1 Introduction

While recent years have been dominated by Covid-19 and now the war in Ukraine, we are witnessing numerous ongoing tragedies. The last few decades have seen a dramatic increase in freak weather events caused by climate change. We have seen dramatic biodiversity loss of the global wildlife population at an average of 69% since 1970 on top of general environmental degradation. These problems are a part of a broader sustainability challenge that humankind faces. As such, sustainability is defined as ‘development that meets the needs of the present without compromising the ability of future generations to meet their own needs’ by the UN in 1987.Footnote 1 This definition acknowledges that issues of environmental protection, economic development, and social progress are interconnected by shifting the focus from environmental problems to the causes of these problems. While a trade-off might occasionally be needed, it does not require balancing growth against environmental sustainability. Economic growth is still possible while preserving the environment; moreover, that growth may be important for ecological protection and social equity.Footnote 2

Sustainability has been on the agenda of international organisations and countries for years, yet the world of competition law has only recently started talking about the subject. As such, we have also seen the concept of sustainability increasingly embraced by the business community,Footnote 3 and we can observe a drive for more sustainable business activity.Footnote 4 This development might have to do with the 2030 Agenda and goal number 12.6 in particular. This goal highlights the need for companies to adopt more sustainable business practices.

While it is clear that addressing sustainability concerns is not the primary concern of competition and the task of competition agencies, questions still arise. What role can competition law play in supporting the transition to a more sustainable operation of markets? And it might not be surprising that competition authorities around the world are anticipating more frequent questions around sustainability and competition.Footnote 5 Some agencies, such as the Dutch,Footnote 6 Greek,Footnote 7 German,Footnote 8 UK,Footnote 9 and EUFootnote 10 authorities, have already become active by adopting policy papers etc. Similarly, the OECD’s Competition Division has discussed the issue,Footnote 11 followed up with discussions about environmental protectionsFootnote 12 and the measurement of environmental benefits for antitrust purposes.Footnote 13

Against this background, the International League of Competition Law (LIDC) had decided to explore the topic of sustainability and competition law at the LIDC Congress on 20–22 October 2022 in Milano. Given that this is a new and emerging topic, it was expected that many jurisdictions would not have pre-existing cases or considerable experience with the subject. Hence, the national reporters were asked to not only provide cases but also suggest how their national system would and could address the interaction between competition law and sustainability.

The report is based on the submissions of 11 countries, namely Austria, Belgium, Brazil, Czech Republic, France, Germany, Hungary, Italy, Malta, Switzerland, and the United Kingdom. It aims at summarising the findings regarding core competition law provisions, the prohibition of coordinated practices, the abuse of a dominant position, and merger regulation. It leaves aside closely related areas, such as false advertising or unfair competition, yet mentions them in a section on other related subjects.

The report first sets out the general legal framework on the interaction between competition law and sustainability in the different countries. Here, the focus is on legal obligations regarding sustainability that might affect the application of competition law. This section is aimed at addressing questions such as: what can be said about the role of sustainability in competition law according to the different national laws? Should sustainability play a role? Can it play a role? And would that be purely up for the competition authority to decide? The first part of the report, therefore, sets out national rules that are important to the interaction between sustainability and competition law.

The second part of the report addresses the core question by looking at specific interactions between competition law and sustainability, exploring cases in the areas of co-operation, cartels, abuse/monopolisation, and mergers. It is subdivided into two sections. The first part explores cases where sustainability played a role in the enforcement of competition law in form of a ‘shield’,Footnote 14 in other words, whether companies that take action to foster sustainability can rely on that fact before competition authorities. This can take different forms: for example, the agency might find that competition is not restricted, that on balance the restriction can be outweighed, or that the case is not taken up based on priorities. The second part addresses the role of competition law as a ‘sword.’ This pertains to cases where protecting competition was in turn expected to be beneficial to sustainability, such as protecting competition in industries crucial to sustainability.

The third part addresses a concern that is often heard in the debate, namely ‘greenwashing’. The report presents a broad definition of greenwashing and summarises the reported instances.

The fourth part deals with the policy side. It explores how agencies, beyond specific cases, have become active in the area, for example by setting out priorities, guidelines, working papers, and individual guidance and strengthening capacity. Similarly, it discusses any existing future plans of agencies and legislatures.

The final part briefly highlights some of the contributions that the reports have mentioned in other closely related areas of law, such as false advertising or unfair competition.

2 General Framework

In this section, we look at the different legal frameworks of the participating jurisdictions and how the relevant general framework of their national legal order regarding sustainability interacts with competition law. While the majority of countries do not have specific clauses that address sustainability—the revised version of the Austrian competition law and the Hungarian being the exception—many countries have provisions in their constitution or in other areas of the law that require an engagement with sustainability. The different reports also make clear that the jurisdictions are at different positions as to the level of importance attached to climate change and sustainability more generally. It also becomes clear that occasionally different definitions of sustainability are used by the competition authorities, although the UN sustainable development goals play a significant role.

Some country reports, like the Italian one, show how sustainability is being linked to markets, competition, and even industrial policy. The Italian report highlights the link to the concept of ecological transition, which in turn stems from the EU Recovery and Resilience Facility of 12 February 2021 (Regulation 2021/241) and the implementing of April 2021. Ecological transition for Italy is then linked to increasing ‘the competitiveness of the production system of goods and services, stimulating new entrepreneurial activities, and encouraging the creation of stable employment’.Footnote 15

In terms of sustainability and competition law, the Italian authority highlights the complementary role of competition law to regulation and taxation in fostering an environmentally sustainable growth model. It highlights how competitive pressure fosters allocative efficiency also in terms of natural resources, the importance of innovation to limit CO2 emissions, and the use of renewable energy.Footnote 16 The authority sees its task in balancing the dynamic and competitive markets with promoting investments by companies in terms of environmental sustainability. Further, they claim to be ready to develop the application of competition law in co-operation with the EU Commission and other agencies to expand the range of available instruments in support of sustainable and competitive development.Footnote 17

The Czech report highlights their alignment with EU law and presents a ‘long journey ahead’ with slow moves and possibly even reluctance towards the inclusion of sustainability in its policies and law.Footnote 18 For example, the Czech Republic adopted a first strategy for sustainable development only in 2004.Footnote 19 Its updated version sets out key principles and goals in various sectors.Footnote 20 As the report highlights, an overview of the legislative acts seems to show that the inclusion of sustainability is not a proactive legislative choice but rather a result of compliance with EU law. The report also highlights that while not mentioning sustainability in competition law, the consideration seems possible as far as EU law does so.

While no specific legislative acts address the interaction between competition law and sustainability, the Belgian competition authority sees the current legislative framework as allowing sustainability considerations, including ‘out-of-market’ considerations, to be taken into account. Footnote 21 It would do so by considering the total and the consumer welfare benefit and the general economic interest.Footnote 22 On the judicial level, the Court of First Instance of Brussels found that the various Belgian governments have been negligent in their climate policy,Footnote 23 yet it stopped short of imposing specific obligations.

Brazil also does not have any specific provision in its competition law that addresses sustainability. Brazilian competition law instead seems more focused on ‘the freedom of initiative, free competition, social function of property, consumer protection and repression of the abuse of economic power’, as the Brazilian report highlights.Footnote 24 Yet the report also highlights that competition law can be interpreted to foster sustainability as competition law seeks to ‘promote human rights, efficiency and consumer welfare’,Footnote 25 particularly in view of the Federal Constitution.Footnote 26

The Brazilian economic order, as foreseen by the Constitution, is ‘founded on the valorisation of human work and free initiative (or free enterprise), [and] aims, through social justice (Article 170 of the Constitution), to contribute to the achievement of human dignity’.Footnote 27 Moreover, Article 225, which is a part of the economic rights section of the Constitution, sets out a right for everyone to an ecologically balanced environment. It thereby imposes a duty upon the government and the community. This duty is to defend and preserve the environment for present and future generations, also by means of antitrust, as the report highlights. The report also highlights how the absence of a position by the CADE—the Brazilian Competition Authority—might create legal uncertainty that might deter companies from taking action. Yet CADE seems ‘attentive to foreign initiatives’ such as the Dutch proposal, and it is likely that CADE will take a position on these matters in the future.

As the French report highlights, sustainability (with a particular view to environmental sustainability) is not specifically mentioned in the French competition law but plays a role in enforcement. The report highlights how environmental quality and performance are now an established parameter on which undertakings compete.Footnote 28 More specifically, the report sets out that Article L. 420-4, which is similar to Article 101(3) TFEU, is seen by the French competition authority as a basis for providing exemptions for sustainability initiatives by companies where its conditions are met, as the authority considers environment protection as a form of economic progress.Footnote 29 In the field of mergers, the competition authority takes a similar view, as economic progress is part of the assessment of a merger’s benefits according to Article L. 430-6. Thus, the agency has qualified the ability of the parties to abandon technologies that damage the environment as a benefit and have used it, inter alia, to approve a merger.Footnote 30

Overall, the report notes that while economic progress is a broad concept and encompasses environmental benefits, the French agency focuses on the principle of proportionality, which it implements in ‘a cautious manner’.Footnote 31 The assessment by the agency examines whether ‘the environmental goal exists’. And if it does, the agency examines whether it is not already pursued by the applicable regulation.Footnote 32 It also makes sure that the environmental benefits may not be achieved by means that are less restrictive to competition.Footnote 33 Moreover, these benefits must be passed on to the consumer. The president of the agency announced that the agencies will be improving the assessment of the passing on to consumers of such environmental benefits.Footnote 34

For the future, the report highlights two possible routes for French competition law. First, it could adopt a specific aggravating factor in its fining practice where negative impacts on the environment exist. Second, French competition law may provide a specifically lenient treatment for measures that provide environmental benefits beyond what is already happening. The French report highlights that this would be difficult, given the mandate of the competition authority to protect competition, but that a better translation of environmental benefits and harms into the framework of competition law can certainly be a path forward.

While there are no specific articles in the German competition act related to sustainability at present,Footnote 35 the German competition authority relies on the UN sustainable development goals, including their environmental and social dimensions.Footnote 36 But most importantly, German competition law would need to be interpreted in line with EU law. The German report highlights that the German Constitution requires the State to protect the environment (Articles 1, 2(1), and 20a of the Basic Law). Article 20a has recently been the focus of the debate and while predominantly addressing that the legislature also binds public authorities when they interpret the relevant statutes.Footnote 37 This obligation to take into account the effects on the climate when making a decision is also spelled out in Section 13(1)1 of the Climate Protection Act. Yet this obligation might create challenges when implementing competition law where the original objective of the law is different.

The UK report highlights the importance that the UK government and their competition authority have attached to sustainability and climate change in particular. The report also emphasises the influence that EU competition law has even though it is now legally possible for the UK to diverge from EU competition law. Against this background, the UK competition authority has become increasingly active in this area. It cites sustainability as a ‘strategic priority’ in its latest annual reports with a particular focus on the transition to a low carbon economy. The agency thus aims to prioritise cases that could impede the net zero goals of the UK. Moreover, the agency has issued a guidance note for sustainability issues in antitrust, mergers, and market regimes with a focus on environmental sustainability. In this sense, the agency has not made any reference to the broader UN sustainable development goals.

The report from Malta highlights that its Constitution has, since 2018, provided for an obligation to ‘protect and conserve the environment and its resources for the benefit of the present and future generations and shall take measures to address any form of environmental degradation in Malta, including that of air, water and land, and any sort of pollution problem and to promote, nurture and support the right of action in favour of the environment’.Footnote 38–Footnote 39 This is a positive obligation imposed upon the government, but it does not seem to be judicially enforceable. Yet it remains ‘fundamental to the governance of the country and it shall be the aim of the State to apply these principles in making laws’.Footnote 40

In line with the Brundtland report, sustainability is defined under the Sustainable Development Act as ‘development that meets the needs of the present without compromising the ability of future generations to meet their own needs’. Like many competition laws, the Maltese competition law does not make reference to sustainability. Yet the report highlights ‘that sustainability can be part of the assessment to be made by the Office for Competition within the Malta Competition and Consumer Affairs Authority […], and by Civil Court (Commerce Section) and other courts and tribunals where applicable (hereinafter the ‘Malta courts’), when assessing claims of breaches of competition law and proposed concentrations’.Footnote 41

In Switzerland, sustainable development, as understood by the Brundtland Commission, is a principle that binds the Federal State and the Cantons via Article 2 of the Federal Constitution. This article makes sustainable development a national goal to be achieved. Moreover, Article 72 demands that the various parts of the State strive for ‘[…] a balanced relationship between nature and its ability to renew itself, on the one hand, and the demands placed on it by the human race, on the other’.

Sustainable development is pursued by national sustainability plans, and some Cantons have also adopted their own law to govern action at that level of the Swiss state. While competition law does not specifically address sustainability, the national report highlights that Articles 2 and 73 of the Constitution should guide the national competition agencies. In competition law, Article 5(2)(a) of the Cartel Act might gain particular relevance as it mentions the more rational use of resources as a reason for economic efficiency that can justify restrictions of competition. The report also highlights that ‘the term “resources” includes (i) entrepreneurial resources, such as money, (ii) public resources, (iii) natural resources and (iv) knowledge.Footnote 42

Austria is the only jurisdiction that specifically addresses sustainability in its competition law. Thus, the Austrian reports highlights Austria’s recent changes to their competition law in 2021, which was aimed to address an environmentally sustainable and carbon-neutral economy. The change included a provision that guides the authorities in the definition of consumer benefit. The provision now states:

Consumers are also allowed a fair share of the resulting benefit, if the benefit derived from improving the production or distribution of goods or promoting technical or economic progress contributes significantly to an environmentally sustainable or carbon-neutral economy.

This definition is particularly relevant for the exemption for agreements deemed to restrict competition. The report, however, notes that notwithstanding this legislative clarification, uncertainty remains which stems from questions about the exact scope and the relationship of Austrian competition law to EU competition law.

The Hungarian report notes that, just as in Austria, a specific environmental protection can be found as a ground for exempting agreements, the equivalent to Article 101(3) TFEU. In particular, Article 17 sets out:

An agreement is exempted from the prohibition pursuant to Article 11 [the prohibition of anti-competitive agreements] provided that

  1. i.

    it contributes to a more reasonable organisation of production or distribution, the promotion of technical or economic progress, or the improvement of competitiveness or of the protection of the environment.

  2. ii.

    it allows trading parties not participating in the agreement a fair share of the resulting benefit;

  3. iii.

    the concomitant restriction or exclusion of competition does not exceed the extent necessary to attain

  4. iv.

    economically justified common goals; and

  5. v.

    it does not enable the exclusion of competition in respect of a substantial proportion of the goods concerned.

Moreover, sustainability is also constitutionally enshrined. Under the heading ‘Foundations’, Article Q(1) sets out ‘sustainable development of humanity’ as an aim of the state. Moreover, Article XXI provides for a right to a healthy environment. These provisions also have bearing on the application of competition law by the courts. As the Hungarian report points out, Article 28 of the Fundamental Law explains that ‘[i]n the course of the application of law, the courts shall in principle interpret the laws in accordance with their objective and with the Fundamental Law. […].’

3 Specific Interaction and Cases

In this section, we look at the specific interaction between competition law provisions on co-operation, cartels, abuse, monopolisation, mergers, and sustainability covering general interaction and specific cases. The section is subdivided into two parts. The first part covers the shield situation, where companies take action aimed at fostering sustainability and the extent to which they are able to rely on sustainability before competition authorities. This can either take the form of a finding that competition law was not infringed in the first place, for example, because the relevant entities or activities were not subject to competition law or because competition was not restricted or because the sustainability benefits have the potential to outweigh the competitive harm. The second section addresses the sword situation. These are situations where the agency or courts became active using the competition rules protecting competition, and this competition in turn was expected to be beneficial to sustainability, for example by protecting competition in industries crucial to sustainability. In other words, the section addresses the question of whether and to what extent it is possible to use competition law to address unsustainable business practices, such as abuses of monopoly power. Three reports of the reports submitted by the 11 jurisdictions state that there have been no cases concerning sustainability and competition law. The Czech report highlights that no cases were found involving competition law and sustainability. Furthermore, even cases in other areas of law where sustainability is of concern have been rare. Brazil also has not reported any cases involving sustainability, while the agency is said to be taking an active interest in the development in other jurisdictions. Similarly, the Belgian report highlights that the Belgian authority has not dealt with sustainability concerns, although it would in general be willing to address these in its competition analysis.

4 Shield

Several of the national reports mention cases or explain how sustainability might function as a shield in their jurisdictions.

In France, an exception similar to Article 101(3) TFEU is contained in Article L. 420-4. But this exception applies not only to agreements but also to abuses. As early as 1973, the agency found that the prevention of environmental pollution was part of the definition of ‘economic progress’, on which the article relies. The first case where environmental protection serves as a ground for exemption under this provision appears in a 1988 case relating to salt and the related environmental protection concerns. Another case can be identified in 1999 regarding used batteries. However, as the report points out, more recent cases in this regard are lacking.

In the merger context, in a case from 1994, the agency accepted that the abandonment of the most polluting production techniques would be technical progress that could justify the authorisation of a merger. A year later, in another case, the agency, however, clarified that the sole compliance with existing environmental protection laws would not be considered as such economic and technical progress.

The German report highlights that exceptions existed in German competition law that might have captured sustainability matters, such as an exemption from the taking back or disposal of goods or services. These were abolished by the legislature. Yet the legislature highlighted that these changes were meant to bring German competition law in line with EU law rather than to affect substantial change. The legislative documents also highlight that a change is not to be expected as European competition law and policy would already be required to take environmental protection into account.

In Germany, there has been a debate about the extent to which Section 2(1) of the competition act (which sets out the prohibition on anti-competitive agreements) can be interpreted more narrowly to allow sustainability initiatives. Where such an interpretation is based on climate law, a full climate impact assessment would be required.

The report notes that the German competition authority’s position seems to have developed over time. Until 1995, the agency used an approach that allowed for the balancing of competition restrictions with public interests, such as public health and environmental protection. This approach has been described as a full balancing within the substantive assessment, sometimes as an exercise in enforcement discretion in terms of priorities. After sustained critique, the competition authority moved away from the substantive balancing approach and instead adopted an approach based on its enforcement discretion and priorities. In other words, anti-competitive action can be ‘tolerated’ even if there is a restriction of competition. This exercise of discretion can be used either for avoiding the allocation of enforcement recourses for minor restrictions or in cases where the strict enforcement of competition law would create serious clashes between protecting competition and other objectives. A prime example mentioned in the report is the competition authority’s activity in the waste management areas. The German legislature enacted a new code to address the recycling of plastic waste. It had been warned by the agency that this might create serious problems with competition law. Yet the legislature still went ahead without changing the competition law framework.

The report highlights a major downside of this approach—the lack of legal certainty. The competition agency can change its mind at any time, and private enforcement stays a relevant risk.

Three recent cases are highlighted by the report: the decision regarding Fairtrade, the Living Wages initiative, and the Initiative Tierwohl case. In these cases, the agency decided that the restrictions of competition—in the case of Initiative Tierwohl, after further changes suggested by the agency—did not restrict competition to an extent that would warrant the competition agency to bring a case.

Yet the report highlights how sustainability might be considered as part of the substantive assessment of Section 2 of the German competition act, which is the national equivalent of Article 101(3) TFEU, and how this section should be applied in conformity with EU law. The report further elaborates that the current view in Germany is that the benefit would therefore have to occur within the same group of consumers that are affected by the restrictions. Notwithstanding, there is a lively debate. The developments in the Netherlands and the more generous approach in the Commission’s draft guidelines have been received with great interest.

While there are no reported cases of sustainability defences regarding unilateral conduct, the report notes regarding mergers that sustainability efficiencies could theoretically be taken into account even though no cases exist yet. This lack of cases is, however, not surprising, given that, so far, no efficiency argument has ever been successful before the German competition authority. Yet a different tool can come into play in this regard: the approval by the relevant minister on public interest grounds, even where the German competition authority has prohibited the merger. The ministry mentions environmental concerns as one of the interest grounds that can be relied upon.Footnote 43 In the case of Miba/Zollern, such an argument had been successful, while in the E.ON/Ruhrgas merger, the relevant minister did not take up the arguments of the parties in this regard but approved the merger based on other reasons. In the Miba/Zollern case, the main argument was one of benefits in terms of ‘know-how and innovation potential for energy transition and sustainability’, which would outweigh restrictions of competition that would only be minor as a level of competition remained.

The UK report highlights that sustainability concerns have only played a limited role in the actual enforcement work or private enforcement. Beyond a sector enquiry into vehicle charging points, no cases have been reported. Thus, the report provided ideas on how sustainability might function as a shield under UK competition law with a particular focus on agreements that do not restrict competition within the meaning of the Chapter I prohibition on anti-competitive agreements and exemptions for such agreements satisfying the conditions of Section 9, the equivalent of Article 101(3) TFEU. The report also highlights the possibility that certain sustainability agreements, such as climate-change-related ones, could be excluded altogether from the scope of Chapter I, as witnessed for certain agreements during the Covid crisis.

With regard to the exception under Section 9, the report highlights the debate around the UK Supreme Court’s judgment in Sainsbury’s Supermarkets Ltd v Visa Europe. The debate concerns the question of whether full compensation of the affected customers is a requirement. The report highlights that the competition authority announced that it would apply the ‘fair share’ criterion with a degree of ‘flexibility’ and rely on Section 60A to depart from EU precedent as applied by the Supreme Court, if needed. The report also highlights that the competition authority has not positioned itself clearly with regard to collective benefits and seems in this regard to be behind the EU Commission, which set out its approach in the draft guidelines on horizonal co-operation.

While no cases of using sustainability as a defence of abuse under Chapter II have been reported, the agency highlighted this possibility and suggested a case-by-case assessment.

In the area of mergers, the report notes that the UK competition agency has recognised that environmental benefits can constitute merger efficiencies in its recently updated merger guidelines. These can be assessed as rivalry-enhancing efficiencies, such as research and development (R&D), or as relevant customer benefits, as long as they are merger specific. While rivalry-enhancing efficiencies are typically related to the market, which is affected by the merger, the relevant customer benefits are not and can appear in other markets. As the agency mentions, relevant customer benefits may include lower energy costs or a lower carbon footprint of the firm’s products. The agency has more recently assessed such claims in two merger cases (Cargotec/Konecranes and Pennon Group plc/Bristol Water) but found that the parties had not provided sufficiently detailed evidence.

The Maltese report highlights that sustainability might function as a shield in cases involving Article 5 of the Competition Act, particularly under Article 5(3), which is the equivalent of Article 101(3) TFEU. Similarly, it might function as an objective justification under the abuse prohibition and efficiency gain in merger review. While there are no reported cases and no guidance from the agency, the guidance by the EU Commission will be of particular relevance once adopted. The Competition Act imposes a duty on the competition authority and the courts that these ‘shall have recourse […] to relevant decisions and statements of the European Commission including interpretative notices on the relevant provisions of the TFEU and secondary legislation relative to competition […]’.

The Austrian report notes that not all sustainability agreements are within the scope of the prohibition on anti-competitive agreements, such as certain environmental standardisation agreements. Moreover, it underlines the possibility of considering sustainability under Section 2(1) of the Cartel Act, the equivalent of Article 101(3) TFEU. Previously, it was considered that out-of-market efficiencies could not readily be considered under this provision. The amendments to the Cartel Act are meant to provide legal certainty. They clarify that out-of-market environmental sustainability benefits are assumed to be passed on to consumers. In other words, as the legislative material notes, environmental sustainability and contributions to net zero always benefit society at least in the long run and thereby compensate the affected consumers as part of society. This also distinguishes environmental sustainability from other elements of sustainability. In these cases, Austrian law would still require the direct compensation of the consumers affected. Yet, in any case, the exemption for environmental sustainability cannot apply to hardcore restrictions like price fixing.

The new guidelines of the authority set out specific steps for the exemption criteria to be fulfilled. There must be technological or economic progress, and it must contribute to environmental sustainability (e.g. carbon neutrality). This contribution must be significant while not imposing indispensable restrictions or eliminating competition in respect of a substantial part of the product.

There is a debate as to the extent that this exemption is broader and will be applied in practice. The exemption covers only cases without a cross-border element to which Article 101 TFEU would apply.

The Swiss contribution reports that the use of practices such as more sustainable packaging material can be seen as efficiency gain that is positive for the consumers within the meaning of Article 5(2)(a) of the Cartel Act. This is the case where they are sufficiently linked to agreement. But even where there are doubts as to the permissibility under that article, Article 8 allows for the Federal Council to provide an exemption on public interest grounds. The report also describes several cases where sustainability played a role in Article 5(2)(a), with cases as early as 1997 concerning the disposal of electronic waste. It also highlights a project where the agency found that the envisioned CO2 savings were not sufficient to justify the restriction of competition.

The report notes how this practice seems to contrast sharply with merger decisions. There, the competition authority seems to not take account of such benefits. In particular, the report underscores the ‘Swiss H2 Generation’ case, where the agency mentioned the importance of hydrogen for the global energy transition but then decided the case purely on grounds of market shares and the potential for creating a dominant position.

The Hungarian report highlights that under the specific exemption for environmental protection, numerous agreements could be exempted, such as those that ‘jointly develop a production technology that reduces energy consumption; [the sharing] of infrastructure with a view to reducing the environmental footprint of a production process; [the joint] purchase [of] products having a limited environmental footprint as an input for their production; an agreement […] to purchase from suppliers observing certain sustainability principles’. Yet, as the report notes, hardcore restrictions cannot benefit from this clause. The report also highlights that the competition authority, although sympathetic in principle, has not yet fully accepted such a defence where the parties ex post tried to mount environmental protection as a defence.Footnote 44 Yet, as Hungarian competition law needs to be compliant with EU law, where a cross-border situation exists, the report expects further developments once the EU horizontal guidelines and its sustainability chapter are adopted.

The picture is similar in abuse cases. Environmental protection was occasionally argued as a defence, but these cases were mostly not decided so that it was not clear whether and to what extent these arguments would have convinced the agency. The report comments that the agency would be open to assess such arguments but that the benefits would have to be clearly shown.

For mergers, the report envisions the possibility that sustainability benefits could be argued as part of the efficiency defence and that the agency would examine them seriously or that such an agreement could be exempted by the government under the public interest exception of Section 24/A of the Competition Act. Yet such cases have not been observed yet.

5 Sword

It might be well known that the environmental but more generally the sustainability aspects of a product are part of the quality or performance of a good or service. Thus, they can be a parameter on which undertakings compete. In this sense, competition on these aspects may be hindered, and it might fall under the prohibitions of anti-competitive conduct or be prohibited as an anti-competitive merger. In these cases, we speak of competition law used as a sword.

Of those countries that submitted reports on the substantive interaction between competition law and sustainability, three countries did not report cases or could not address the matter in more detail. This is the case regarding the Austrian report. The Maltese report also mentions that it is conceivable that competition law might function as a sword in the fight against unsustainable practices, particularly with regard to the abuse prohibition. Similarly, the Swiss report did not record any cases where competition law was used to attack unsustainable practices. Moreover, the Swiss report expressed doubt as to whether the competition authority would take account of such negative effects on sustainability, given its mandate to protect competition.

In France, the agency has considered sustainability in several cases where competition law was used as a sword in the context of their provision addressing anti-competitive agreements, unilateral conduct, and mergers. In the context of anti-competitive agreements, the agency has fined companies that have prevented competition based on the sustainability element. This happened in a case involving manufacturers of PVC and linoleum flooring that agreed not to compete and not to provide customers with information on the environmental performance of their products. A currently ongoing case concerns an agreement of manufacturers of food containers not to advertise and market BPA-free products before a French law banning the use of BPA in food packaging would come into effect.

With regard to dominance, the report mentions a case regarding Nespresso machines. The agency took steps to ensure that not only Nespresso-branded capsules could be used in these machines. And while this case did not specifically mention sustainability, it paved the way for things such as biodegradable capsules. Similarly, one could imagine that coffee produced in other, more sustainable ways might now be available, such as coffee produced with higher levels of social sustainability.

In merger control, the report highlights the indirect usage of sustainability as a sword. For example, the report highlights how the agency in one case defined sustainable products as a distinct product market. This allowed the agency to identify specific problems in certain regions that could then be addressed in the form of commitments.

In terms of the sword, the German report highlights that in several non-sustainability-related cases, the courts have taken a more extensive approach to ensure compliance with the Constitution and fundamental rights in particular. In these cases, the competition provision was interpreted more expansively. This interpretation meant that behaviour was prohibited where it would usually be questionable as to whether it is covered by the prohibitions.

In this line, the report highlights the discussion regarding the German prohibitions on abuse and whether these might be used to address unsustainable practices. The report highlights that this might be possible where the conditions of the Facebook case are fulfilled. In other words, there must be a sufficiently close connection between the violation of a certain law, competition, and harm to consumers.

The report also highlights earlier cases where intervention by the agency had positive impacts on sustainability whether intended or not, particularly highlighting cases from the waste management sector involving Duales System Deutschland (DSD).

In terms of the sword, the UK report highlights that the agency has started to investigate arrangements regarding the recycling of old vehicles and explained its actions with its commitment to prioritise environmental sustainability cases. This seems to be mainly the case with regard to anti-competitive agreements as the report also highlights that the abuse provision has not been substantially featured in the sustainability debate in the UK. The report, however, makes suggestions on how the UK competition authority could address unsustainable and exploitative actions by dominant companies where the unstainable practice has a reasonable nexus to competition.

The sword question has also been relevant in the context of mergers. The competition authority has highlighted in its new merger guidelines that competition between parties can be sustainability related (e.g. energy efficiency, sustainability innovation) and that such competition would need to be protected. This can take the form of remedies or prohibition decisions. In the Cargotec Corporation / Konecranes Plc case, the agency in fact found that the companies were competing on environmental-performance-related matters. But there was still sufficient evidence that the transaction would not result in a substantive lessening of competition. Importantly, the UK competition authority has committed to conducting at least a market inquiry in markets relevant to the net zero target within the next fiscal year.

In Hungary, the report notes that the idea of competition as a sword seems possible within certain limitations. And while no cases have been observed with regard to agreements, abuse, or mergers, the further development of EU law in this regard will be influential. Moreover, in the areas of digital markets, the competition authority has shown that it is willing to examine ‘non-price effects, namely, the merger’s effect on quality, variety and innovation’.Footnote 45

6 Greenwashing

Greenwashing is a concern that is often raised in the context of the debate about sustainability and competition law. Thus, the country rapporteurs were specifically asked about cases of illegal anti-competitive conduct that occurred in the context of sustainability initiatives. These involved cases where companies gave the false impression of pursuing a sustainability initiative when they really served as a cover for anti-competitive behaviour and cases of genuine sustainability initiatives that served as a springboard for other anti-competitive behaviour. While these cases can clearly be distinguished on a theoretical level, a certain overlap can also be found, in particular where genuine sustainability initiatives ‘spill over’ into anti-competitive practices such as price fixing. Hence, these cases are grouped together here.

Regarding the issue of green washing, many reports highlight the possibility of addressing such matters under unfair competition, consumer protection law, or rules of false advertising. In the more specific competition law sense, greenwashing refers to situations where a sustainability benefit was claimed but the actual agreement pursues alternative, anti-competitive objectives; in other words, these are disingenuous sustainability initiatives.

Even with this broad definition of greenwashing and specific questions about it, not many jurisdictions reported cases, including those jurisdictions where sustainability is a rather established parameter that might exempt anti-competitive agreements. Reports of such situations have been received from Brazil and Germany. In France, the competition agency does seem to look into such cases.

The Brazilian report highlights one case involving an association in the sand industry. The case concerned the unloading and storage at a sand terminal and also involved environmental concerns. The association served as a springboard to share sensitive commercial information. The remedies imposed in that case addressed competition and environmental concerns.

The German report mentions two cases of potential greenwashing where companies made claims in proceedings that were subsequently refuted by the agency. For example, in the 2007 DSD case, the report cites the head of the competition authority, who said: ‘We will not allow anti-competitive cartel agreements to be made under the guise of environmental protection.’Footnote 46 This statement needs to be seen as a response to the companies’ claim in the proceedings that the monopolistic structure that they created for recycling purposes was needed in order to achieve a functioning recycling system. In a more recent example, the agency provided individual guidance. In Agrardialog Milch,Footnote 47 the aim was to establish a unified surcharge for producers of raw milk as the cost of production often exceeds the price of milk. The competition authority rejected the initiative as it did not set out any criteria for milk production that fosters sustainability but instead set up a price agreement at the expense of consumers.

While the French report does not reveal any specific case, it mentions that the French competition agency is looking actively into possible issues of greenwashing to ensure that anti-competitive activities are not taking place under the guise of sustainability initiatives.

7 Agency and Legislative Activities in the Areas of Competition and Sustainability

Having set out the general framework for sustainability and competition and having looked at how the relevant competition laws treat specific cases, the rapporteurs were also asked about activities of agencies, such as priorities, guidelines, working papers, individual guidance, or capacity building. Moreover, they were asked whether their legislatures have become or will become active in the area.

Overall, we can see that several agencies have provided individual guidance or adopted policy documents. However, many seem to be waiting for the EU Commission’s guidance on horizontal co-operation agreements which will again contain a section on sustainability agreements, after a lively debate of the draft guidelines.

While the Czech submission does not report any cases, the Office for the Protection of Competition addresses these issues in documents on its webpage. For example, it has a policy document called ‘Application of rules for public support in the environmental field’ Footnote 48 that addresses environmental elements of sustainability with a focus on efficiency and energy efficiency. The document describes different options for exemptions with a specific focus on EU law, such as de minimis, individual notification to the European Commission, regulation of block exemptions, and the adjustment of payment for services in the general economic interest. In 2022, the agency also organised an international conference where sustainability was one of the key areas of discussion.Footnote 49 The report expects further impetus in the sustainability area from the EU Council presidency, which the Czech Republic will hold from July until 2022.

The Belgian competition authority has made the green and circular economy a strategic priority for competition policy in 2022 in order to stimulate innovation and technical developments in this area while expressing a willingness to look more closely at issues where the competition rules might hinder sustainability initiatives.Footnote 50 Thus, the agency offers to provide individual guidance to sustainability initiatives.Footnote 51 It is also supportive of the initiatives of the Dutch and Greek competition authorities in the field of sustainability.Footnote 52 Yet the Belgian competition authority also highlights the importance of guidance at the EU level.Footnote 53

In Brazil, the agency has so far not adopted any policy measures, but the report notes that the agency is observing the guideline drafts in Europe and is discussing the adoption of a policy. The report also notes hesitancy among Brazilian businesses to engage in sustainability initiatives due to fear of prosecution under competition law.Footnote 54

The French report does not note any specific guidance issues. Yet in May 2020, a group of independent regulators, including the competition agency, issued a document on the regulatory challenges of the Paris Agreements and the climate emergency.Footnote 55 The report notes that ‘[t]his document, which is not an instrument of soft law but rather a roadmap, expresses the regulator’s commitment to help undertakings adapt to the changes caused by the global warming’.Footnote 56 And while the document contains the clarification that ‘the mandate given to the [French Competition Authority] is to protect competition, not to protect the environment’, the president of the Authority has made it clear that the agency is working on the matter to ensure that the passing on of environmental benefits to consumers is assessed better.Footnote 57

The German report notes that the agency has given individual guidance in sustainability-related cases, such as the Fairtrade label, Living Wages initiative for the Ecuadorian banana sector, and Initiative Tierwohl. And while it published a background paperFootnote 58 and addressed the issue in its annual reportFootnote 59 and a press release,Footnote 60 it has not published guidelines. Similarly, the independent expert body, the Monopoly Commission, has addressed the issue in its annual report.Footnote 61 The agency has expressed resistance to the issue through more than individual guidance by means of guidelines.Footnote 62 It argued that there is not enough case law yet, that the effects are case specific and decisions need to be made on a case-by-case basis, that such guidance creates a risk of false negatives, and that it would not be the primary task of the agency to protect sustainability but competition and such decision should be made by the legislature. In fact, the German Federal Ministry for Economic Affairs and Climate Action, which is in charge of competition policy, has forwarded 10 points in its policy road map for competition policy until 2025.Footnote 63 These include steps to ensure a more sustainable competition policy with a legal framework that provides clarity for sustainability co-operation while addressing the risk of greenwashing. It will have to be seen what this will entail, but a change in the law might be possible.

In the UK, the agency has consulted, issued guidance on sustainability matters, and then established a sustainability task force. The report notes that this includes the (i) January 2021 information sheet on sustainability agreements, (ii) a market inquiry regarding electric vehicle charging points (including a subsequent investigation with commitments); (iii) provided advice to the UK Government on how the current competition and consumer law frameworks facilitate or hinder sustainability and Net Zero objectives; (iv) established a Sustainability Task Force to spearhead further engagement with these issues; and (v) under its consumer powers, has published a ‘Green Claims Code’ to help businesses and consumers avoid ‘greenwashing’ claims. Moreover, the competition agency committed to increase the number of market inquiries in the area.

The Maltese report notes that the agency has not issued any guidance or policy notes on the subject but should do so in the future. Moreover, it suggests that advocacy might be a particularly fruitful role as the advice given by the agency has been given a strong weight by the applicable legal framework. The report also highlights that in any competition matter, Malta’s Sustainable Development Vision for 2050 will be a crucial point of reference. This 2018 policy document was published based on the Sustainable Development Act by the Ministry for the Environment, Energy, and Enterprise.

The Italian report does not mention any specific guidelines or policy documents. But for the authority, advocacy has been high on the agenda, and it has used its powers to propose measures where competitive pressure can help ensure more sustainable development with proposals in such areas as infrastructure for electrical vehicles, waste management, and energy market organisation.Footnote 64

The Swiss agency has not issued any specific guidance or policy documents, but the report highlights that the agency has set up a ‘Core Group Sustainability’ that monitors the developments, both abroad and in Switzerland.

The Hungarian report notes the engagement of the agency with the topic as part of the European Competition Network (ECN) and in the International Competition Network (ICN), including drafting a report,Footnote 65 and they were involved in organising events. And while no substantive cases have been decided by the agency, the report highlights some interesting procedural elements with regard to sustainability. Sustainability is considered in fining and in making commitments. The fining guidelinesFootnote 66 and the commitment noticeFootnote 67 take account of sustainability, and actions of companies to foster sustainability are described as contributing to consumer welfare. The report also mentions the possibility that the competition agency might bring a damages action in the public interests, where a large group of consumers is affected. Thus, it seems possible that the agency could bring a claim for the environmental damages caused by an anti-competitive action.

8 Other Competition-Law-Related Subjects and Competition

Countless legal tools might be named that address sustainability and its interaction with the market and market participants, which in turn may affect competition. While not the focus of this report, the national reports have highlighted other areas of law that are related to the core competition provisions, such as co-operation, cartels, abuse, monopolisation, and mergers. These areas of law might be relevant to the pursuit of sustainability and might directly affect competition between companies. The Austrian, UK, Hungarian, and Maltese reports noted environmental advertising, which is dealt with by consumer protection or via unfair competition law. The Swiss report highlighted the importance of public procurement rules and sustainable finance.

9 Conclusion

Upon reviewing the different national reports, it becomes clear once again that no one seems to argue that sustainability is a primary goal of competition law. However, in a vast majority of jurisdictions, competition law is required to account for sustainability impacts.Footnote 68 These obligations can be contained directly in competition laws—as in the examples from Austria and Hungary—and in specific laws—such as the climate law in Germany—or in the constitutions—as in the vast majority of the jurisdictions covered by this report.

The debate about sustainability and competition has been ongoing for some time. And to address the argument of legislative choices that is often heard in the debate, the legislature has acted in Austria and introduced a sustainability exemption. Germany might follow this example in the future. However, the Austrian experience also highlights how national changes to accommodate sustainability concerns also create challenges, particularly where national competition law is embedded in the European legal order.

Overall, the topic of sustainability and competition law seems to gain importance in all the jurisdictions covered. There are a number of cases reported across the jurisdictions, with some having experiences going back more than 20 years. And while it might be speculated that the total number of cases related to sustainability matters might be even higher than the number of cases covering data protection and competition, many jurisdictions still lack cases. However, all competition authorities in the jurisdictions covered seem to consider this an emerging issue that needs attention. The reports highlight that even when there are no direct experiences and activities reported by the agencies, it is expected that the agencies will become more active in the future.

The main point of difference and debate is the treatment of out-of-market efficiencies, in other words, situations where the beneficiaries in terms of sustainability do not overlap with the consumer affected by the restriction of competition.

The new EU guidelines on horizontal co-operation and their chapter on sustainability will be highly influential in all of the covered jurisdictions. The reports indicate that it will have this influence whether or not the jurisdictions are a part of the EU, whether the jurisdictions have already addressed sustainability and competition law, and whether or not they adopt a wait-and-see attitude.

The importance of these guidelines also becomes clear as the reports highlight the potential to deter measures that are beneficial from a sustainability point of view, thereby creating false positives. More legal certainty on the use of sustainability, whether as a shield or as a sword, is certainly called for. Once more certainty in the substantive field exists, the debate might also shift to more procedural questions, such as different forms of remedies, including public interest damage actions.

Based on the national reports and this international report, the LIDC adopted the following conclusions and recommendations:

  • Competition law is certainly not the only, and may not be the best, tool to address sustainability issues, but it can play a role in the move towards a more sustainable society.

  • The debate is beginning and/or increasing momentum in a growing number of jurisdictions. Some jurisdictions are more advanced than others in their thinking.

  • Certain competition authorities are taking a lead, from advocacy on sustainability issues to publishing policy papers and guidelines. Certain authorities are proactively leading the debate and not waiting until the cases come to them.

  • While there is still not an abundance of cases, the number of cases in the different jurisdiction is increasing.

  • There are still numerous questions that remain unanswered, in particular—but not limited to—questions relating to the treatment of out-of-market efficiencies.

  • Intervention by the legislator could address problems of (democratic) legitimacy and the balancing/weighing exercise to be undertaken by competition authorities.

  • Companies should be encouraged to take up the opportunity offered by certain competition authorities to be provided with individual guidance.

  • In order to provide greater transparency and clarity to industry, advisors, and society as a whole, it would be helpful if individual guidance were at least published as press release. The publication of more detailed/concrete documents other than press releases, such as individual guidance (comfort/business advice letters) would be preferrable from the perspective of transparency, legal certainty, and value for advising on matters of sustainability.

  • Guidelines addressing sustainability, or even block exemptions, could provide even greater legal certainty, although this may be difficult, at least until there are sufficient examples/cases to draw upon.

  • International sharing of experience between competition authorities/agencies around the world is highly recommended as they have experiences in different fields. Sustainability is a global issue, and this requires a global debate.

  • The establishment of (global) best practices, possibly with a focus on standards—an area where a lot of experience exists—is strongly encouraged.

In terms of next steps and the role of the LIDC, all the factors outlined above merit further debate. Potential legislative and soft law solutions could be explored in the future. In the meantime, the dialogue on the interface of competition law and policy and sustainability should continue (between authorities, practitioners, industry, and interest groups). As an international organisation, the LIDC is well placed to lead and facilitate this discussion and will look for ways to further the international dialogue. Accordingly, the Scientific Committee shall add this to our work programme for 2023 and will explore opportunities for follow-up webinars and/or a working group on sustainability and competition.