It means that one has to be able to show the fact that in the absence of agreement replacing workers with independents has already taken place—a point in time at which a collective bargaining agreement is probably too late. See Pennings, supra note 68, at 114.Google Scholar

132 See Case C-123/83 Bureau national interprofessionnel du cognac v Guy Clair (BNIC v Clair) [1985] ECLI:EU:C:1985:33; Joined cases C-101/07 P and C-110/07 P Coop de France bétail et viande and Fédération nationale des syndicats d'exploitants agricoles (FNSEA) and Others v Commission of the European Communities [2008] ECLI:EU:C:2008:741.Google Scholar

133 Case C-309/99 Wouters and others, [97].Google Scholar

134 Id. at paras. 109–110.Google Scholar

135 Case C-35/96 Commission v Italy (CNSD) [1998].Google Scholar

136 Case C-35/99 Arduino [2002] ECLI:EU:C:2002:97.Google Scholar

137 Id. at para. 44.Google Scholar

138 Case C-35/96 Commission v Italy (CNSD), [43].Google Scholar

139 Some organizing, however, is taking place. A notable development in this respect is, for instance, the Ride Share Drivers United organization which seeks improvement of the conditions for Uber drivers. See RideShare Drivers United, AUS & USA, http://ridesharedriversunited.com/.Google Scholar

140 Case C 5/69 [1969]. In it the Court held that: “[…] An agreement falls outside the prohibition in [Article 101] when it has only an insignificant effect on the markets, taking into account the weak position which the persons concerned have on the market of the product in question.” In this case, one of the parties had 0.08% market share of the Community market, 0.2% in Germany and 0.6% in Belgium and Luxembourg.Google Scholar

141 2014 O.J. (C 291) 30.8 (European Commission, Notice on Agreements of Minor Importance Which do not Appreciably Restrict Competition Under Article 101(1) of the Treaty on the Functioning of the European Union (De Minimis Notice).Google Scholar

142 See Case C-681/11 Bundeswettbewerbsbehörde, Bundeskartellanwalt v Schenker & Co. AG and Others (Schenker) [2013]. Importantly, the judgment went against an assurance, which had been issued by the Austrian competition authority that such an agreement would be exempt.Google Scholar

143 For instance, self-employed without personnel in the Netherlands may enjoy exemption from the competition rules provided: (1) [T]hat they meet certain turnover criteria (5.5 million euros), and (2) that there are no more than 8 enterprises involved. We should stress, however, that an effect on cross-border trade is easily found in EU competition law, so it is to be doubted to what extent such national exceptions have any meaning in practice.Google Scholar

144 See Commission White Paper on Modernisation of the Rules Implementing Articles 85 and 86 of the EC Treaty, at 5, COM (1999), 101 final (April 28, 1999). See also Maher, Imelda, Competition Law and Transnational Private Regulatory Regimes: Marking the Cartel Boundary, 38(1) J. L. & Soc'y 119 (2011).Google Scholar

145 NMa Fines Window Cleaners in The Hague for Cartel Activities, NMA News (Dec. 29, 2011), https://www.acm.nl/en/publications/publication/6721/NMa-fines-window-cleaners-in-The-Hague-for-cartel-activities/ (a Dutch language press release with a summary of the decision is available at https://www.acm.nl/nl/publicaties/publicatie/6623/NMa-beboet-kartelafspraak-Haagse-glazenwassers/).Google Scholar

146 The glass cleaner in question received a symbolic fine of 1 euro. See Samenvatting van het besluit van de NMa van, NMA News (Dec. 20, 2011), https://www.acm.nl/nl/publicaties/publicatie/6623/NMa-beboet-kartelafspraak-Haagse-glazenwassers/.Google Scholar

147 See, NMa geeft schoonmakers miljoenenboete, Nu.nl (Mar. 19, 2003), http://www.nu.nl/economie/122827/nma-geeft-schoonmakers-miljoenenboete.html (according to the article, the branch organization OSB numbered 650 cleaning business – for the most part, small undertakings).Google Scholar

148 Id. Google Scholar

149 Consider the VEBIC case which was subject to a preliminary reference before the Court of Justice. Case C-439/08 Vlaamse federatie van verenigingen van Brood- en Banketbakkers, Ijsbereiders en Chocoladebewerkers (VEBIC) VZW. [2010] ECLI:EU:C:2010:739 (the infringement in question was a price agreement between artisan bakers, ice-cream and chocolate makers in Belgium).Google Scholar

150 The 2001 decision of the Irish Competition Authority restricting the possibility of freelance actors to bargain collectively has caused much outrage in Irish society, and multiple legislation attempts have since been made to address the issue of the right to collective bargaining for vulnerable self-employed, especially artists, musicians and freelance journalists. In 2010, a legislative proposal was made to amend the competition rules; however, the proposal was rejected because of concerns with compliance with the IMF/EU Financial Support program which did not allow for additional exemptions from competition law. Since then, two more attempts for legislative amendment have been made—in 2014 and 2016. Remarkably, in 2016, the proposal secured the support of all parties. See Seanad Deb. (July 10, 2014 & July 6, 2016) (Ir.), http://oireachtasdebates.oireachtas.ie/; see also European Labor Law Network website, ‘ECJ Case C-413/13 (FNV Kunsten Informatie en Media)‘ <http://www.labourlawnetwork.eu/national_labour_law/implications_of_ecj_rulings/_implications_of_ecj_rulings/prm/191/v__detail/id__5332/category__17/index.html; Tim Dawson & Séamus Dooley, Irish Freelances Shorten the Road to the Promised Land, The Freelance Bulletin (July 7, 2016).Google Scholar

151 As argued by Brishen Rogers in Rogers, supra note 33, at 479.Google Scholar

152 Id. See also Collins, supra note 2; Green Paper on Modernising Labour Law to Meet the Challenges of the 21st Century, supra note 26.Google Scholar

153 Pietro Ichino, Collective Bargaining and Antitrust Laws: An Open Issue, 17 (2) Int'l J. Comp. Lab. L. & Indus. Rel. 185 (2001).Google Scholar

154 See Green Paper on Unfair Trading Practices in the Business-to-Business Food and Non-Food Supply Chain in Europe COM (2013) 37 final (Jan. 31, 2013); Jules Stuyck, Do We Need ‘Consumer Protection’ for Small Businesses at the EU Level?, in Varieties of European Economic Law and Regulation 359, 359–368 (Purnhagen & Rott eds., 2014); Victoria Daskalova, The Monopsony Paradox: Buyer Power and Enforcement of the EU Antitrust Provisions (PhD thesis, 2016); Martijn Hesselink, Unfair Terms in Contracts between Businesses, in Centre for the Study of European Contract Law Working Paper Series No. 2011/07, 1 (2011).Google Scholar

155 See generally Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, A Better Functioning Food Supply Chain in Europe COM (2009) 0591 final (Oct. 28, 2009), http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52009DC0591; European Competition Network Food Subgroup, ECN Activities in the Food Sector: Report on Competition Law Enforcement and Market Monitoring Activities by European Competition Authorities in the Food Sector (May 24, 2012), http://ec.europa.eu/competition/ecn/food_report_en.pdf; Communication from the Commission, Tackling Unfair Trading Practices in the Business-to-Business Food Supply Chain, COM (2014) 472 final (July 15, 2014).Google Scholar

156 See e.g. The UK Groceries Code Adjudicator Act 2013, ch. 19 (Eng.), https://www.legislation.gov.uk/ukpga/2013/19/pdfs/ukpga_20130019_en.pdf.Google Scholar

157 A prominent example at the EU level is the code of conduct developed by European food and drink producers and supermarkets in the context of the Supply Chain Initiative endorsed by the European Commission. See Principles of Good Practice in vertical relationships in the Food Supply Chain (Nov. 29, 2011), http://www.supplychaininitiative.eu/about-initiative/principles-good-practice-vertical-relationships-food-supply-chain; see also European Commission, Code of Conduct, Vertical relationships in the Food Supply Chain: Principles of Good Practice, (Nov. 29, 2011), https://ec.europa.eu/digital-single-market/en/content/vertical-relationships-food-supply-chain-principles-good-practice-b2b-platform-0 (the code is accompanied by a business-to-business (B2B) Platform for enforcement of the principles).Google Scholar

158 For a helpful overview of the varied legal landscape with respect to stricter rules aimed to address power imbalances in the food supply chain see Stefanelli, Justine & Marsden, Philip, Models of Enforcement in Europe for Relations in the Food Supply Chain, British Institute of International and Comparative Law (Apr. 23, 2012), http://www.anilact.pt/documentos/hlf001.pdf; see also European Commission, Final Report of the Study on the Legal Framework Covering Business-to-Business Unfair Trading Practices (Feb. 26, 2014), http://ec.europa.eu/internal_market/retail/docs/140711-study-utp-legal-framework_en.pdf.Google Scholar

159 Inspiration is drawn from Walker Smith, Regulation and the Risk of Inaction, in Autonomes Fahren: Technische, rechtliche und gesellschaftliche Aspekte 593–609 (Maurer et al ed.; Springer 2015) and his graph of regulatory quadrants which is adapted for the purpose of this paper.Google Scholar

160 There is evidence that some companies have started introducing minimum requirements for fair treatment of their independent contractors. De Stefano refers to the Code of Conduct Paid Crowdsourcing to which three crowdwork platforms in Germany have already agreed and which is endorsed by the German Crowdsourcing Association. See Crowdsourcing Code of Conduct, http://crowdsourcing-code.com/; see also de Stefano, supra note 29, at 24.Google Scholar

161 See e.g. Fair Crowd Work, http://www.faircrowdwork.org/en (the website allows crowdworkers to check for the best online rates).Google Scholar

162 Hesselink, supra note 154; Stuyck, supra note 154.Google Scholar

163 Collins, supra note 2, at 375–376.Google Scholar

164 Antitrust for Small and Middle Size Undertakings and Image Protection from Non-Competitors (Pranvera Këllezi, Bruce Kilpatrick & Pierre Kobel eds., 2014).Google Scholar

165 See Lang, Temple, Reprisals and Overreaction by Dominant Companies as an Anti-Competitive Abuse under Article 82(B), 29(1) Eur. Competition L. Rev. 13 (2008); see also Green Paper on Unfair Trading Practices in the Business-to-Business Food and Non-Food Supply Chain in Europe, supra note 154, at 7 and 17 discussing the so-called “fear factor”.Google Scholar

166 See Cherry, Miriam A. & Antonio Aloisi, “Dependent Contractors” in the Gig Economy: A Comparative Approach, 66 Am. U. L. Rev. 635, 682–684 (2017).Google Scholar

167 Currently, antitrust enforcement emphasizes consumer choice as part of a commitment to consumer welfare.Google Scholar

168 See the blog for Uber drivers, Uber App and it[s] Effect on Cellular Data Usage, UberPeople.net (posts from June 16, 2016), https://uberpeople.net/threads/uber-app-and-it-effect-on-cellular-data-usage.24123/.Google Scholar

169 See Commission Regulation 2016/679, 2016 O.J. (L 119) 4.5 (regulation on the Protection of Natural Persons with Regard to the Processing of Personal Data and on the Free Movement of Such Data, and Repealing Directive 95/46/EC (General Data Protection Regulation).Google Scholar

170 See René Joliet, Monopolization and Abuse of Dominant Position: A Comparative Study of the American and European Approaches to the Control of Economic Power (1970); see also Akman, Pinar, Searching for the Long-Lost Soul of Article 82EC, 29(2) Oxford J. Legal Stud. 267 (2009).Google Scholar

171 Labor purchasing is the classic example of a monopsony used in economics textbooks. See Manning, supra note 1.Google Scholar

172 One of the main concerns of drivers is the lack of transparency in compensation, for instance, with respect to bonuses. See Mohlmann, Mareike, Lior Zalmanson, & Ola Henfridsson, Who is Driving the Car? How do Uber Drivers Regain Control in the Face of Algorithmic Management, Presented at the 4th International Workshop on the Sharing Economy held in Lund, Sweden (June 15, 2017).Google Scholar

173 Media reports that Uber's car loans have the effect of tying people to the company. One reason for that is that Uber offers car loans to people with poor credit scores. This makes it difficult for those who signed up to leave the job, even in the face of falling compensation. Rebecca Smith, deputy director at the US National Employment Law Project, states in an interview for the Financial Times: “It is a car lease that comes from your employer and makes it impossible for you to leave your job before it is paid off.” See Hook, Leslie, Uber Hitches a Ride with Car Finance Schemes, Financial Times (Aug. 11, 2016), https://www.ft.com/content/921289f6-5dd1-11e6-bb77-a121aa8abd95. In Australia, a driver deactivated from Uber's platform was left in debt and filed a court case against Uber. One of his car loans was via Uber. The case is currently under appeal. See AAP, WA Man Mike Oze-Igiehon Fails in Damages Claim Against Uber, PerthNow (Dec. 9, 2016), http://www.perthnow.com.au/news/western-australia/wa-man-mike-ozeigiehon-fails-in-damages-claim-against-uber/news-story/7b494ef5148af47582fdba35e7479fd5. Similar stories reported by Georgia Wilkins, Dumped Uber Driver Pleads for Explanation, The Age (May 21, 2016), http://www.theage.com.au/business/consumer-affairs/dumped-uber-driver-pleads-for-explanation-20160519-goz0dl?deviceType=text.Google Scholar

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177 Konkurrensverket (Swedish Competition Authority), The Pros and Cons of High Prices (Swed.), http://www.konkurrensverket.se/globalassets/english/research/the-pros-and-cons-of-high-prices-14mb.pdf.Google Scholar

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179 Type I error stands for under-enforcement and type II stands for over-enforcement. The prevailing opinion is that under-enforcement is preferable to over-enforcement because over-enforcement tends to chill competition.Google Scholar

180 See Lyons, Bruce, The Paradox of the Exclusion of Exploitative Abuse, CCP Working Paper 08-1, 1 (2007).Google Scholar

181 Alison Jones & Brenda Sufrin, EU Competition Law: Texts, Cases, and Materials 573 (6th ed. 2016); Alexandr Svetlicinii & Marco Botta, Article 102 TFEU As A Tool for Market Regulation: “Excessive Enforcement” Against “Excessive Prices” in the New EU Member States and Candidate Countries, 8(3) Eur. Competition J. 473, 473 (2012). Svetlicinii and Botta note, however, that the sentiment toward exploitative abuse is not shared by enforcers in the new Member States.Google Scholar

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186 James Whitman, Consumerism Versus Producerism: A Study in Comparative Law, 117(3) Yale L. J. 340 (2007).Google Scholar

187 Case C- 27/76 United Brands Company and United Brands Continentaal BV v Commission of the European Communities [1978] ECLI:EU:C:1978:22, [250–253].Google Scholar

188 See Case 298/83 Comité des industries cinématographique des Communautés européennes (CICCE) [1985] ECLI:EU:C:1985:150; some indications are available in European Commission on Quantifying Harm in Actions for Damages Based on Breaches of Article 101 or 102 of the Treaty on the Functioning of the European Union 2013 O.J. (C 167) 56.Google Scholar

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