The European Commission has launched an initiative to define E.U. competition law’s scope concerning digital platforms’ self-employed workers. This roadmap consists of gathering feedback to regulate independent platform workers’ working conditions in the “gig economy.” The proposed regulation is set for mid-2022.
The topic of the legal status of independent platform workers has spurred widespread concerns in the press, the courts, and beyond. On-call contingent labor has historical roots much older than the rise of digital platforms; instead, the employee status has emerged and spread recently in labor history. Nevertheless, underused resources, bundled with disruptive innovation of online platforms, has created a whole new gig economy. In the European Union only, the European crowd employment platforms’ size represented around €4.5 billion in gross revenue representing 12.8 million active workers in 2016. Digital technologies and innovation of the app-based business models have allowed for “gig workers” to reap the benefits of extra income, with few of them exclusively relying on the digital platforms as a source of income. This latter category of gig-workers (namely those financially dependent on platforms) is the primary focus of social and popular concerns. Nevertheless, disrupting traditional incumbents through a Schumpeterian process of creative destruction, the gig economy has created more jobs than it destroyed. The preservation of the innovative business model and drive of the digital platforms remains essential for the flourishing, expansion, and strengthening of the innovation economy the Commission wants to see emerging.
However, despite the complexities of the topic and the many (un)intended consequences stringent regulations can generate at the expense of the growth of the digital innovation, it appears that the present roadmap has a clear, predefined view of the precise outcome it wants to reach. Indeed, the inception impact assessment identifies a “baseline scenario” (i.e., status quo) where independent platform workers are subject to E.U. competition and therefore cannot enter into collective bargaining with the digital platform. The Commission argues that “in the absence of E.U. intervention,” independent platform workers may be prevented from entering collective bargaining. Thus, the Commission concludes that “action at the E.U. Level may thus
It thus appears that the Commission has a well-defined objective even before starting the roadmap. The roadmap legitimizes an ardent desire for intervention for two main reasons. First, the Digital Single Market’s regulatory fragmentation is already underway; national initiatives, either through regulations or through court judgments, have started to unilaterally regulate independent platform workers’ ability to enter collective bargaining. The European Commission appraises these risks of regulatory fragmentations as exacerbated by the absence of E.U. preemptive action. If the E.U. acts, Member States’ regulatory frameworks may be superseded by an E.U. regulation enjoying both supremacy over national regulations and harmonization benefits. It will be argued that the preemption argument is unconvincing since the European Commission lacks both the legal basis and downplays the benefits accrued from regulatory race to efficient national regulations of collective bargaining rights. Second, commissioned studies have concluded that independent platform workers need to be entitled to enter collective bargaining with digital platforms. As acknowledged by the Commission itself in the inception impact assessment, only “one in four self-employed” platform workers “can be seen as facing more precarious situations, with lower levels of income and job security.” Despite this relatively marginal proportion of independent platform workers susceptible to benefit from the foreseeable regulation, the European Commission unequivocally embraces the studies’ conclusions to modify competition law in favor of independent platform workers. Despite having raised concerns as per the innovation costs of such regulation and the legal incongruities created thereof, these justificatory studies constitute a legitimate basis for actions according to the Commission.
Therefore, the inception impact assessment outlines the four different directions identified by the European Commission since the status quo (or so-called “baseline scenario”) is excluded. The first regulatory Option would consist of granting “all solo self-employed providing their labor through digital labor platforms” would access collective bargaining. The second regulatory Option would give access to collective bargaining for “all solo self-employed providing their labor through digital labor platforms or to professional customers of a certain minimum size,” thereby encompassing also traditional professions in the offline economy. For example, this might include real estate agents. The third regulatory Option envisages granting collective bargaining rights to all solo self-employed providing their labor through digital platforms or to professional customers of any size except for regulated (and liberal) professions,” thus broadening even further the category irrespectively of company size. The fourth and final Option entails that “all solo self-employed providing their labor through digital labor platforms or to professional customers of any size” are entitled to collective bargaining rights, thereby including any company of any size and even regulated professions excluded in Option 3.
These four options are flawed as they engender incommensurable costs and risks to innovation and consumers without providing workers the necessary improvement of the working standards. Indeed, the baseline scenario, subject to improvements outside the realm of competition law, is the most desirable scenario irrespective of the Commission’s outright and baseless exclusion from policy options.
Indeed, the gig economy’s fragile digital ecosystem commands the Commission to cautiously warrant against the hasty regulatory burden imposed in Europe and the expense of the continent’s competitiveness and innovativeness. Nevertheless, the popular tensions that have arisen can hardly be unaddressed: social concerns are better addressed through social protection regulations instead of ill-suited competition laws. After exposing the numerous advantages and merits of preserving the competition law’s status quo (II), we shall outline the countless disadvantages and risks associated with the policy options envisaged. Competition law principles appear to be twisted in a socially detrimental manner (III). The social tensions above-mentioned can be addressed while preserving the competition and innovation objectives of the Digital Single Market. We thus lay down the socially optimal path forward (IV). We finally conclude by summarizing our policy recommendations and calling for greater policy coordination across jurisdictions on these cross-jurisdictional issues (V).
These recommendations are as follows:
- Abandon all of the European Commission’s four propositions included in the Inception Impact Assessment as they unduly expand the reach of competition laws without providing the necessary improvement of working conditions through more adequate means (i.e., labor regulations);
- Preserve the limitation of the antitrust exemption to employees only, and retroactively to those reclassified as “false self-employed” platform workers;
- Allow the Member States to create a third category (when not already existing) related to economically dependent (vulnerable) full-time platform workers: this category would target only those vulnerable platform workers and allow minimal working standards. This third category status of “flexicurity” would enable platforms to provide more benefits without the risk of having their workers classified as non-contingent workers entitled to full employment rights;
- Enable at national levels collective representations (such as trade associaions) of vulnerable platform workers, but ensure the prohibition of price-fixing arrangements;
- Ease the access to justice for platform workers who may qualify for reclassification as employees;
- Ensure full prohibition of no-poaching agreements and of unreasonable non-compete clauses to address monopsony power;
- Declare void any contractual clause preventing platform workers from seeking before a Tribunal to reclassify their work relationship as an employment relationship;
- Prohibit price-fixing agreement involving platform workers: improvement of working standards may take the form of applicable regulation of labor (i.e., health and security benefits, pensions, and sickness benefits), excluding the fixing of the wages and fees for platform workers as this would crystallize the final price by end-users, thereby cartelizing the platform economy;
- Exclude liberal professions from the possible legislative reform: because specific labor and business regulations apply to liberal professions, these particular rules preempt any general rules on the platform economy;
- Examine the state of the platform economy, precisely the economic reality of full-time platform workers, regularly update and best adapt the envisaged legislation.
We believe these solutions are reasonable: they maximize the path of digital innovation and competition in the platform economy while minimizing the risks of vulnerable platform workers being further disenfranchised from the social security benefits that are legitimate to them. To be sure, the path is fragile in providing the optimal incentives (i.e., digital innovation, starting and expanding a start-up, etc.) while ensuring that no platform worker is left behind. We strive for the reasonable path forward we have delineated and look forward to providing that the reasonable equilibrium suggested materializes inadequate legislative reforms at both E.U. and national levels whenever necessary.