The past three years have demonstrated that EU competition policy can lend significant support to the European Green Deal, which seeks to address climate and environmental challenges and make Europe carbon-neutral by 2050. The Commission has stepped up its actions in order to properly respond to those challenges and to ascertain how EU competition law can support and complement environmental and climate polices. Last year, the Commission issued its Competition Policy Brief (CPB), which summarises the Commission’s activities in this area while simultaneously promoting sustainability through competition law.
In September 2021, Executive Vice-President Margrethe Vestager launched a wide-ranging debate on how competition rules and sustainability polices can work in tandem to help reach the goals set out in the European Green Deal. As a result of a call for contributions, the Commission received feedback from around two hundred market participants, environmental groups, consumer organisations and various independent experts. Subsequently, Margrethe Vestager hosted a conference, during which the various ideas and proposals received were the subject of broad discussion.
In addition, the Commission has been conducting specific public consultations via the “Have Your Say” Portal (an online platform for all EU citizens), as well as consultations with national competition authorities. Thanks to these efforts, the Commission has received valuable input which it has used when preparing reforms to competition law with a view to promoting sustainability.
Drawing on the feedback received, the Commission concluded that, with regards to state aid, it is important to clarify and simplify the rulebook, provide favourable conditions for investment in low carbon recharging and refuelling infrastructure, as well as offer preferential funding for non-fossil fuels. At the same time, the Commission’s policy aims to discourage aid for projects involving fossil fuels that generate the greatest pollution. The revised Climate, Energy and Environment Aid Guidelines address these considerations and support various aid measures consistent with the European Green Deal.
From an antitrust perspective, the Commission noted that, according to the feedback received from companies, the key issue is to clarify whether and how sustainability benefits can be assessed, especially with respect to Article 101(3) TFEU.
In the CPB, the Commission pointed out that: “In order to reach the goals set out in the European Green Deal, everyone, private and public, must play their part”. Thus, the Commission acknowledges that in order to encourage companies to carry out sustainable initiatives such as joint investments, the creation of solutions, and the production and distribution of sustainable products, there has to be greater clarity. This is why the Commission is trying, by means of its revised guidelines (mainly on horizontal cooperation), to resurrect the idea of the 2001 horizontal guidelines and CECED (1999) decision by expanding the notion of the efficiency condition laid down in Article 101(3) TFEU to third parties who are not directly or indirectly involved in the transactions taking place on the relevant market (e.g. people living in the vicinity of a factory that has agreed to abandon fossil fuels). The Commission is attempting to provide solutions that can facilitate self-assessment, encourage investment in sustainable products and, at the same time, maintain effective competition.
Furthermore, by the beginning of 2024, the Commission will issue guidelines on the conditions of applicability for agriculture-specific derogation arising from one of the blocks of the new Common Agricultural Policy covering the period from 2023 to 2027. The exemption will refer to sustainability agreements concluded between farmers and other participants in the food value chain. The aim of this derogation is to provide opportunities for farmers to achieve higher environmental protection standards in the agriculture sector, to boost climate change prevention, and to enhance animal health and welfare in exchange for various benefits such as higher prices.
The Commission concluded that the changes have to be complex and cover all areas of competition law, including merger control. That is why the Commission announced that it will pay extra attention to protecting green innovations and prevent so called “killer” acquisitions (i.e. when a company with a strong market position that doesn’t carry out environmentally friendly strategies engages in the killing acquisition of a company active in green innovations).
The Commission has taken important steps in order to promote sustainability among market participants and has shown that it is broadly open to discussion and knows how to benefit from feedback received. As most of the competition law regulations together with corresponding guidelines have already been revised or are in the process of being revised, the Commission took this opportunity to introduce solutions and provide guidance on how to approach sustainability. Some experts have pointed out that the proposed solutions may not be sufficient and do not provide companies with an appropriate level of clarity, but only time will tell if market participants will benefit from the solutions offered by the Commission.
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For further information, please contact:
Szymon Golebiowski, Bird & Bird
szymon.golebiowski@twobirds.com
