Climate change and competition law – the Green Deal
‘I like the dreams of the future better than the history of the past’
Climate change is one of the main challenges of our time. In addressing this issue there are a variety of potential solutions and instruments. At the European Union (the “EU”) level the European Green Deal aims to transform the EU into a modern resource-efficient and competitive economy with its ultimate goal to be the first climate neutral continent by 2050. It has been acknowledged from the very beginning that competition law could also contribute to the goal of a greener economy. Against this background the European Commission (the “EC”) called for contributions on questions about how competition rules and sustainability policies work together.
The purpose of the consultation was to gather ideas and proposals from everyone with a stake in the issue, including competition experts, academia, industry, environmental groups, and consumer organizations. The consultation related to all three main fields of competition law: State Aid, Antitrust Rules, and Merger Control.
The call for contributions resulted in over 200 contributions from 26 Member States, and was followed by a conference on 4 February 2021.
Competition policy supporting the Green Deal
In its call for contributions the EC stressed that State Aid allows support for the priority axes of the Green Deal (decarbonisation, energy efficiency, sustainable mobility, circular economy, and zero pollution goals). The general question was what main changes stakeholders would like to see in the current regime of State Aid. If contributors would consider that lower levels of State Aid, or fewer State Aid measures should be approved for activities with a negative environmental impact, the EC sought to know how that should be accomplished. For projects that have a negative environmental impact, the EC was particularly interested in learning what methods there may be for Member States or the beneficiaries to mitigate any negative effects.
As regards the revision of the State Aid rules, numerous respondents stressed the need to keep in mind the need for a level playing field. In general, many of the respondents favored using State Aid to support the goals of the Green Deal. However, there also were more skeptical voices pointing out that it would be a slippery slope to single out or define specific projects or initiatives for State Aid.
The current COVID-19 pandemic with severe consequences for the economies of the Member States adds an interesting dimension to the debate. Where there is a clear need for a Member State to help certain vital industries to deal with the pandemic, a legitimate question could be whether this assistance should also include parts of an industry with an uncertain future in its current form. For this reason, the Green Deal might be part of the broader (political) discussion of how to structure a sustainable economy.
In its document initiating the discussion, the EC started by stating that EU antitrust rules already contribute to the Green Deal objectives by sanctioning restrictive behavior. Restrictions in the development or roll-out of cleaner technologies, or foreclosing access to essential infrastructure, is already prohibited. The current framework neither prevents certain joint efforts of competing companies, such as standardization agreements, provided that that such efforts do not include unnecessary restrictions on competition. Also, certain agreements pursuing sustainability objectives may enjoy the benefit of the Commission’s block exemption regulations. The current debate aims to identify whether there are remaining barriers to desirable agreements supporting Green Deal objectives and, if so, how such barriers can best be addressed.
Unsurprisingly, the need for clear and predicable guidance as to how sustainability initiatives will be assessed has been a thread through the responses of the various stakeholders. In this respect, the Dutch competition authority issued Draft Guidelines on Sustainability Agreements which provide specific guidance on the application of competition law to business-to-business arrangements. One of the main elements of the Draft Guidelines is a proposed interpretation of what is a “fair share” for consumers in the meaning of Article 101(3) TFEU. In the Dutch Draft Guidelines, under specified circumstances, a “fair share” does not require full compensation for consumers. The Draft Guidelines also provide for case-by-case (informal) assessments that, subject to approval by the parties involved, could also be published for future guidance.
Another question is defining the circumstances under which cooperation – rather than competition – between firms will lead to greener outcomes, and whether there are circumstances when the pursuit of Green Deal objectives would justify restrictive agreements beyond that which is already possible. It is not without reason that the EC also asked the question of how the pursuit of Green Deal objectives could be differentiated from other important policy objectives such as job creation, or other social objectives?
Even though most observers won’t question the importance of climate measures, it indeed is a legitimate question how that interest relates to other interests, such as the public policy goals of competition law, which always has been a point of discussion. Many of the contributions from stakeholders have not explicitly commented on the competition policy issue. This may well be because of the political dimension of this topic. In this respect the Federal Government of Germany pointed out that care must be taken to ensure that any prioritization of common-interest objectives would have to take place outside the competition authorities and should be bound by strict criteria because the weighing of conflicting objectives is a political issue.
However, there were also respondents that considered it appropriate to distinguish between sustainability objectives and other policy objectives. For example, sustainability benefits can be differentiated from other benefits because of the intergenerational impact that is a unique and defining feature of sustainability related policy objectives. Another proposed possibility may be to grant sustainability objectives specific evidential treatment, e.g., by an assumption that an advantage from environmental benefits by its nature is beneficial for everyone.
Lastly, Merger Control can contribute to the goals of the Green Deal. A merger could result in lasting damage to competition, for example, by eliminating competitive between the firms involved. Mergers eliminate pressures between competing firms to innovate on sustainability aspects of some products. Judging the contributions of stakeholders, particularly that of the national competition authorities, many respondents favored an assessment of the environmental implications of mergers. At the same time, there were respondents that seemed to indicate that the current regime and existing tools are in principle fit for that purpose, although there is room for improvement in the application of these tools (e.g. to take sustainability issues more into account at the market definition stage of merger analysis). Most respondents indicated that there should be specific attention paid to so-called “killer” acquisitions that could result in reduced innovation as a result of a buy-out by a competing company.
There will next be a reflection process by the EC when all input from stakeholders will be considered together with the more tailored consultations (e.g., on State Aid). An EC report on learnings from the contributions and conference is expected before Summer 2021. This will undoubted be followed by new legislative proposals to support the Green Deal, because the EC is very much determined to accomplish the goals of the Green Deal. In this respect, during the conference initiating the project, EC Executive Vice-President Frans Timmermans used the quote ‘I like the dreams of the future better than the history of the past’ from Thomas Jefferson. Clearly, the view of the Commission is that the future is green rather than carbon black.
 The non-confidential contributions (189 in total) can be downloaded through the following link: https://ec.europa.eu/competition/information/green_deal/contributions.zip
 See, e.g. the submission from the Danish Chamber of Commerce.
 Contribution of the University of Groningen (the Netherlands) and the Inclusive Competition Forum by prof. H. Vedder, A. Gorecka and F. Richter.
 See the contribution of the Autorité de la concurrence.
 Actually, Timmermans referred to the political TV series Borgen where this quote was used in one of the episodes.
*Rogier Meijer is a Partner in the Amsterdam office.