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OECD Global Forum on Competition, 1 December 2016

Competition Law, inequality and labour market issues

Human rights – due process

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Human rights, to the extent that they involve due process and natural justice, will inevitably be embedded into the competition enforcement process

My focus is on whether competition enforcement is inimical to labour market issues, specifically freedom of association for the purposes of achieving certain salary objectives

Human rights – freedom of association and collective bargaining

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Collective bargaining by unions well established as an exception to competition enforcement

Industrial Relations Act (Singapore)

Section 6 Clayton Act (US)

“Undertakings” (EU, UK and Singapore)

Employed vs Self Employed

Human rights – freedom of association and collective bargaining

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Employees in a single firm associating for purposes of collective bargaining will not fall foul of competition law because they are not undertakings;

Independent self-employed contractors who associate to achieve certain salary objectives would fall foul of competition law since they are considered undertakings and need to compete to supply services.

Employed vs self-employed

Employee vs Self-employed

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Employees are not undertakings while self-employed service providers who may perform the same activities as employees are, in principle, undertakings in relation to the Act.

Sound policy reason to prohibit freedom of association among undertakings on collective agreements as it may result in adverse impact to market competition and consumers.

FNV Kunsten Informatie en Media v Staat der Nederlanden – notion of “false self-employed’

Uber drivers found by London employment tribunal to be “employees”

Institutional setting of competition enforcement

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Under cartel laws, where undertakings are involved, freedom of association rules would be proscribed by competition law.

But competition law regimes exist in an institutional setting, where other policy goals are being pursued.

Important for statutory framework to ensure that competition enforcement does not directly conflict with other policy goals

Institutional setting of competition enforcement

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Schumpeterian disruption is a key feature of the competitive process, but job losses caused by disruption require policy interventions such as job matching, retraining and reskilling

Lower prices for goods and services are important, but so are good jobs and purchasing power so as to achieve overall welfare enhancement

Good labour market policies can complement competition enforcement

Statutory framework allows government policy and net economic benefits (if established) to be exempt from enforcement

Case study 1: Modelling services

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A number of modelling agencies agreed to collectively raise rates for modelling services.

Claimed NEB to ostensibly raise welfare of models, but no substantive evidence provided.

Argued that some clients had strong bargaining power, hence agreement had no impact.

But CAB found 60% increase in rates from 2005 to 2009. Also a number of clients were SMEs.

Agreement to fix prices is a restriction of competition by object; NEB not made out.

Case study 2: SMA Guideline on fees (“GOF”)

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SMA is a private sector professional association for doctors. The SMA GOF recommended range of fees for services provided by self employed doctors in private practice in Singapore.

GOF had the object of restricting competition as it was a decision by association of undertakings.

GOF was not useful in constraining doctors from overcharging, did not meet the requirements for NEB test (e.g. there were minimum prices specified)

GOF was really meant more for doctors than patients and there were less anti-competitive means to achieve pricing transparency.

Case study 2: SMA Guideline on fees (“GOF”)

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SMA applied to Minister to exclude GOF on grounds of exceptional and compelling reasons of public policy, but application was declined by the Minister.

Private sector healthcare services do not merit special exemptions from the Act.

Law Society of Singapore removed guidelines on fees for conveyancing in 2009 as “all fees should be freely negotiated between solicitors and clients without guidelines from the Law Society Council”

Case study 3: Monthly salaries of Foreign Domestic Workers (“FDWs”)

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16 employment agencies (“EAs”) entered into an agreement to raise and fix monthly salaries of new foreign domestic workers (FDWs)

An FDW is charged a placement fee by the EA (measured by no. of months of salary) for finding her an employer in Singapore.

Agreement was in relation to the monthly salary of FDWs, but actual intent and effect was to increase placement fees retained by the Singapore EAs.

Government can intervene for social reasons (e.g. mandatory rest day per week or progressive wage models for specific sectors)

Conclusion

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“…the goal of competition policy is to contribute to overall welfare and economic growth by promoting market conditions in which the nature, quality, and price of goods and services are determined by competitive market forces.

In addition to benefiting consumers and a jurisdiction’s economy as a whole, such a competitive environment rewards enterprises that respond efficiently to consumer demand”

-OECD Guidelines for Multinational Enterprises

Conclusion

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Competition law enforcement restricts freedom of association and collective agreements where undertakings are not considered employees.

Competition law enforcement operates in an institutional setting where various Government agencies have different mandates which addresses various socio-economic issues such as jobs, reskilling and salaries to contribute to overall welfare and economic growth.

Important for statutory framework to ensure that competition enforcement does not directly conflict with other policy goals