As I write this the world is gathering in Glasgow, UK, for the most important international conference in recent years — COP 26. This comes at the end of a year in which 100s have died from floods in countries as far apart as Belgium and China, and others from Greece and Turkey to the west coast of North America have suffered record (and lethal) heat and wildfires. Neither this bulletin, nor this foreword, is about climate change as such but, before we dive into our technical competition law (or economics) bubble, it’s important to remind ourselves of the context in which we are looking at sustainability and competition policy – and retain some perspective. This is not just another interesting and technical aspect of competition law but something which has a bearing on the most important issue facing humanity — the existential threat that climate change poses.
Happily, many in the competition world are alert to this and sustainability is now one of the two hottest topics in competition policy today (the other being the digital/platform issues). As we will see, this bulletin reflects just how far sustainability has permeated all aspects of competition law and more and more jurisdictions are engaging with it.
Sustainability is relevant to all areas of competition law (in its widest sense) . In summary:
- (i). Top of my list is its relevance to laws dealing with cooperation between competitors (such as Article 101 TFEU and its equivalents in national law). While regulation on things like environmental standards is very important, it is often too slow in coming, limited in scope (and to particular jurisdictions) whereas climate change is a global issue and regulation is frequently not ambitious enough. Often business is willing to go further. Sometimes firms can compete on the sustainability of their products/services (and where they can, they should) but in many instances, they will face a “first-mover disadvantage” such that it may not be viable or, even if it is, it may result in niche sustainable products when what we need is to move whole sectors of our economy onto a sustainable basis. Firms may therefore need to cooperate if we are to realize the enormous potential for business to play its part in combatting climate change. But this is where competition law comes in. So ingrained is the mantra “thou shalt not talk to your competitors” that vital collaborative initiatives never happen, or are more limited in scope than they need be, for FEAR of competition law . Such fear is usually misconceived and I (and many others) have shown how there is much more scope for cooperation on sustainability than is often realized .
- (ii). Sustainability is also relevant to provisions dealing with monopoly power — such as Article 102 TFEU which prohibits all abuses of a dominant position. For example, Article 102 could be used more to tackle unfair and unsustainable practices (such as unsustainably low prices paid for some commodities) — i.e. as a “sword”. Sustainability could also be used as a “shield” to protect against misconceived allegations of abuse against companies trying to improve sustainability (eg by not supplying potential customers who would use their products in an unsustainable manner) .
- (iii). Next up is mergers where sustainability can (where appropriate) be a positive factor contributing to a deal being cleared — or a negative factor making it more likely that a deal should be blocked — or require remedies .
- (iv). Equally important is state aid given the massive amount of public support that is needed to transform our economy — much of which will constitute state aid under EU law and need approval under either a block exemption or by the European Commission . In particular, we need to support renewable forms of energy and cease supporting fossil fuels in a rapid but just transition.
- (v). We also need to ensure we are making the best use of the vast spending power of the public sector. This means ensuring that public procurement rules support, rather than hinder, the greening of our economy. This is a vast and under-explored issue .
This special issue on Sustainability & Competition Policy contains some  or so notes and articles covering many developments in most of the above areas over the last year or so at the EU and national level, and by competition authorities, courts, and the legislature. A few words on some of them.
A. THE EU LEVEL
There has been considerable work at the EU level over the last 2 years in the area of "antitrust" (Article 101 TFEU dealing with potentially anticompetitive agreements, and Article 102, dealing with any "abuse" of a "dominant position") with the Commission carrying out a number of consultations — in particular in October 2020 on "How competition Policy can better support the European Green Deal"  and in July 2021 on updating the Commission’s "Horizontal Guidelines" . At the time of writing, the latest statement of the Commission’s thinking is set out in a policy brief on 10 September 2021: "Competition Policy in Support of Europe’s Green Ambition" .
There is one EU merger approval reported on in this bulletin of relevance to climate change/sustainability — approval of a fuel cell JV between Daimler and Volvo contributing to climate-neutral and sustainable transport .
In parallel, the Commission has been consulting with a view to updating its General Block exemption for certain categories of state aid ("GBER") , and its "Guidelines on State aid for Environmental Protection and Energy" . These guidelines are due to be adopted by the end of 2021 and, reflecting the increased importance of climate protection, they are to be renamed the "Climate, Energy and Environmental State Aid Guidelines" ("CEEAG"). Interestingly, the Commission has signaled that EU governments may be allowed to grant more aid to projects that help achieve climate goals — the so-called "Green Bonus" .
The EU Court of Justice ("CJEU") has also given a landmark judgment in the Hinkley Point case where it confirmed that any state aid which contravenes provisions or general principles of EU law cannot be approved under Article 107 TFEU. In particular, all state aid must respect the principles of EU environmental law enshrined in EU primary and secondary legislation, such as the precautionary "polluter pays" and "sustainability" principles .
This bulletin also covers 2 other initiatives of the Commission relevant to state aid and sustainability. First, in September 2020 the Commission adopted revised EU Emission Trading System state aid guidelines . Secondly, in April 2021, the Commission invited interested parties to provide comments on a proposed revision of the State aid Framework for Research, Development, and Innovation .
Other Policy Areas
Just as climate change and sustainability permeate all aspects of competition policy (or should), competition policy does not operate in a vacuum apart from other Commission policies. Reflecting this, this bulletin includes a note on the Commission adopting an action plan for Intellectual Property (IP) to promote recovery and resilience in which it emphasizes that IP is closely linked to sustainability and that it sees IP as a building block in the "new green and digital project" — not least because of the high share of "green patents" held by EU companies . There is also a brief note on the Commission’s "Pharmaceutical Strategy for Europe" which refers to changes to the regulatory framework to enhance the environmental sustainability of medicines and the need for environment-specific measures that cover the entire supply chain .
In parallel with initiatives at the EU level, there has been activity at the international level. Climate change and sustainability issues are being discussed in both the International Competition Network (ICN) and the European Competition Network (ECN); the International Chamber of Commerce is discussing and writing on the issue  ; and the OECD held a RoundTable on Sustainability and Competition Policy in each of December, 2020 and 2021 .
C. NATIONAL LEVEL
Most competition authorities (at least in Europe) are now thinking about the issue of sustainability and competition policy — although the degree of engagement varies considerably.
The "market leader" is very much the Dutch competition authority (ACM) led by Martijn Snoep. Notably, it has published detailed draft guidelines setting out how competition law can accommodate sustainability agreements between businesses — agreements which "can contribute in an effective manner to the realization of public sustainability objectives" . Most notably, this excellent initiative:
- contains more flexible rules for exempting "environmental damage agreements";
- makes it clear that it is not always necessary to quantify the benefits of an agreement to exempt it; and
- it makes it clear that it will not fine companies which follow its guidelines in good faith (even if the authority ultimately disagrees with the parties and finds the agreement is caught by competition law and does not merit an exemption) .
While the Dutch are leading, at the time of writing it remains to be seen how much other countries and, most importantly, the EU Commission will follow.
One competition authority that is keeping up, and working with, the Dutch is that of Greece, led by Ioannis Llianos. It has published a detailed discussion paper on this topic, has worked with the Dutch on a technical report  and proposed to create a "sandbox" — a supervised environment in which businesses can develop initiatives to promote sustainable development without undue fear of competition law .
Another leader which has not attracted the attention and praise it deserves is Austria. In September 2021, Austria quietly amended its national equivalent of Article 101 (3) TFEU which allows agreements caught by the prohibition on anticompetitive agreements to be exempted if certain conditions are met. The Austrian provision explicitly states that the requirement for consumers to receive a “fair share” of the benefits of the agreement will be met if those benefits “make an essential contribution to an ecologically sustainable and climate-neutral economy” .
The French authorities have made some welcome (but so far rather general) commitments on sustainable development. In May 2020 eight French regulators issued a joint working paper highlighting the need to take into account the “climate emergency” in their work. Some regulators already had an explicit mandate to take into account environmental issues (eg the energy and transport authorities); others like the competition authority (FCA) confirmed that the absence of such mandate did not prevent them from taking into account the objectives of the Paris Agreement where conduct has competition implications. The FCA also spelled out that it now puts sustainability at the heart of its priorities . This point was confirmed in the FCA’s annual report for 2020 published in August 2021 which set out a two-pronged approach — targeting anticompetitive practices that are most harmful to the environment and providing guidance to companies planning to enter into agreements with environmental benefits .
So far the UK has taken a similar high-level approach to the issue with the CMA’s (the UK competition authority) annual report for 2020  saying that a "strategic priority” was “Climate change” and “supporting the transition to a low carbon economy" and the publication in January 2020 of very generic guidance to business . However, things may be changing. In July, 2021 the CMA published a helpful study into electric vehicle charging  and in September 2021 it launched a consultation on “Environmental Sustainability and the Competition and Consumer Law Regimes” which could lead to more specific guidance and a more engaged approach to the whole sustainability and competition policy issue .
One interesting feature of the Sustainability and Competition Policy debate is that it is not (or not just) the “usual suspects” (Germany, the UK, and France in Europe), and certainly not the US, which are leading the debate. We have already mentioned leading initiatives from the Dutch, Greeks, and Austrians, but other smaller countries are taking important initiatives. Like France and the UK, the Belgian competition authority, in setting out its strategic priorities for 2021, said that, in line with authorities like the European Commission and Dutch competition authority, it would focus on applying competition policy to promote a green and circular economy in Belgium . Although not competition policy in the strict sense, the Hungarian Authority has taken steps to combat “Greenwashing” and “Green “ claims by publishing guidelines for marketing and commercial practices relating to green and eco-friendly claims .
Meanwhile, the Czech competition authority has reminded us that good environmental motives are not enough. In July 2021, it imposed a fine in respect of anticompetitive parking conditions for certain hybrid vehicles. It recognized that the advantageous conditions given to hybrid vehicles were motivated by legitimate efforts to reduce emissions. However, these advantages were not based on objective and non-discriminatory criteria and were not proportionate to the stated objective of the regulation in question .
The Italian Competition Authority (ICA) has also reminded us that, just because an initiative is in the environmental sector of the economy, does not mean that the competition rules do not apply (On this, see further the so-called “Green Dot” case ). On the contrary, we need to be even more careful to make sure that competition on environmental criteria is not restricted (On this see further the “AdBlue” case ). In the Corepla case the ICA fined a plastics supply chain consortium that had abused its dominant position in the market for the recovery of pet plastic packaging for food use . Furthermore, harming the environment can be an aggravating factor when looking at imposing fines. For example, in the Google/Enel X case, when assessing the seriousness of Google’s conduct and quantifying the fine which it imposed on Google (for abuse of a dominant position), the ICA took account of the negative effects of the conduct on the development of e-mobility-which promotes environmental sustainability .
Space does not permit discussion of all countries which are taking initiatives in this area or contributing to the discussion . However, more and more countries are beginning to engage in this area-and not exclusively in Europe. Outside Europe one country worth mentioning, whose public interest test has shown itself capable of taking account of sustainability issues, is Australia. An example of this is the authorization given by the Australian competition authority (ACCC) to a scheme to increase battery collection and recycling .
CONCLUSION: COMPETITION LAW MUST PLAY ITS PART IN COMBATTING THE CLIMATE CRISIS
I will end on a personal note. Climate change is an existential crisis for humanity, a crisis that calls for us to do everything we can to combat it. What does this mean for competition law, competition policy, and the competition community? The short answer is: a lot.
- First, as Commissioner Vestager has recognized, everyone is called upon to play their part-including competition enforcers (and I would add everyone in the competition community).
- Secondly, we must use all the policy tools we have available to us. Yes, environmental regulation is important — but it is often too slow coming; limited in jurisdictional scope (and this is a global crisis); and often lacking in ambition. Business is often prepared to go further and/or faster. Where this is the case, we need very good reasons if we are going to let competition law prevent it from doing so. We must stop squabbling over whether regulation or private action is best. We need both—and we need them now.
- Thirdly, where individual businesses can develop more sustainable products and compete profitably on the sustainability of their products, they should do so. However, this is often not realistic (eg where the sustainable product is more costly and too few consumers are prepared to pay a higher price for the product for it to be profitable). And, even where it is profitable, if this only results in a small niche market, this may not be enough. We need to transform our whole economy moving production and consumption onto a sustainable footing as fast as possible. Often this can only be done (or can only be done fast enough) by businesses working together. In most cases, this can be done under existing competition law (with appropriate safeguards). My message is simple. Rather than look to place obstacles to such urgent cooperation (tying ourselves in knots in arcane competition speak) the competition community needs to do everything it can to ensure that competition law does not stand in the way and communicate that message clearly to those businesses keen to “do their bit”. Future generations will not thank us if we do not. Imagine explaining to your grandchild why we opposed an agreement to develop new clean fuels or to eliminate plastic from a product or an entire supply chain.
- Finally, we should stop exaggerating the power of competition. Yes, competition can lead to leaner production using fewer resources — but, equally it can push businesses to use cheaper and less sustainable resources (even when they would prefer not to). Yes, competition can make prices more cost-reflective, but not if those prices do not reflect all those costs conveniently left out and dumped on society (rather quaintly known as “externalities”).
The good news is that these key messages are being understood and promoted by more and more people in the competition community (they are already obvious to anyone outside the competition law bubble). This includes competition authorities and while this bulletin highlights some great initiatives (with the prospect of more to come) I would single out the Dutch and the Austrians:
- The Dutch ACM has developed an innovative approach to make it easier to exempt “environmental damage agreements”; and
- The Austrians have amended their law so that agreements that “make an essential contribution to an ecologically sustainable and climate-neutral economy” can be excluded from the general ban on anticompetitive agreements (as always, if certain conditions are met). Now we need the others to follow-most importantly the EU (and in due course, the US).
Competition law is not the answer to the climate challenge but it can and must play its part. In fact the best thing it can do is not to get in the way (intentionally or otherwise) of the exciting and vital initiatives that our businesses are ready and willing to pursue together to combat the biggest challenge we face today — the climate crisis.