Online platforms commit to remove minimum prices
Happy Helper and Hilfr have committed to remove minimum prices for the cleaning services offered via the companies’ platforms. These commitments are made in the aftermath of the Danish Competition and Consumer Authority’s (Konkurrence- og Forbrugerstyrelsen) concerns about the platforms’ use of fixed minimum rates as part of their terms and conditions.
The Danish Competition Council’s (Konkurrencerådet) decisions of 26 August 2020 – (1) Minimum price on Happy Helper’s platform and (2) Minimum prices on Hilfr’s platform
Happy Helper and Hilfr are onlineplatforms which establish contact between offerors of cleaning services and end customer.
Generally, the offerors of the cleaning services are independent contractors who enter into agreements regarding cleaning services directly with the customers. Happy Helper and Hilfr therefore only facilitate the contact between the parties.
In January 2019 the Danish Competition and Consumer Authority undertook control investigations at the platform companies because the authority - in connection with a general mapping of online platforms in Denmark - had noticed that both platforms used minimum prices. The investigations resulted in the Danish Competition and Consumer Authority commencing individual investigations of both platforms.
One of the terms which the offerors of the cleaning services had to undertake in order to use the platforms was to apply a certain minimum price. The Danish Competition and Consumer Authority considered this term to create a “price floor” which could harm the open price competition. Hilfr operated at an hourly rate of at least DKK 130 (excl. various charges) while Happy Helpers’s minimum rate was DKK 120 (excl. various charges).
In addition to the minimum prices the Danish Competition and Consumer Authority also investigated the Hilfr platform’s so-called “SuperHilfrers”. On the Hilfr platform any cleaning offeror automatically becomes a SuperHilfr after having worked for more than 100 hours through the platform. However, the offeror may choose to continue as an independent Hilfr. SuperHilfrers are covered by a collective agreement entitling them to e.g. holiday allowance, platform commission, pension and health scheme. SuperHilfrers receive a job confirmation for each cleaning service, but also receive, however, an employment certificate upon becoming a SuperHilfr. SuperHilfrers were also comprised by the requirement for a minimum rate.
The Danish Competition and Consumer Authority’s investigation showed that it could not be denied that SuperHilfrers could be considered employees for competition law purposes. This is an important distinction as an employee is not subject tothe competition law rules. On the contrary, an independent contractor is subject to the competition law rules. However, this question was never clarified since the case was closed with the commitments.
The case, and with it the investigations of the authority, was closed by Happy Helper and Hilfr committing to change their practice, which was accepted by the Danish Competition Council.
The commitments were as follows:
- Happy Helper and Hilfr undertake to ensure and support that no terms or statements about minimum prices appear and that no minimum prices are otherwise used for independent contractors using the platforms.
- Hilfr undertakes to ensure that Superhilfrers are employed for competition law purposes:
- Hilfr must ensure the existence of a superior-subordinate relationship between Hilfr and SuperHilfrers.
- Hilfr must bear the financial risk, which is to be ensured by implementing a new section in the terms and conditions of business to clarify this.
The commitments apply for an indefinite period time.
What do the decisions show?
The competition authorities show considerable interest in online platforms facilitating the establishment of contact between offerors and customers. The decisions show that online platforms should be careful when determining terms and conditions for platform users considered to be independent contractors. Independent contractors, such as consultants, are subject to the competition law rules. Therefore, any terms affecting the competition parameters on the platform - e.g. minimum prices - between independent contractors who are competitors will be unlawful.
See the Danish Competition Council’s decision on minimum price on Happy Helper’s platform.
See the Danish Competition Council’s decision on minimum price on Hilfr’s platform.