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“Symbolic penalty” imposed on security business associations for transfer clause

By  |  April 3, 2012
“Symbolic penalty” imposed on security business associations for transfer clause

The National Competition Commission Council has ruled that, in principle, transfer clauses (agreements for the transfer of employees contained in a collective agreement) do not restrain competition. The Council found that such transfer clauses help preserve stability in employment. However, the specific transfer clause at hand does constitute “an agreement that is capable of hindering effective competition in the market for the transport and handling of funds,” and thereby contravenes article 1 of the Competition Act.

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    The transfer clause at issue was contained in the “State Collective Agreement for Security Companies 2005-2008,” signed between business associations in the security sector and unions FES-UGT and FTSP-USO. The Council determined that the design of the transfer mechanism suffered from flaws such as the lack of objective criteria for determining who is to transfer transfer clause. The uncertainty created by the transfer clause thus created barriers to entry in the already concentrated security market.

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    No penalty has been imposed on the unions, and only a “purely symbolic penalty” was handed down to the business associations, due to the antitrust violation’s “somewhat novel nature.”

    Full content: Comision Nacional de la Competencia