How can competition law take workers' interests into account?

"Due to the weakening of trade unions and higher levels of market concentration, workers find themselves worse off with fewer potential buyers for their labour. In some cases, companies have very few competitors or have established a monopoly for buying the labour of specific groups of workers. This situation has long avoided scrutiny from the competition authorities, which generally focus on the impact that concentration of market control has on consumers."

So says Haukur Logi Karlsson, a postdoctoral researcher at the Faculty of Law, who is now investigating competition law to discover whether it would be beneficial to expand the law so that it addresses not only consumer interests but also worker interests.

"The research is intended to contribute to the discussion taking place now in both the US and Europe about worsening conditions for workers in our globalised economy, where companies are continually growing larger and concentration of market control is increasing," adds Haukur.

A new tone after the economic collapse in 2008

Haukur explains that with the rise of neoliberalism in US universities in the 60s and 70s, it came to be widely believed that the primary role of competition law is to promote economic efficiency, particularly with regard to consumer interests since the competition authorities at that time often made decisions that were unfavourable to consumers. These arguments gained a lot of traction in US legal practice in the 80s, in line with the Zeitgeist during Ronald Reagan's presidency. The European Union adopted similar focuses in their own competition laws after the turn of the century. "A clause stating that the law was intended to promote healthy economic competition for the benefit of consumers was finally added to the Icelandic Competition Law in 2020," adds Haukur.

After the global economic crash hit in 2008 and doubts about neoliberal ideology began to surface, an increasing number of academics have started to criticise the competition authorities' emphasis on economic efficiency and consumer interests. "These criteria were too narrow, which led to many economic and social harms. These harms could be combated by taking a different approach to the enforcement of rules on competition, in particular with regard to the increased concentration of market control in various markets. One aspect of this discussion involves looking at the circumstances and interests of workers when evaluating a company's behaviour on the market in terms of competition law," says Haukur.

In other words, concentration of market control has an impact on society that goes well beyond the impact on consumers. "For example, it puts a company in a much stronger position as a buyer of the labour of certain groups of workers. A situation like this enables a company to increase profits at its employees' expense, which exacerbates economic inequality between the capital owners and workers who find themselves in a weak position," explains Haukur.

The paradox of increasing market efficiency for the benefit of consumers

There is a certain paradox at play here, according to Haukur. "Consumers could benefit if a company that offers a certain product or service implements poorer conditions for its workers. But those workers are also consumers, and most consumers are also employed somewhere. So, increasing efficiency to benefit consumers at the workers' expense doesn't necessarily have a positive impact on society, even though overall prosperity levels may rise. The biggest risk is increased economic inequality between workers in vulnerable positions and consumers in strong economic positions, especially consumers who also own companies and capital," explains Haukur.