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Have banks agreed wages? Antitrust authorities suspect

The tip came from the industry itself: More than 30 banks in German-speaking Switzerland apparently inform each other about the wages of apprentices and graduates. The competition authority is now determining whether there are any indications of a violation of the Cartel Act. The industry shows a lack of understanding.

People at Zurich’s Paradeplatz: Do the banks agree on wages for apprentices?

Ennio Leanza / Keystone

When companies cheat consumers by fixing prices, the thing is clear: this reduces competition to the detriment of the general public. Antitrust law was originally created for such cases in particular.

Now the Swiss competition authorities have taken on a new domain: the job market. The secretariat of the Competition Commission (Weko) announced on Monday that it was investigating 34 banking institutions. In fact, the Commission’s preliminary investigations cover most German-speaking Swiss banks that train apprentices themselves.

There is a suspicion that the banks exchanged information on wages and wage components. When asked, the authority said it was particularly about wages for apprentices and graduates. It is conceivable, for example, that the banks involved wanted to prevent them from mutually increasing the starting wages for apprentices who had completed their apprenticeship. A bank has apparently given evidence of the suspected exchange of information.

On the other hand, the Weko does not focus on the key values ​​that were fixed in the collective labor agreement between the social partners. This includes in particular the minimum wage for apprenticeship leavers. From January 2023, this will be CHF 58,000 per year. For comparison: According to the 2021 salary book, a bank employee in the canton of Zurich earns a median of 13 x 6,116 francs, i.e. slightly less than 80,000 francs per year.

In a first step, the secretariat must now find out whether there are indications of a violation of the antitrust law. An investigation only follows if this is the case and a member of the Weko Presidium gives the green light. In short: there is still a very long way to go before individual banks are punished.

misunderstanding in the industry

The Swiss Bankers Association and the Association of Employers and Banks, which is responsible for the social partnership, report that no such exchange has taken place in their bodies. The focus is also on six regional banking associations, which cover almost all of German-speaking Switzerland. Dissatisfaction and surprise about ComCo’s actions can be heard from those around her.

According to her interpretation, the denounced exchange of information should ensure fairness on the apprenticeship market; the banks have been criticized on a number of occasions for aggressively retaining apprentices at a very early age. They wanted to put a stop to that. In any case, the willingness to have any decision by the Commission directed against the banks reviewed by a court seems to be quite high.

The Swiss Bank Staff Association (SBPV), i.e. the employee representative, is “somewhat surprised that the Competition Commission is taking on this matter”. The association does not know anything about agreements. The SBPV points out that free competition is not always in the interests of the employees if previous achievements of the social partnership are called into question. For the association, this includes in particular lower wage limits.

Isn’t there strong competition for the brightest minds in the world of finance? “The incentive to undermine any such agreements is real,” writes the employee representatives. In the case of banks, there is competition for certain voluntary additional benefits such as parental leave and subsidies for childcare, which has very positive results for employees.

When wage transparency becomes a problem

The current President of the Swiss Competition Commission, Andreas Heinemann, came recently in an essay on EU antitrust law to the conclusion that “fixing prices when purchasing work”, i.e. wages and wage components, are to be classified as “intended restrictions on competition”.

In the essay, Heinemann emphasizes the paramount importance of work not only for livelihood, but also for personality and society. For him, these arguments also apply to questions of the exchange of information – only when it comes to the exchange of aggregated wage statistics, which do not allow any conclusions to be drawn about future remuneration policy, does he see no problem in this. It would be surprising if Heinemann came to different conclusions for the Swiss antitrust law.

The St. Gallen competition economist Stefan Bühler speaks of overall welfare, which Swiss antitrust law actually takes care of. From this point of view, it is not only about the consumers, but also about wage agreements between the companies, which worsen the position of the employees.

However, Bühler also points out that antitrust law does not even cover the clearest agreements in the labor market: Generally binding collective labor agreements, i.e. agreements between trade unions and employers, are exempt from antitrust law. Minimum wages are stipulated in such contracts, for example, which increase the hurdle for certain employees to get a job in an industry.

If it turns out that the exchange of information on wages is illegal price fixing, this could be punished by the Competition Commission. Bühler, who used to be Vice President of Weko, could imagine that the authority would prohibit the exchange of information after an investigation. However, since ComCo is moving into a completely new area, it could at best do without a bus.

A trial balloon

In the communication, the Commission emphasizes that the labor market is increasingly becoming the focus of the activities of competition authorities around the world. In the USA, for example, there is increasing investigation into what a merger means for the employees concerned. Although the Weko always deals with individual cases, with the current preliminary clarification it should want to create a precedent that also serves as a signal to other industries.

The Swiss competition authority should better justify why they jump on this bandwagon. Just arguing that this is a global trend is not enough given their scarce resources. Rather, it must convincingly explain why antitrust law is applicable to the labor market at all. At least in older versions of antitrust law, this would hardly have been possible. The specific case is a tip from a bank – a through pass that Weko has now recorded.

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