COLLECTIVE BARGAINING: A COMPETITION LAW CONCERN?

[Basu Chandola - Research Assistant, Jindal Initiative on Research in IP and Competition]

Recent news reports suggest that drivers associated with Cab aggregators Uber and Ola (Platforms) have decided to strike in Delhi-NCR. Generally, one would assume that any analysis of strike would be limited to labour law. However, it is also essential to have a competition law perspective on this matter owing to the relationship between drivers and the cab aggregators and the whole idea of the gig economy at large. In this piece, the author attempts to present the competition concerns which may arise under the Competition Act, 2002 (Act) in implementing such a strike.

This concern arises from three factors. First, the relationship between drivers and the platforms is not an employer-employee relationship. As a result, any collective action by the drivers would qualify as a cartel. Also, collective bargaining cannot be a defense for anti-competitive conduct.

1. Relationship between drivers and aggregators

Cab aggregators generally identify themselves as technology or electronic platforms which facilitate the aggregation of vehicles and arrange transportation or logistics service with independent third-party service providers. These Platforms act as ‘technology companies’ providing matching service to riders and third-party providers of, primarily, ride services. The Platforms do not own taxis or employ drivers but merely match riders with third-party drivers. The T&Cs of the service clearly define that the transportation or logistics services on the platform are provided by independent third-party contractors who are not employed by these platforms. Thus, the Platforms neither treat nor claim that the drivers associated with them are their employees. However, there is a widespread debate on the legal status of drivers associated with Platforms. A few jurisdictions have decided that the drivers are employees of the platforms, while most of the jurisdictions are silent on this issue.

In India, the Hon’ble Delhi High Court in Delhi Commercial Driver Union vs Union of India had an opportunity to decide this issue. The Hon’ble High Court had to determine if the taxi aggregators were merely playing the role of online conduits, connecting drivers to customers through a mobile app and whether the drivers associated with these platforms fell within the legal category of “employees” qualifying for the range of labour laws. However, the petitioners withdrew the case before any final decision could be made in this case. Thus, the uncertainty on the legal status of drivers associated with these platforms continues.

The relationship between Platforms and drivers has also been discussed before the CCI. In Samir Agrawal and ANI Technologies Pvt. Ltd, the Informant submitted before the CCI that drivers associated with such platforms do not function as their employees, but as independent third-party service providers and argued that there existed a hub-and-spoke cartel between the drivers and the platforms. While the CCI rejected the submission on the existence of the hub-and-spoke cartel, it observed that ‘the drivers offer the physical service of transportation to the riders and are legally independent entities’. Thus, it may be suggested that the drivers associated with the platforms are not employees but rather independent contractors.

2. Decision to Strike- Does it amount to Cartelization?

In a statement to the press, the president of Sarvodaya Drivers Association of Delhi, a union of Ola-Uber drivers, has declared that around two lakh drivers of the cab services have given the strike call demanding extension of the moratorium on loan repayment and a hike in fare in view of the Covid-19 pandemic. This call for a strike may well be considered a violation of the Act.

Under Section 2(c) the Act, a cartel includes an association of service providers who, by agreement amongst themselves, limit, control or attempt to control the provision of services. In addition, Section 3(3) of the Act provides that any agreement entered into between persons or associations of persons or decision taken by, any association of enterprises or association of persons, including cartels, engaged in identical or similar trade of goods or provision of services, which limits or controls the provision of services shall be presumed to have an appreciable adverse effect on competition.

Assessing the striking drivers on the aforementioned parameters, it is clear that the Drivers Association is limiting the provision of services during the strike. Such drivers qualify as enterprises are they are individuals providing services in line with Section 2(e) and (l) of the Act. The aforementioned limitation of service is caused by a decision of an association of persons who are engaged in the identical provision of services i.e. operating cabs in the present case. Thus, the requirement of Section 3(3) is fulfilled and an assumption of appreciable adverse affection on competition is cast on the striking drivers.

In addition, it may be difficult to negate this assumption since the pro-competitive factors enlisted in Section 19(3) i.e. accrual of benefits to consumers; improvements in production or distribution of goods or provision of services; and promotion of technical, scientific and economic development by means of production or distribution of goods or provision of services, are unlikely to be achieved due to the strike.

3. Defense of Collective bargaining

The CCI has had several opportunities to analyze the defense of Collective Bargaining wherein the parties have argued protection on the ground that they were indulging in collective bargaining. On this issue, the CCI’s stance has been that the guise of ‘collective bargaining’ cannot be used to justify restrictive acts by an association, whose members are commercial enterprises. In the FICCI and Multiplex Association of India and United Producers/ Distributors Forum, the CCI has observed that “Collective bargaining may not be per se bad in law and may be resorted to for legitimate purposes in accordance with the law. However, when the trade associations enter into agreements in the garb of collective bargaining which are anti-competitive in nature, then no competition watchdog can countenance such act/agreement.”

Even the Hon’ble Supreme Court of India in Competition Commission of India vs. Coordination Committee of Artists and Technicians of West Bengal Film and Television has ruled that if the membership of a trade union consisted of (even a few) commercial enterprises, they cannot use the guise of collective bargaining and industrial action to impede competition. Based on these observations and the fact that the drivers associated with Platforms are commercial enterprises involved in the provision of services, a collective bargaining arrangement used to limit services may fall foul of the Act.

Conclusion

Several gig economy based enterprises such as drivers associated with Platforms, food delivery partners associated with food delivery platforms, etc. often resort to strikes to get the platforms they are associated with to listen to their concerns. If the drivers were considered employees, a violation of the Act would not occur since the drivers would then not qualify as enterprises. However, looking at the current jurisprudence it seems that the drivers would be considered as independent contractors only and would therefore qualify as enterprises. The collusion of such enterprises would be bad under Section 3(3). While collective bargaining may be useful for negotiating against the platforms, such a strike if considered a violation of the Act could lead to serious fines. Therefore, the drivers association should be extremely cautious in calling such a collective decision.