Sustainability Agreements Competition

Competition authorities are currently interpreting consumer welfare, the cornerstone of competition law, in a relatively restrictive manner when assessing whether or not sustainable development initiatives are anti-competitive. Their evaluation often focuses almost exclusively on the economic impact of an initiative (for example. B in terms of price, quality and innovation), regardless of its impact on the environment or society in the longer term. There is a growing perception that this approach is likely to end up on the wrong side of history and that future generations, who will bear most of the burden of climate change, will likely view the current interpretation of consumer damage as parochial and short-sighted. Companies may even consider it effective to partner with competitors and civil society organizations to achieve more sustainable production chains. This could lead to sectoral initiatives for human, animal and environmental sustainable development goals, such as agreements on child labour, child wages and animal welfare. Such agreements should, among other things, lead to higher prices, since products from the ecological and ethical harvest have a price. Competition law in principle prohibits agreements between competitors that cause economic harm to end consumers by raising prices. Overall, most competition regimes prohibit agreements that harm competition, but release them when they achieve efficiency gains that outweigh those damages (so-called „defence of efficiency“). Sustainable development issues are increasingly on the list of competition policy priorities, both at EU and Member State level. The European Commission (EC) and national competition authorities are actively considering how competition policy can better support the transition to sustainable economic growth. While recent initiatives are paving the way for much-needed legal directions and certainty, there are already lessons that businesses can learn from the discussions that have taken place so far.

Companies are increasingly working to cooperate on sustainable development initiatives. The desire to join forces is understandable, as such initiatives are often high-investment and may, at least in the short to medium term, be unprofitable for businesses (the „first-time disadvantage“). The existing framework for cartels and abuse of dominance already contributes, in several respects, to the objectives of the Green Deal, for example by prohibiting anti-competitive practices that limit the development or adoption of clean technologies or by preventing access to critical infrastructure, such as transmission lines, which are essential for the development of offshore wind farms and other renewable energy sources.