Relevant Labour Market: Missing in the New Market Definition Notice

Abstract

The European Commission has been signalling an ambition to start more vigorously enforcing EU competition law against actions taken by businesses when they act as employers. Such enforcement may be necessary because empirical research shows that competition between European employers is often limited. However, the Commission's new Market Definition Notice entirely ignores the markets for labour, on which such competition takes place, even though their definition may be necessary in the enforcement. Against this backdrop, the present working paper examines how to define the relevant employing market. It discusses the occupation and geographic dimensions of the market, the role of the hypothetical monopsonist framework and the relationship of the market to downstream product markets, and it considers which evidence can be used to define the market. The discussion reveals that the relevant employing market consists of jobs for which the respective workers qualify and that they are also willing to consider. This so-called matching nature of employing markets is a major reason why employing markets tend to be quite narrow. The working paper calls on the Commission to provide an authoritative guidance to market actors and enforcers on how to define relevant employing markets.

Keywords: labour antitrust, labour market, employing market, monopsony, market definition, relevant market

JEL Classification: J20, J42, K21, K31, L49