6th April 2023
In its 2023-24 Annual Plan, published on 23 March 2023, the Competition and Markets Authority (the CMA) cited the identification of potential competition issues in UK labour markets as one of its key areas of focus for the year.
This follows the publication, on 9 February 2023, of the CMA’s guidance for employers on how to avoid anti-competitive behaviour. The guidance outlines the main types of anti-competitive behaviour in the employment sphere, steps that may be taken to avoid such behaviours, and how to report them.
This represents a noticeable shift in priorities for the CMA which, save for an investigation launched in July 2022 regarding the purchase of freelance services by companies which produce and broadcast sports content, has not historically focused its enforcement efforts on collusion on employment matters.
We explain below the types of conduct the CMA is targeting and the steps employers should take to reduce the risk of infringement.
The CMA’s guidance highlights the three main types of anti-competitive behaviours in labour markets, which it likens to cartel behaviour:
The CMA is concerned that the above behaviours can negatively impact labour markets in a range of ways, including lowering wages, reducing employee mobility and choice, and limiting the ability of smaller businesses to recruit and expand.
The CMA’s guidance for employers reiterates that anti-competitive behaviour extends beyond written agreements to informal arrangements and concerted practices, such as gentleman’s agreements. It also makes clear that these behaviours exist in the markets for freelancers and contracted workers, as well as permanent salaried staff.
Failure to comply with competition law can carry significant financial and personal consequences, including financial penalties for businesses of up to 10% of their annual worldwide turnover, and personal fines, imprisonment and director disqualification for up to 15 years for individuals.
In light of the CMA’s guidance for employers, now is a good time for businesses to evaluate their own compliance with competition law and take steps to minimise the infringement risk. In particular, you might consider:
Where infringing behaviour is identified, the CMA encourages market participants to ‘blow the whistle’ in exchange for the grant of full or partial immunity from penalties and protection for staff and directors from individual sanctions. The sooner a company comes forward, the greater the protection it is likely to receive.
Our Competition specialists have considerable experience advising businesses on all aspects of competition law. For more information on the CMA’s guidance for employers or assistance on this, or any other competition related topic, please contact Sarah Ward or Jack Gale.