Year: 2024
Type: article
Abstract: In the last year or so, further progress has been made integrating sustainability considerations into competition policy and enforcement in Europe. On sustainability co-operation agreements we have seen more guidelines being published (notably the UK with its ‘more permissive approach’ to ‘climate change agreements’) with many competition authorities providing quick, light touch, informal guidance for specific projects. Conversely, anti-competitive arrangements harmful to a sustainable future have been punished as cartels or an abuse of dominant position. This survey looks at the emerging thinking on sustainability and abuse of dominance and mergers before looking at the key challengers for the future. In last year’s survey1 I reported the amazing progress that had been made in integrating climate change and sustainability considerations into competition policy in recent years with most European competition authorities focused on it and bringing out policy statements and guidelines (and draft guidelines). This progress has continued with more guidelines being produced or finalized and cases being decided. We have also seen more competition authorities around the world emulating the progress made in Europe (with the notable exception of the US). That said, the last year has in some ways being one of consolidation in the area of sustainability cooperation agreements as authorities and companies implement and adapt to the new more progressive landscape: progress is now likely to be less dramatic and more incremental. While there is more to be done in this area, there are some signs of the focus shifting towards other areas of competition law where sustainability considerations may be relevant-noticeably the law on abuse of dominance and potentially merger control. Reflecting this this survey is structured as follows: Sustainability Cooperation Agreements-and the latest guidelines and specific guidance from the authorities. Sustainability cartels-and updates on the latest cases and fines. The use of abuse of dominance laws to attack unsustainable practices-emerging thinking and new cases. Merger review and sustainability considerations-some new decisions. Challenges for the future. Conclusion. First a quick reminder of the key issue here-businesses being afraid to work together to fight climate change and make their sectors more sustainable for fear (usually misconceived) of being considered to have infringed competition law (e.g. Article 101 TFEU and its equivalents under national competition law).2 The competition authorities in Europe have been responding to this concern in recent years and produced helpful general guidelines and some are beginning to publish guidance on specific proposals that companies have brought to them. The most important of these is Chapter 9 of the European Commission’s updated Horizontal Guidelines that took effect on 1 June 20233 (and which last year’s survey summarized). These are still work in progress and the full extent of their impact remains to be seen. This section of the survey summarizes the main developments on sustainability cooperation agreements since then. The United Kingdom’s Competition and Markets Authority (CMA) launched its Green Agreements Guidance on 12 October, 2023 to help business cooperate on environmental goals (the ‘Green Guidance’). The document is part of a wider awareness campaign that the UK authority has launched. It includes a video and a roadmap and focuses on environmental sustainability (including climate agreements and arrangements to protect biodiversity), as opposed to some other jurisdictions like the EU, which encompass a broader range of sustainability goals. Along with examples, the CMA sets out key principles that companies may use to shape their decisions when entering into agreements pursuing environmental sustainability goals. While being probably the most progressive of the guidelines finalized so far, they are, in my view, entirely consistent with UK, EU, and other similar/identical laws on anti-competitive agreements (Article 101 TFEU etc).5 It first explains which agreements are unlikely to infringe the Chapter 1 Prohibition of the UK Competition Act 1998 that prohibits anti-competitive agreements (the ‘Chapter 1 Prohibition’). Such agreements include agreements that: (i) do not appreciably affect competition, for example, because the parties’ combined market share is too small; (ii) do not affect competitive parameters, including agreements on internal corporate conduct on, for instance, limiting internal use of non-sustainable material; (iii) provide for joint advocacy or environmental campaigns; (iv) enable the parties to do jointly something that none could do individually or that they could do together more efficiently or quickly; (v) involve cooperation that is required by law; (vi) relate to the pooling of information about the environmental sustainability credentials of a supplier or customer; (vii) create new environmental industry standards, provided that conditions for a safe harbor are met, and the participants are free to go further than the minimum standard required; (viii) relate to the phasing-out of non-sustainable products or processes; (ix) involve the creation of non-binding industry-wide environmental targets; or (x) arrangements between shareholders to vote in favor of policies that pursue environmental sustainability. This includes an agreement (or network of similar agreements together) covering shareholders’ conduct in relation to several businesses that are competitors in a market, to pursue corporate policies supporting, encouraging or requiring the adoption of permissible sustainability agreements. In the next section the CMA explains (with examples) the sort of environmental sustainability agreements which could infringe the Chapter 1 Prohibition. They will be prohibited if they have the ‘object or effect’ of restricting competition (unless they can benefit from an exemption—as discussed below). An example of a ‘by object’ infringement given is one that limits the competitor’s ‘ability or incentive to innovate in order to meet or exceed a sustainability goal or to achieve that goal more quickly (e.g. an agreement not to adopt a new less polluting production process)’.8 An example of such an agreement might be the AdBlue case discussed in Part V of last year’s survey.9 Some agreements will only infringe the Chapter 1 Prohibition if they have the ‘effect’ of restricting competition. Two examples given are useful: An agreement between competitors only to purchase from suppliers that sell sustainable products (where those suppliers operate at a different level of the market to the purchasers); and An agreement between competing suppliers not to provide products or services to customers that produce environmentally damaging products or services. This example is particularly important in the context of efforts to get financial service and insurance providers to stop financing and insuring new fossil fuel projects (see Part 2.F (ii) below)10 The CMA explains that some restrictions of competition may escape the Chapter 1 Prohibition (without needing to meet the requirements for an exemption) if they qualify as ‘ancillary restraints’. This will be the case where the restriction is an ‘ancillary restraint to a wider [legal] environmental agreement’ and it is ‘objectively necessary to implement, and proportionate to, the objectives of that wider sustainability [agreement]’. If an agreement has the object or effect of restricting competition (and is caught by the Chapter 1 Prohibition) it can still be exempt under Section 9 of the Competition Act 1998. This is the UK equivalent to the exemption in Article 101(3) TFEU. To be exempt an agreement must meet each of the same four conditions as under Article 101(3) and Section 5 of the Green Guidance explains how environmental sustainability agreements can meet each of these four conditions. The most important way in which the UK Green Guidance differs from that of the European Commission is its ‘more permissive approach’ to ‘climate change agreements’. This reflects its recognition that ‘climate change represents a special category of threat: the sheer magnitude of the risk that climate change represents (including the need for urgent action), the degree of public concern about it, and the binding national and international commitments that successive UK have are as which to climate These will be those which the from such as and from the or of or The guidance a of helpful examples of climate change agreements including most agreement between financial services providers not to provide such as financing or insurance to fossil fuel (see further Part (ii) below). The ‘more permissive approach’ it for an agreement to the share for is one of the four which agreement must if it is to benefit from an exemption from the on anti-competitive agreements under UK, EU, or most European national competition the ‘more permissive approach’ into the benefit of the agreement for UK not those to the or service in between the and UK Green Guidance is that the CMA guidance in relation to for the guidance or from the and the CMA that it is to help businesses and their sustainability and is an companies may its to provide informal guidance on their sustainability (see further Part (i) and (ii) below). The competition authority (the has been at the of the to climate change and sustainability into in competition policy (and published the first and most progressive draft guidelines in this as a of the EU, and that agreements are likely to have an effect on between such that competition law it has its in the light of the Commission’s new Horizontal These are by a new in which the to the that it has on how it or it and that the in not to These (i) to with a binding sustainability not international under the also national or European This is on the that not under competition (ii) to which with an international or national standard or policy goal to or such environmental and where the environmental the competitive The also sets out the which can in relation to specific sustainability and the has been the most of the competition authorities in (and such guidance (see further Part (iii) to (ix) below). the explains the in which agreements to will not in if it out that the agreement is not with competition In the is being as progressive as it can the on it as a of the the Commission is the competition the and as a of the EU, is also on the European Commission’s guidelines on sustainability agreements. It published a on how it will issue informal in this the UK CMA it it has an policy and to issue informal a first such in June (see Part (x) below). While general of the sort discussed (and those of the European are there are many where more specific guidance in relation to agreements before they have the to with them. authorities have the policy and the to issue to published to include the examples out In my view, each of these is with competition law in Article 101 TFEU and its national equivalents in UK CMA guidance to the an agreement which more sustainable to to purchase minimum of from a of on The CMA that the agreement in and of products for UK The CMA if its to it not issue fines. concern of and probably one of the some are to sustainability agreements to competition is a concern that they will get into a and That the guidance produced and is at only other to a quick for UK CMA guidance in to a by a by UK to in their by the of suppliers from to This in It review of the sort that business The CMA that it not have the that might be in a It could not the of some to competitors or it considered that this risk to be and that there to that the produce environmental that could be of harmful competitive that might and The CMA its ‘more permissive change discussed and took into the of the to UK from the agreement (and not those to the customers the products by the with its first and in with its Green the CMA not to or the if it to that the arrangements in infringe competition of 2023 cooperation to (iv) for a cooperation agreement suppliers at the of on and more and in less being (v) competitors and to in the of in The goal of the agreement to the into the The focused on these companies could achieve the same individually and took into the for and for in the competition particularly if the to the objectives of the The that the of the agreement and it important for (vi) an agreement between to of which The agreement necessary because continued to be (vii) a by which work together to in June the an agreement by which together to make their sustainability on like and conditions more (e.g. to with the corporate sustainability of the This not only more the is and information is the has produced a to help businesses the cooperation they like to do with competitors is under competition The competition authority has published its first informal to its This agreements in the to and of the environmental of are a of of It seen as a agreement in the of the European Commission’s Horizontal Guidelines on cooperation It that the authority had at the issue this not been the case the parties have been to also be case in other The necessary for the environmental to be on and The parties free to be more in their to go the of the the agreement is a recognition that the environmental impact of a can be an important of competition. This is consistent with the cases that have restrictions on competition on environmental as cartels (see Part The Competition Authority a sustainability focused on in the The cooperation agreement and the of and information the authority not to be and the parties not to or minimum not to to their The that it for a of the on is a joint of of public companies in the and industry and international of the goals of the joint is to help in and a sustainable To achieve the its to to minimum purchase and to achieve for in the not to this the of the commitments given that there for if to meet their information commitments with the and and the of the only a of the the and in the of I have on the of competition that the guidelines and guidance has not been being cases which have been to the competition authorities and that those that have not been to that is It is and the is still like the CMA have made it that their guidelines are under review and they in the light of Some of the projects for which guidance has been given do to have the to be (e.g. those of in the and commitments by UK to in their guidance is to be the exception the general of in the light of the general that to be is it is to the extent of the the more published of sustainability cooperation being by the competition authorities (and which are with competition the more likely will be to go with their the the of competition be The guidelines and guidance in Europe is encouraging in this area around the world with guidelines (and draft being and published in as as and are sustainability cooperation agreements in have the to thinking in Europe example competition or of the Competition example, the in a not only the of a by and this to be on to and most cooperation agreements provide that it is to each or not they on to their not as such a competition law it is that the on corporate sustainability has been this (with years to implement This companies a to and environmental and their and enforcement not only authorities also the This may to companies a entering into agreements to such as unlikely to competition in most cases. it may also competing companies to not to in the sort of by the (e.g. to go further or than the Such agreements be may competition and be the of future guidance by competition This a in survey of recent developments be and at a to and The of progress in this area and the in the and The of to to and insurance for new fossil fuel projects. do I the in a review of developments in The is that many of the businesses with the most to work together to fight climate change have to the and is there is at the an for In the in the are of and in that the the has produced the sort of sustainability cooperation agreements guidelines and specific guidance of the sort we have seen in discussed is that there is under a of law could not the sort of cooperation agreements that are being and in Europe to the extent that they market and a That in the climate in the (see will in the the only if the businesses for a sustainability agreement could the for a review the equivalent of the informal being given by European competition authorities in this The other is a of of law by which is as being to the of the fossil fuel are main to First by to law agreements (see further below). a by the on the in and a (and more published on the same there is the fear that a like this has how it further to the market the world has in a of financial and insurance companies to their with a future including to new fossil fuel These the of the in the discussed The of these agreements the key is that have from and they have the sort of (or that is so agreements on sustainability are Some are and to an companies on environmental or other sustainability of competition, there is this be more than on other of competition. such as AdBlue and other where like has been by a competition authority discussed in Part V of last year’s year I to the the on and the This has now been the Commission’s in the Competition Authority (the launched an into the information which companies (or make to customers in relation to in In 2023 they of The some 101 companies (including and and for not to provide with information on the or on the which into with or its this might have been seen as a to be with under laws and not competition it to provide information in relation to to which and suppliers could be to the extent that they go the minimum requirements in infringement encouraging to to free before they by This that to free products at a when these products (and to be to a competitive by the of in its The case is in a of it not concern the most of competition, of competition, in this case information (and to decisions as to which products to purchase (and how they are to for as in many cartels the participants to have had to the information provided to the this as a to that could not between the of the different parties by to the the to be by object the authority not have to that they had an ‘effect’ on the in to be entirely consistent with competition If an agreement or a which competitors can be to in it that is or The has an into the of the to provide with information on the of products and this has a the will at the of the as a of competition. this is an we and on this further the is several years I (and a have that competition law can be to attack and unsustainable by dominant be it in or the This area of the law and is still the have that dominant companies have a to and that the of abuse are not recent has the in this area to be is the sort of which the as and not be as such by the In other we can use competition policy as a to attack unsustainable to towards a sustainable This is particularly the case where the in is with binding commitments in relation to climate change or with and as those of the Authority or the out to be done to to a sustainability example might be the of competition that when a dominant the of of products (e.g. by on or in its those a competitive This could be an and abuse of the dominant position. It of the and the It could also have an effect if it to that the dominant is the competition environmental (and because is or because it is not being where have we to in this I about this area 5 years it While the we had not seen cases brought by the authorities or This is we can more cases in the future. In last year’s survey I reported cases brought by the competition authority the abuse of dominance to companies for harmful to competition and environmental goals and a of cases in this area have been the most of these is a of for brought in the Competition several and The are that these companies infringed the Chapter of the Competition Act 1998 (the equivalent of Article by providing information to the in relation to This under in the companies being to to for services. The are for In the European Commission a of to the that it had a dominant by its in the market its main The Commission that providers and into more environmentally The Commission not only may this to for it could to and The European Commission has that as the only to and in that may Article TFEU in with Article TFEU. The is considered to be the of competition in the market for and with for The competition authority has launched an into for its dominant in the It is to have into agreements with and with and of which may have the of and more The case the between policy and an competition in the achieve the environmental objectives by European and since it could and more than and since it also from a of view, the of or we will be to further on these cases in future of this the of the European Commission has published its draft guidelines on Article and (the The Commission to these in will be the to on more that the draft a from a sustainability of (i) It is a that this only and not as unsustainable conduct by dominant companies to be in or in the of that That said, many such will also have an effect (see my example of by in a or the than the of of it (ii) the Horizontal Guidelines published by the Commission in the draft guidelines do not a specific section on sustainability. This is a not The guidelines had sustainability section years in 2023 it a to by we will have a on Article and sustainability. is (iii) is not and the draft guidelines have a of by which sustainability considerations can be into when Article It that the to the of a given such as It that the of out in the of Article are examples and not the of a dominant which are It the guidelines only concern the principles which they out also for the of other of such as to it (and to survey developments in sustainability and competition policy to one of the main of competition law abuse of and merger has been about how merger (and the Merger and other European sustainability considerations into Sustainability can be a in the potentially a to a being or requiring a dominant a in order to the from its more sustainable Conversely, sustainability can be a to a to a dominant a in order to out its more sustainable its production and The example of sustainability being into in the last year is not a European an In October, the competition the a merger between and The that the might to a of (or it a of that in a of in and that this a public benefit in the that it is important and of to It that there likely to be a to the public that the to the public that or be likely to from the year I my survey with some for the has been done to of sustainability (and particularly the fight climate in competition to be While further progress has been made in this area (e.g. more guidelines being produced or finalized and specific guidance being given for the remains the same and can be as the guidelines on sustainability agreements are work in and they updated in the light of progress has been made with companies use of the policies (see Part we need to more of this and this businesses need to with examples of projects which they like to out in areas where guidelines do not provide general Some on sustainability to more than a We have seen these being and the parties (see Part We can to more such cases in the future. the focus so has been on climate and less on the other to recognition of this we can to businesses looking at ways of together to guidelines a on this the progress has been made in Europe. many of the which have the impact on the to a sustainable have around the world less progress has been made in the some like and are discussed in Part the is the (and the for Some of are on it will and on like the of the the focus so has been on that competition policy not agreements to their a more sustainable more to be given to the other areas of the law on abuse of dominance and mergers and 5 In this an to mergers which have for the to a sustainable and the unsustainable of dominant companies in cases where their an abuse of a dominant position. In other the competition authorities and parties must be to use the competition competition policy has a to in the to a sustainable other and policies such as progress has been made in the last years more remains to be To this we need to the sustainability agreements and Europe. the business must do more to of the by the guidelines on sustainability agreements. This specific projects to competition authorities to make the most of their
Author: Simon Holmes
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: hybrid
Estimated APC paid: $4,877
OpenAlex ID: W4403586037