Samuel R Beighton
Partner
Co-lead of the Family Matters network
Article
8
In October 2023, the UK's Competition and Markets Authority (the CMA) launched an investigation into suspected infringements of UK competition law arising from concerns over how certain businesses in the media sector: (i) employed staff; and (ii) obtained the services of freelance providers.
In this update, we consider the background to the current investigations, and the practical steps businesses can take now to ensure their HR activities are compliant with UK competition law.
This is the second investigation the CMA has opened in this area, emphasising its focus upon addressing UK competition law concerns in so-called "labour markets".
While these two investigations are currently ongoing, if the CMA ultimately finds that infringements have taken place:
Competition authorities worldwide are increasingly active in investigating arrangements that restrict competition between businesses in relation to the recruitment and/or retention of permanently employed staff, temporary contract staff, and/or freelance providers (together referred to as personnel).
For authorities, arrangements of this nature may be expected to:
The CMA's first investigation in this area was launched in July 2022. Under this investigation, the CMA is investigating suspected infringements of UK competition law arising from concerns over how certain businesses in the media sector: (i) employed staff; and (ii) obtained the services of freelance providers, who were involved in supporting the production and broadcasting of sports content in the UK.
Following this first investigation, the CMA published its guidance "Employers advice on how to avoid anti-competitive behaviour" (February 2023), which we considered in our earlier Employment Essentials podcast.
Importantly, the CMA's guidance identifies the following three types of anti-competitive arrangements as "business cartels":
Within the CMA's Annual Plan for 2023/24 (published in March 2023), the authority made clear that identifying "potential competition issues within UK labour markets" is a key area of focus.
Subsequently, the CMA's "Guidance on horizontal agreements" (published in August 2023) expressly identifies wage-fixing agreements (see above) as an example of a "buyer cartel", with the guidance stating that:
"Buyer cartels are agreements between purchasers aimed at coordinating their individual negotiations and purchases with suppliers. They do so by: (a) coordinating those purchasers' individual competitive behaviour on the purchasing market or influencing the relevant parameters of competition between them through, for example, fixing or coordinating purchase prices or aspects of purchase prices (including agreements to fix wages)".[1]
The CMA's current investigations and recent policy statements mark a significant shift in approach, with HR strategies now clearly being viewed by the CMA as having the potential to constitute serious infringements of UK competition law.
Against this background, businesses must be aware that the CMA will seek to take enforcement action against suspected anti-competitive arrangements in relation to labour markets, and may be expected to sanction any such arrangements as cartels.
Businesses should therefore take proactive steps to ensure that all members of their internal teams are performing their roles in compliance with UK competition law.
These actions could include:
If you have any questions regarding UK competition law in the context of labour markets, and how your business can engage with this issue, please contact Gowling WLG's EU, Trade & Competition team.
Footnotes:
[1] See, Guidance on horizontal agreements, 16 August 2023, paragraph 6.9(a).
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