This fails with a compiler error:

    <S> Iterable<S> id(Iterable<S> arg) { return arg; }
    <T extends Comparable<T>> Iterable<T> empty() { return null; }
    void test() { id(empty()); }

So does this:

    <S extends Comparable<S>> Iterable<S> id(Iterable<S> arg) { return arg; }
    <T> Iterable<T> empty() { return null; }
    void test() { id(empty()); }

This succeeds:

    <T extends Comparable<T>> Iterable<T> empty() { return null; }
    void test() { empty(); }

All ought to succeed (per JLS 18.4), generating a type variable of the form:
Z extends Comparable<Z>