On March 22, 2023, the Federal Ministry for Economic Affairs and Climate Action (“FMEACA”) hosted an event in which they presented a report commissioned by the FMEACA concerning sustainability goals in competition law in Germany and the EU (“the Report”).
The Report examines how competition policy can contribute to achieving climate protection goals. The President of the Federal Cartel Office (“FCO”), Andreas Mundt, commented on the report and along with the authors responded to questions from the audience (114 attended online and more live). The hybrid event marked the opening of the public consultation on the transition to a socio-ecological market economy. The FMEACA welcomes feedback at email@example.com by April 6th, 2023.
In addition to President Mundt, participants in the event included:
- Moderator Elga Bartsch, Director General for Economic Policy at the FMEACA
- Sven Giegold, State Secretary at the FMEACA
- The authors of the Report:
- Prof. Dr. Justus Haucap (Director of the Düsseldorf Institute for Competition Economics)
- Prof. Dr. Rupprecht Podszun (Chair of Civil law, German and European Competition Law and Director of the Institute for Antitrust Law at the Heinrich Heine University of Düsseldorf)
- Prof. Dr. Charlotte Kreuter-Kirchhof (Chair of German and Foreign Public Law, Public International Law, and European Law at the Heinrich Heine University of Düsseldorf and Deputy Member of the Constitutional Court for the State of North Rhine-Westphalia)
The authors opened by addressing issues in the appraisal of sustainability goals. They then presented four main steps in which competition authorities like the FCO could develop sustainability in competition law:
- Broadening awareness of sustainability.
- Boosting sustainability by strengthening competition for sustainable solutions.
- Changing paradigms, either by moving away from the Chicago school theory or by further developing it, such that sustainable competition is the only option. The authors admitted that this may seem radical, but if this approach is not taken, the market as we know it will not continue to exist in the future.
- A leveling approach in which the written law requires sustainable action.
The authors in particular discussed options such as
- banning cartels agreeing on less sustainable limits (such as the Car Emissions case);
- lightening of restrictions, e.g., by taking the form of a sustainability sandbox. The authors suggested that such a sandbox would benefit from President Mundt’s strong backing, though President Mundt did not seem to take this bait;
- banning abuse and disallowing unsustainable mergers, as the authors said did not occur in Bayer/Monsanto;
- procedures and sanctions strengthening affected third parties; and
- the “best part of the Report”, according to the authors, is the Annex, which provides a brief introduction to 34 options to develop sustainable competition.
President Mundt began his presentation by setting out the measures the FCO has already taken.
- He referred to a 2020 FCO working paper cited in the Report.
- He highlighted the 2022 Fair Trade Bananas Initiative and the Animal Welfare Initiative, for which the FCO has provided guidance since 2014.
- As a negative example from which we can derive learning lessons, President Mundt referred to the 2022 milk industry decision in which milk producers sought to agree to increase the price of raw milk. The FCO blocked the cooperation because the proposed agreement sought to improve the producer’s income to the detriment of customers and the parties could not sufficiently show sustainability benefit.
- President Mundt further mentioned Section 9 of the EU’s draft horizontal guidelines published for consultation from March to April 2022, which covers sustainability agreements. The EU is now consulting on guidelines specific to the agricultural sector, running from January 10 to April 24. President Mundt stressed that the EU’s guidelines are not binding but “absolutely scene setting”.
In short, President Mundt expressed satisfaction with the mere two positive and one negative example constituting the FCO’s guidance. He emphasized his preference to wait and see what happens in practice and to provide guidance on a case-by-case basis. When asked whether further guidelines or laws are necessary, President Mundt responded, “let’s see where we stand in a year or more”. In contrast, the Intergovernmental Panel on Climate Change (“IPCC”) Report published this week states, with regard to the “Timing and Urgency of Climate Action”, that “[d]eep, rapid and sustained mitigation and accelerated implementation of adaptation reduces the risks of climate change for humans and ecosystems. [Some] modelled pathways […] assume immediate action […] As adaptation options often have long implementation times, accelerated implementation of adaptation, particularly in this decade, is important to close adaptation gaps. (high confidence)”.
Near the end, in response to an audience question—whether President Mundt agreed with the Report—President Mundt brought up his concern about avoiding the politicization of competition law. State Secretary Giegold responded that every time there are limits set by the legislator, those have been political. He added that even if the FCO continues to be considered independent, the FCO is political, and President Mundt’s position itself is a product of politics.
The event was just over an hour long. Nonetheless, some topics were notably missing:
- Any mention of the importance of technological development in meeting ambitious climate targets, and how both strong competition, and agreements between competitors, might benefit the development of more sustainable technologies.
- Any mention of the IPCC Reports and the urgency required to avoid “immeasurable long-term effects […] once certain tipping points are reached.”
- Unlike the UK’s Competition and Markets Authority, Japan’s Fair Trade Commission, Austria’s Federal Competition Authority, the Dutch Competition Authority (“ACM”), and the Hellenic Competition Commission, the FCO has not opened a sandbox or consultation or offered guidelines or written law concerning sustainability agreements.
In light of other national competition authorities taking the initiative to open their own consultations, it is something of a surprise that the FMEACA has opened its own consultation instead.
 Eventually, the Report will be translated to English as a courtesy to the European Commission.
 Coauthors of the Report include Prof. Dr. Rüdiger Hahn, Dr. Tristan Rohner, Philipp Offergeld, Anja Rösner, and Alexandra May.
 “Wir stehen nicht schlecht da . . . das Maximum an Guidance, was wir geben können.”
 See the UK’s Competition and Markets Authority Draft Guidance on Environmental Sustainability Agreements, para. 6.4; see also our Client Alert.