How competition policy acts as a barrier to climate action
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This ICC white paper explores how to bridge the gap between businesses, and competition authorities, who hold conflicting perspectives on the value of business collaboration to achieve their own and/or global sustainability goals. It provides real-world business cases and proposes dos and don’ts for businesses looking to cooperate with competitors to contribute to the fight against climate change.
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Competition policy vs sustainability goals?
Combatting climate change will require contributions on many fronts, and businesses and competition authorities alike play a crucial role in this context.
Businesses can, need and want to work together to help fight climate change. However, current competition policies are chilling this, arguing that any collaboration between competing businesses must be carefully considered to avoid breaching competition law and encouraging greenwashing.
Competition authorities and law makers, on the other hand, can and must do more to reduce this chilling effect. Reconciling both parties can be challenging, but can largely be done within current legal frameworks for competition law.
How can competition policy support climate action?
Businesses see a lack of sufficient clarity and comfort around antitrust rules as stifling their sustainability efforts. It is therefore crucial that competition antitrust agencies provide guidance on
- Safe harbours and what level of reduction in competition (if any) agencies are willing to accept in favour of a greener economy.
- Case law to allow businesses to draw the lines between what is permitted and what is considered unlawful.
Similarly, competition antitrust agencies are called on to
- Converge incentives to drive businesses in one clear direction, avoiding conflicting goals.
- Foster an agreed approach among competition authorities globally, e.g. through the International Competition Network, to minimise delays and costs for companies resulting from burdensome engagement with multiple competition regimes involved in the implementation of sustainability initiatives.
- Shift the burden of proof and recognise sustainability initiatives, such as the UN Race to Zero campaign, which show that sustainability benefits from collective initiatives outweigh any effects on competition.
- Reconsider pre-authorisation processes for agreements prone to triggering anti-competitive effects to prevent genuine sustainability efforts from undergoing pre-authorisation processes, which cause delays and costs, and deter collective action.
How is ICC contributing to the fight against climate change from an antitrust perspective?
Leveraging its diverse and experienced global network, ICC provides real-world business cases of companies looking to cooperate with competitors to contribute to the fight against climate change or to consider sustainability-driven actions but not pursuing them given for fear of competition. The featured cases legitimately aim to produce sustainable results but have the potential to result in reduced competition – at least in the short term.
Further, with a list of dos and don’ts for companies, ICC sets out examples of arrangements or provisions that
- tend to make an agreement between businesses less likely to be caught by competition law,
- benefit from some sort of exemption or safe harbour if prima facia caught,
- are more likely to be caught or less likely to be exempt.
Lastly, building on previous work on competition policy and environmental sustainability, ICC calls on key antitrust regulators to issue ambitious sustainability guidelines and to (re-)introduce specific proceedings for the review of sustainability arrangements.
