The Energy Transition: Recent Developments in Trade and Competition Law

World leaders and legislators, particularly in the EU and UK, have set ambitious goals as they seek to combat climate change. Similarly, businesses are taking steps, including making structural changes, aimed at achieving these sustainability goals. However, there is often an uneasy relationship between antitrust rules and the measures aimed at achieving green transformation and meeting the relevant EU and UK sustainability goals. This raises the important question of how companies can mitigate antitrust risk in practice.

We recently gathered a group of experts from Freshfields and Frontier Economics to share insights into competition and trade developments relating to the energy transition, covering the antitrust legal framework, economic assessment and evidence, EU State aid, the UK Subsidy Control regime, and international trade law.

Here is an overview of some of the key takeaway points from the event:

1. Green collaborations modelled on precedent, or a framework approved by a competition authority are likely to be more easily defensible from a competition law perspective.
2. Business should clearly articulate green objectives, reasons for the green collaboration and (so far as possible) objectively quantify environmental and other benefits for consumers at the start of the project.
3. With the EU taking several actions to increase public spending, and revamping its State aid rules in order to achieve sustainability initiatives, private stakeholders should be well prepared to commit time and resources necessary to navigate the regulatory framework for unlocking EU public funding. The framework of the revised State aid rules in the EU is fragmented, which may require inefficient segmentation of large innovative projects.
4. In the UK, it is important for businesses to engage in dialogue with the public authority at an early stage of the design of any sustainability subsidy measure so as to ensure that the subsidy control principle-based self-assessment is conducted, evidenced and documented properly.
5. The international trade law dimension is critical, and companies should think hard about how it affects the “rules that govern the rules” within the countries in which they operate.  Robust international rules are necessary to minimise protectionist side-effects of environmental legislation and to encourage global approaches to fostering the energy transition – and where companies committed to the green transition seem protectionism rather than evidence-based policy motivating local rules, they should consider whether they may be able to call on international trade rules to prevent unfairness.

For more detail on the topics discussed, please see our briefing note. 

 Please do not hesitate to reach out to your usual Freshfields contact or any of the speakers at the event if you have any questions about the topics discussed.