On September 10, 2021, the European Commission published a policy brief on “Competition Policy in Support of Europe’s Green Ambition” (the “Policy Brief”).[1] A year after Executive Vice-President Margrethe Vestager called for a greener EU competition policy,[2] the Policy Brief summarizes the key takeaways from the stakeholder consultation and sets out the Commission’s ambitions for a greener competition policy. The key message being that “a green competition policy still has to be – well, a competition policy.”[3]
Background and scope of Policy Brief
In its Policy Brief, the Commission outlines that competition policy should support and complement Europe’s green ambition, because the effectiveness of environmentally ambitious policies hinges, according to the Commission, on fair competition enabling companies “to innovate by competing intensely and fairly with each other.”[4]
In essence, the respondents to the Commission consultation agreed that competition policy has a significant role to play in reaching the Green Deal objectives. The Policy Brief summarizes the input thus received and puts forward policy proposals covering the fields of (i) antitrust, (ii) merger control, and (iii) State aid control.[5]
Antitrust
In response to stakeholder input, the Commission pinpointed several topics for discussion.[6]
- First, a number of respondents called on the Commission to clarify how to jointly invest, identify solutions, produce, and distribute sustainable products without breaching Article 101(1) The Commission confirms that the revised guidelines on horizontal cooperation and vertical agreements will provide more guidance on the application of Article 101 TFEU to agreements that pursue sustainability objectives or otherwise impact the environment. The guidance is expected to provide concrete examples of how sustainability objectives can be pursued safely, via, for instance, joint production or purchasing agreements and standard-setting agreements.[7]
- Second, a number of respondents asked the Commission to clarify whether and how to assess sustainability benefits in the context of its assessment of conducts under Article 101(3) TFEU (g., consideration of non-economic benefits occurring outside the investigated markets, expansion or revision of the notions of “consumers” and “fair share”). The Commission confirms it will commit to taking sustainability benefits into account—whether qualitative or cost efficiencies—as part of its assessment of the exemption under Article 101(3) TFEU.[8]
- Third, the Commission maintains that the competitive effects and benefits should be assessed “within the confines of each relevant ”[9] The Commission states that “benefits achieved on separate markets can possibly be taken into account provided that the group of consumers affected by the restriction and the group of benefiting consumers are substantially the same.” According to the Commission, this would incentivize companies to invest in green solutions through joint investment, production and distribution, while preserving the consumer welfare standard—a “soun[d] principl[e]” of competition law—and ensuring that consumers are fully compensated for any harm suffered.[10] However, experts have criticized the Commission’s approach, deeming it overly prudent and arguing that there are no policy reasons to limit an agreement’s benefits to those in the relevant market.[11]
Finally, the Commission expresses its readiness to provide individual guidance letters on specific sustainability initiatives, encouraging companies to request such an assessment.[12]
Merger control
As regards merger control,[13] respondents emphasized the need for the Commission to strengthen enforcement concerning possible harm to innovation, including so-called green “killer acquisitions.” The Commission refers to the guidance on the Article 22 EUMR referral mechanism it recently adopted.[14] Beyond “killer acquisitions,” the Commission notes it will continue enforcing innovation theories of harm, as it did in Dow/Dupont,[15] in order to protect innovation benefiting the environment, especially in industries with long innovation cycles, such as environmental technologies.[16]
State aid control
Respondents identified State aid control as a key instrument to support Green Deal targets. They insisted on the need to focus on the funding of non-fossil fuels, called for a clarification and simplification of the Commission’s rulebook (e.g., transparency on potentially harmful State aid initiatives), and its adaptation to enhance research & development possibilities.[17]
The Policy Brief essentially points to the broadness of the existing regulatory tools in this field. For instance, the Commission signals that the new Climate, Energy, and Environment Aid Guidelines and the revised related sections of the General Block Exemption Regulation will provide new opportunities for Member States and businesses to act consistently with the Green Deal.
The new rules will expand the scope of compatible aid, including by allowing investments in green infrastructure without the need for prior Commission approval, and discourage governments from making investments in fossil fuels. Separately, the Commission recalls that it is reviewing the rules for Important Projects of Common European Interest,[18] in order to involve a greater number of participants (e.g., SMEs), favor environment-neutral investments, and better conform to Green Deal objectives.
Finally, the Policy Brief emphasizes the critical role of other instruments, such as the regional aid guidelines, State aid frameworks in agriculture, forestry, fisheries, which all have recently been, or soon will be updated.[19]
The way forward
The Commission’s Policy Brief takes place in the broader context of its ambitious reform of competition law to address the current challenges of climate change, the COVID-19 pandemic, and the digital economy. The call for contributions has stirred up considerable interest across the spectrum of competition instruments, highlighting the need for stakeholders to receive clearer guidance on the interaction between competition policy and sustainability. It remains to be seen how the Commission’s ambitions will translate into its various enforcement tools.
[1] See, Commission Competition Policy Brief 1/2021 “Competition Policy in Support of Europe’s Green Ambition,” September 10, 2021, available at: https:// op.europa.eu/en/publication-detail/-/publication/63c4944f-1698-11ec-b4fe-01aa75ed71a1/language-en/format-PDF. See also, for further information on the European Green Deal, https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal_en.
[2] See, for reporting on Executive Vice-President Vestager’s speech and the publication of the call for contributions, our October 19, 2020 Alert Memorandum “EU Commission Call for Contributions on ‘Competition Policy Supporting the Green Deal.”
[3] See, Executive Vice-President Vestager’s keynote speech at the 25th IBA Competition Conference, available at: https://ec.europa.eu/commission/ commissioners/2019-2024/vestager/announcements/competition-policy-support-green-deal_en.
[4] See, Policy Brief, p. 1.
[5] See, Policy Brief, pp. 2–3.
[6] See, Policy Brief, pp. 5–6.
[7] See, Policy Brief, pp. 2 and 5.
[8] See, Policy Brief, pp. 2–3 and 5–6. The Commission further recalls that sustainability benefits need not be “direct or immediately noticeable” product quality improvements or cost-savings.
[9] See, Policy Brief, p. 6.
[10] See, Policy Brief, p. 6.
[11] See, Netherlands Authority for Consumers and Markets and Hellenic Competition Commission’s “Technical Report on Sustainability and Competition” of January 2021, available at: https://www.acm.nl/sites/default/files/documents/technical-report-sustainability-and-competition_0.pdf. See also, OECD, “Climate Change and Competition Law – Note by Simon Holmes,” October 27, 2020. See, finally, Maurits Dolmans, “Sustainability agreements and antitrust – three criteria to distinguish beneficial cooperation from greenwashing,” Chillin’ Competition Blog, September 9, 2021, available at: https://chillingcompetition. com/2021/09/09/sustainability-agreements-and-antitrust-three-criteria-to-distinguish-beneficial-cooperation-from-greenwashing-by-maurits-dolmans.
[12] See, Policy Brief, p. 6.
[13] See, Policy Brief, pp. 6–7.
[14] Council Regulation (EC) No 139/2004 of January 20, 2004, on the control of concentrations between undertakings OJ 2004 L 24 (“EUMR”). See, for reporting on the application of Article 22 EUMR and its practical implications, our April 23, 2021 Alert Memorandum “European Commission Implements New Policy To Investigate Transactions That Would Otherwise Escape Merger Review.”
[15] See, Dow/DuPont (Case COMP/M.7932), Commission decision of March 27, 2017.
[16] In particular, the Commission commits to protecting “innovation efforts on environmentally friendly technologies or capabilities when there is a risk of discontinuation of overlapping lines or research, or there is a risk of a reduction of incentives and the ability to achieve the same level or type of innovation.” See, Policy Brief, p. 7.
[17] See, Policy Brief, pp. 2, 3– 5.
[18] Important Projects of Common European Interest comprise innovative research projects that often entail significant risks, and require joint, well-coordinated efforts and transnational investments by public authorities and industries from several Member States. See, for more information on those rules and their ongoing review, Commission Press Release IP/21/689, “Commission invites stakeholders to provide comments on revised State aid rules on Important Projects of Common European Interest,” February 23, 2021.
[19] See, Policy Brief, p. 5.