Competition law and the EU Green Deal – friends not foes

Yesterday the European Commission commenced a public consultation on how competition law and sustainability policies work together. The consultation is open until 20 November and will be followed by a conference in early 2021 to discuss the input received.

The consultation, which was originally announced in a speech by Margrethe Vestager (Executive Vice-President of the Commission and Commissioner for Competition) on 22 September, is intended to stimulate discussion and collate proposals on how competition law can best support the European Green Deal. That deal seeks to 'transform the EU into a fair and prosperous society, with a modern, resource-efficient and competitive economy', including by making the EU carbon neutral by 2050. While primarily focused on achieving environmental goals, the broad ambitions of the deal make it also relevant to wider sustainability issues (eg labour conditions).

When announcing the consultation, Margrethe Vestager again acknowledged that competition law has a role to play in supporting Europe’s transition to a more sustainable economy: 'To succeed, everyone in Europe will have to play their part – every individual, every public authority. And that includes competition enforcers.' While she cautioned that competition policy cannot replace environmental laws and green investment to accomplish that transition (as it is a 'team effort'), the consultation demonstrates that the Commission is now taking concrete public steps to seek to implement necessary changes to competition laws, policies and procedures.

The consultation follows – and was arguably driven by – papers published recently by the Dutch (see our recent blog post), German and Greek competition authorities which consider the role that competition law should play in assisting (or at least not hindering) companies engaged in initiatives designed to meet sustainability goals (eg joint research into green technologies or committing to minimum sustainability standards). Those papers range from practical guidance for companies self-assessing sustainability initiatives under strict EU competition criteria to more in-depth studies of the legal and economic issues under debate. They also illustrate some differences of opinion among the authorities on how they should approach these issues.

The Commission is understandably keen to play a leading role in the emerging international debate and to achieve a consistent EU-wide approach ('a European perspective') to these complex issues, which will be essential given the necessarily cross-border nature of many sustainability initiatives.

The consultation consists of three parts:

1. State aid: the Commission has requested views on, amongst other things, the ways in which the current state aid rules support the European Green Deal, how the rules might provide further such support, and whether lower levels of state aid should be approved for activities with an adverse environmental impact. (For further information on state aid and sustainability, see our blog post)

2. Anticompetitive agreements and abuse of dominance: the Commission has invited submissions on real or theoretical examples of green cooperation agreements that are hindered by antitrust risks, the need for more guidance and comfort from the Commission as to the characteristics of green agreements and actions that do not restrict competition, and whether any categories of green agreements should be exempt from antitrust law prohibitions. (For further information on co-operation agreements and sustainability, see our blog post.)

3. Merger control: the Commission has requested views on situations in which a merger could reduce consumer choice of environmentally friendly products or technologies, as well as views on how merger enforcement could better contribute to the sustainability objectives of the EU Green Deal. (For further information on merger control and sustainability, see our blog post.)

The Commission has encouraged all key stakeholders, including businesses, environmental groups, consumer organisations and competition experts, to contribute to the consultation. For that purpose, the Commission has raised specific questions in its consultation document on each of the three topics mentioned above.

This is a critical time for companies engaged in sustainability initiatives (or who may engage in such initiatives in due course) to help shape the future direction of competition policy and achieve the necessary degree of legal certainty in these vital areas. Providing flexibility to businesses to take co-ordinated action to address key environmental and broader sustainability challenges is too important an objective to be left to the generally hesitant approach that has characterised competition law enforcement to date.

We will be responding to the consultation and contributing to the debate. If you are also considering doing so, please feel free to contact a member of the Freshfields antitrust, competition and trade team.