Case C-413/13 FNV Kunsten Informatie en Media Case: Limits of competition law, collective agreements and the self-employed

The Court of Justice’s recent judgment in FNV Kunsten Informatie en Media Case v Staat der Nederland C-413/13 EU:C:2014:2411 is the latest in a line of cases that exclude collective agreements from the application of EU competition law and in particular from Article 101(1) TFEU.

In this case, there was a rather peculiar twist in the facts which lead the Court to adopt a cautious approach. It led the Court to distinguish between “workers”, “self employed” persons who are usually considered to be “undertakings” and “false self employed” who are more like workers.

A trade union representing musicians negotiated a collective agreement with an organisation representing orchestras in the Netherlands.  Not only were salaried, employee musicians covered by the agreement, but it was negotiated on behalf of independent, self employed musicians also. Thus the Court was faced with the question whether a provision of a collective labour agreement, which sets minimum fees for 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, does not fall within the scope of Article 101(1) TFEU.

The Court answered that 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 left it to the national court to ascertain whether that is so.

The Court recalled its settled case-law according to which, although certain restrictions of competition are inherent in collective agreements between organisations representing employers and employees, the social policy objectives pursued by such agreements would be seriously compromised if management and labour were subject to Article 101(1) TFEU when seeking jointly to adopt measures to improve conditions of work and employment (Albany, C-67/96, EU:C:1999:430, paragraph 59; International Transport Workers’ Federation and Finnish Seamen’s Union, C‑438/05, EU:C:2007:772, paragraph 49 and 3F Commission, C‑319/07 P, EU:C:2009:435, paragraph 50).

Thus agreements entered into within the framework of collective bargaining between employers and employees and intended to improve employment and working conditions must, by virtue of their nature and purpose, be regarded falling outside the scope of Article 101(1) TFEU (judgments in Albany, EU:C:1999:430, paragraph 60; Brentjens’, C-115/97 to C-117/97, EU:C:1999:434, paragraph 57; Drijvende Bokken, C-219/97, EU:C:1999:437, paragraph 47; Pavlov and Others, C‑180/98 to C‑184/98, EU:C:2000:428, paragraph 67; van der Woude, C-222/98, EU:C:2000:475, paragraph 22; and AG2R Prévoyance, C‑437/09, EU:C:2011:112, paragraph 29).

The Court of Justice considered carefully the rather peculiar facts of this case. In the case in the main proceedings, the agreement concerned was concluded between an employers’ organisation and employees’ organisations of mixed composition, which negotiated, in accordance with national law, not only for employed substitutes but also for affiliated self-employed substitutes.

Therefore, it examined whether the nature and purpose of such an agreement enable it to be included in collective negotiations between employers and employees and justify its exclusion, as regards minimum fees for self-employed substitutes, from the scope of Article 101(1) TFEU.

First, as regards the nature of that agreement, it is clear from the findings of the referring court that the agreement was concluded in the form of a collective labour agreement. However, that agreement, specifically as regards the provision on minimum fees, is the result of negotiations between an employers’ organisation and employees’ organisations which also represent the interests of self-employed substitutes who provide services to orchestras under a works or service contract.

The Court found that, although they perform the same activities as employees, service providers such as the substitutes at issue in the main proceedings, are, in principle, ‘undertakings’ within the meaning of Article 101(1) TFEU, for they offer their services for remuneration on a given market (judgment in Ordem dos Técnicos Oficiais de Contas, C‑1/12, EU:C:2013:127, paragraphs 36 and 37) and perform their activities as independent economic operators in relation to their principal (see judgment in Confederación Española de Empresarios de Estaciones de Servicio, C‑217/05, EU:C:2006:784, paragraph 45).

It is clear, the Court held, that, in so far as an organisation representing workers carries out negotiations acting in the name, and on behalf, of those self-employed persons who are its members, it does not act as a trade union association and therefore as a social partner, but, in reality, acts as an association of undertakings.

The Court added that, although the Treaty encourages dialogue between management and labour, it does not, however, contain provisions, like Articles 153 TFEU and 155 TFEU or Articles 1 and 4 of the Agreement on social policy (OJ 1992 C 191, p. 91), encouraging self-employed service providers to open a dialogue with the employers to which they provide services under a works or service contract and, therefore, to conclude collective agreements with a view to improving their terms of employment and working conditions (judgment in Pavlov and Others, C-180/98 to C-184/98, EU:C:2000:428, paragraph 69).

Thus, the Court held that a provision of a collective labour agreement, such as that at issue in the main proceedings, in so far as it was concluded by an employees’ organisation in the name, and on behalf, of the self-employed services providers who are its members, does not constitute the result of a collective negotiation between employers and employees, and cannot be excluded, by reason of its nature, from the scope of Article 101(1) TFEU.

That finding, the Court held, cannot prevent such a provision of a collective labour agreement from being regarded also as the result of dialogue between management and labour if the service providers, in the name and on behalf of whom the trade union negotiated, are in fact ‘false self-employed’, that is to say, service providers in a situation comparable to that of employees.

In today’s economy, remarked the Court, it is not always easy to establish the status of some self-employed contractors as ‘undertakings’, such as the substitutes at issue in the main proceedings.

As far as concerns the case in the main proceedings, the Court recalled that, according to settled case-law, on the one hand, a service provider can lose his status of an independent trader, and hence of an undertaking, if he does not determine independently his own conduct on the market, but is entirely dependent on his principal, because he does not bear any of the financial or commercial risks arising out of the latter’s activity and operates as an auxiliary within the principal’s undertaking (judgment in Confederación Española de Empresarios de Estaciones de Servicio, EU:C:2006:784, paragraphs 43 and 44).

On the other hand, the term ‘employee’ for the purpose of EU law must itself be defined according to objective criteria that characterise the employment relationship, taking into consideration the rights and responsibilities of the persons concerned. In that connection, it is settled case-law that the essential feature of that relationship is that for a certain period of time one person performs services for and under the direction of another person in return for which he receives remuneration (see judgments in N., C‑46/12, EU:C:2013:97, paragraph 40 and the case-law cited, and Haralambidis, C‑270/13, EU:C:2014:2185, paragraph 28).

From that point of view, the Court  previously held that the classification of a ‘self-employed person’ under national law does not prevent that person being classified as an employee within the meaning of EU law if his independence is merely notional, thereby disguising an employment relationship (judgment in Allonby, C‑256/01, EU:C:2004:18, paragraph 71).

It follows that the status of ‘worker’ within the meaning of EU law is not affected by the fact that a person has been hired as a self-employed person under national law, for tax, administrative or organisational reasons, as long as that persons acts under the direction of his employer as regards, in particular, his freedom to choose the time, place and content of his work (judgment in Allonby, EU:C:2004:18, paragraph 72), does not share in the employer’s commercial risks (judgment in Agegate, C‑3/87, EU:C:1989:650, paragraph 36), and, for the duration of that relationship, forms an integral part of that employer’s undertaking, so forming an economic unit with that undertaking (see judgment in Becu and Others, C‑22/98, EU:C:1999:419, paragraph 26).

In the light of those principles, in order that the self-employed substitutes concerned in the main proceedings may be classified, not as ‘workers’ within the meaning of EU law, but as genuine ‘undertakings’ within the meaning of that law, it is for the national court to ascertain that, apart from the legal nature of their works or service contract, those substitutes are not in fact in a relationship with the orchestra concerned that is one of subordination during the contractual relationship, so that they enjoy more independence and flexibility than employees who perform the same activity, as regards the determination of the working hours, the place and manner of performing the tasks assigned, in other words, the rehearsals and concerts.

As regards, second, the purpose of the collective labour agreement at issue in the main proceedings, the Court held the self employed musicians could be in the same situation as employees only if the referring court were to classify the substitutes involved in the main proceedings not as ‘undertakings’ but as ‘false self-employed’.

It held that the minimum fees scheme put in place by the collective labour agreement directly contributes to the improvement of the employment and working conditions of those substitutes, classified as ‘false self-employed’.

Such a scheme not only guarantees those service providers basic pay higher than they would have received were it not for that provision but also, as found by the referring court, enables contributions to be made to pension insurance corresponding to participation in the pension scheme for workers, thereby guaranteeing them the means necessary to be eligible in future for a certain level of pension.

Accordingly, a provision of a collective labour agreement, in so far as it sets minimum fees for service providers who are ‘false self-employed’, cannot, by reason of its nature and purpose, be subject to the scope of Article 101(1) TFEU.

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