As is well known, labor markets have recently come under intense scrutiny by different competition authorities around the world. In recent years, various investigations regarding labour markets have been carried out by the Turkish Competition Authority, and some investigations are currently ongoing. In this context, the European Commission ("Commission") published a Policy Brief at the beginning of May, which outlines its views and policies on competition law practices in labour markets.
In the Policy Brief, the Commission particularly emphasizes wage-fixing and no-poaching agreements in labour markets. In general, wage-fixing agreements refer to undertakings' joint determination of employees' wages and working conditions, while employee no-poaching agreements refer to undertakings' practices of not hiring or making job offers to each other's employees..
The Policy Brief emphasizes that such agreements restrict labour mobility, limit the effective distribution of productive employees among undertakings, may have negative effects on innovation and business productivity, and are therefore likely to be anti-competitive. The Policy Brief also notes that this restricts competition between undertakings and triggers low wages in the labor market.
Under the Policy Brief, such agreements and practices in labour markets are evaluated within the context of Article 101 of the Treaty on the Functioning of the European Union (“TFEU”). It is stated that under the provisions of Article 101(1) of the TFEU, wage-fixing and no-poaching agreements are generally considered as agreements that restrict competition by object due to their very nature.
Furthermore, the Policy Brief underlines that anti-competitive agreements in labor markets often result in lower wages for employees, making it difficult for these agreements to provide substantial benefits for the exemption under TFEU 101/3.It also states that it is usually possible to achieve the objectives of anti-competitive agreements in labor markets through less restrictive means, and in such cases, the relevant agreement should not be granted an exemption.
However, under certain conditions, wage-fixing and no-poaching agreements may be considered as ancillary restraints[1] of a main agreement and no sanctions would be applied to such agreements. For such agreements to be considered as ancillary restraints, the following four cumulative conditions are required:
There must be a main agreement among the parties that does not restrict competition,
The ancillary restraint must be directly related to the main agreement,
The ancillary restraint must be objectively necessary for the implementation of the main agreement,
The ancillary restraint must be proportionate,
In this context, it is stated that in order for a valid ancillary restraint to exist:
There should be no less restrictive alternatives available.
The ancillary restraint should be designed to cover only the employees related to the subject matter of the main agreement.
Finally, it is emphasized that labour markets are generally defined at national, regional, or local levels, and therefore, investigations regarding labour markets should mostly be carried out by national competition authorities.
Although the Policy Brief is not a legally binding document, it is important in terms of demonstrating the Commission's perspective on competition law practices in labour markets. It would be important for undertakings to take into account the Commission's views in their compliance policies, especially in this period when investigations into labor markets are also on the agenda in Türkiye.
[1] Restrictions imposed on the parties to an agreement that, while not constituting the substance of the agreement, are necessary for the achievement of the objectives intended to be achieved by the agreement and are directly related to these objectives.