Does this look like Universities colluding?

There is currently an ongoing dispute between academic staff and employers in the UK pre-92 Universities regarding the running of the USS pension scheme. I don’t want to get into the debate surrounding the reasons for the dispute, but an interesting competition law question has arisen regarding several UK Universities’ near identical responses to the fact the trade union that represents academic staff, the UCU, have announced a collective marking boycott as part of industrial action protesting at proposed changes to the pension scheme.

Withholding Pay

If an academic withdraws part of their labour, in this case marking and assessment, but carries on with all their other duties, namely teaching, research and administration, they are only partially fulfilling their contract of employment. There is no controversy that if an employee is only part fulfilling their contract of employment in the UK the employer can withhold remuneration on the basis of the breach of contract. Where this question gets interesting for competition lawyers is *how* UK Universities appear to be deciding how much pay to withhold if staff boycott assessment.

Some institutions take the view that as partial performance is non-performance the employer is entitled to withhold 100% of salary for as long as the non-performance continues (Full Disclosure: the only statement to-date by my employer is that they take the position that they can withhold “up to 100%” of salary). Other employers have taken a less forthright stance and have indicated they would withhold a proportion of salary to reflect the part performance. Given that each employer could come up with a number between 0 and 100% it is *very* interesting that so many appear to have come up with the same number; assessment boycott leading to a 25% withhold (Full Disclosure: most institutions have not published what they intend to do but have informed staff, but the number I have heard most often, particularly from Scottish Universities, is 25%).

Collusion or Coincidence?

When a competition lawyer hears a significant number of institutions ‘independently’ coming up with the same figure it results in a red flag; is there collusion?

There are legitimate reasons why a number of institutions might have arrived at the same answer, but that means that Universities would have to be seen as a sufficiently tight oligopoly. Maybe that isn’t such an outrageous proposition. The pre-92 UK Universities are a group that has a certain degree of similarity. They offer similar products, in the sense of the qualifications they offer, and face similar pressures and constraints from the UK Govt funding model that most operate under (Oxford and Cambridge being notable exceptions because of their separate funding). All institutions will also have internal ‘Workload Models’ that indicate how academic staff divide their time between different elements of their role. In fact, Universities have to take surveys of this and return regular data to the funding bodies. All of this could mean that similar institutions, working within similar constraints, and with transparency between them because of regular data collection, will naturally come up with similar values when asked the question.

The only flaw in that argument is that in workload calculations and in the data collected on how academics spend their time, assessment is not often seen as being separate from teaching, but rather as part of it. With that lack of transparency it is *much* more difficult to see how so many institutions came up with the same figure at the same time.

Perhaps the only other explanation is then that the Universities, when they meet, under the auspices of Universities UK, to collectively discuss their position in relation the pension scheme, they might also have shared information on how they might deal with the collective assessment boycott threatened by the Union. If there has been any information exchange between institutions in this regard it could easily be seen as collusion falling with the terms of Article 101 TFEU, or s 2 of the Competition Act 1998. Following cases such as Case C-8/08 T-Mobile Netherlands it has been pretty clear that if information exchange occurs and then parties act having received that information it can be presumed that there is a causal connection, and it can be seen as being part of a “concerted practice”.

I, of course, don’t know what has been going on inside Universities UK, but it would be interesting to see what the CMA might find if they were sufficiently interested to take a look …

 

P.S. Thanks to Declan Walsh (@deckie) for his thoughts via Twitter

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4 responses to “Does this look like Universities colluding?”

  1. Okeoghene Odudu says :

    I don’t think anyone could accuse me of being an apologist for the conduct of universities operating in a market. See, for example: http://competitionbulletin.com/2014/10/27/competition-law-and-public-services-insights-from-the-oft-report-into-higher-education/
    However, having re-read Case C-67/96, Albany International BV, paras. 46-70, is there not a strong argument to be made that even if the UK universities have expressly agreed on their response to industrial action, that that agreement would fall outside the scope of Article 101(1)–it being reached within a framework of collective bargaining? Although a famous trade union movement case I have always understood Albany as being about the the employers. Read in conjunction with the Opinion of AG Jacobs it seems clear that a Trade Union does not act as an undertaking in the context of collective bargaining. Employees, following Becu, are also not seen as undertakings, so a Trade Union is not an an association of undertakings. Within the framework of collective bargaining the only entities needing exemption are the employers, and it is to these that the Albany exemption applies.I think it applies to any agreement universities may have reached inter se in this context.

    • Angus MacCulloch says :

      Absolutely the Albany point applies to the original collective bargaining process. Perhaps because I was trying to be a little provocative I didn’t address it directly, but I still wonder how far down the collective bargaining exception goes? There must be some point at which collective action over pay and pensions ceases, and institutions must act independently again. Here you could clearly argue that this is a response to collective action and therefore on the basis of ‘equality of arms’ the employers should also be allowed to respond collectively. If that’s the case I think the employers should be more transparent about it, and make that case.
      At the moment their position is still presented as being of individual institutions.

      • alan riley says :

        Approaching this from a different direction. Would we agree that if employers got together and behind closed doors fixed salary levels to eliminate pay competition this would be a breach of the Chapter 1 prohibition/Article 101 TFEU? (as indeed the Magic Circle law firms allegedly did before the coming into force of the Competition Act 1998). What is the difference between such an agreement and an agreement to respond to strike action by agreement on pay deductions in response to the strike action? Is it simply that it is a response to collective labour action and as it is a response to such action it immunises the co-operation of the employers? Of course the two really big antitrust issues in academic are (a) agreement on pricing of tuition fees between institutions (this really is not a good idea it would constitute price-fixing and (b) the extent to which the QAA can operate without infringing the rules on information exchange between competitors.

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