A SWORD AND A SHIELD.Using our laws on abuse of dominance to tackle climate change and unsustainable practices

Professor Simon Holmes, Chair ICC Sustainability and Competition Taskforce; Member, UK Competition Appeal Tribunal

“The law on abuse of dominance in the sustainability context is still underdeveloped. However, I believe this is changing”

Last year I explained how businesses can work together to fight climate change and put their industries on a more sustainable footing without infringing competition law. I referred to the guidelines on “sustainability cooperation agreements“  from the European Commission and to the UK CMA’s guidance on “green agreements.” I also flagged the invitation from such authorities to businesses to seek guidance from them about potential projects.  Several such projects have been given the green light since then but businesses are still encouraged to take real life examples to competition authorities and seek comfort if they feel they need this before working with competitors.

However, competition law is not only relevant where companies are looking to work together on sustainability issues. Also relevant is the law prohibiting any “abuse“ of a “dominant position“ – whether that is the EU’s Article 102 TFEU or the equivalent laws in most European countries, including the UK. This is relevant in two ways. First, as a “sword” which can be used to attack unsustainable conduct by dominant firms. Secondly, sustainability objectives can act as something of a “shield” to avoid positive action on sustainability being misclassified as an “abuse”.

The sword
In my view, we can use the abuse of dominance provisions as a powerful  “sword” to attack unsustainable practices by dominant firms in order to facilitate the transition to a sustainable economy (consistent with other laws and regulations designed to transition our economies onto a sustainable basis) This is particularly the case where the practices in question are inconsistent with legally binding commitments in relation to climate change: e.g. those made at COPs such as the Paris agreement or with internationally recognised norms and reports (such as those of the International Energy Authority or the IPPC) setting out what needs to be done to transition to a sustainable economy.

One example might be the distortion of competition that arises when a dominant company avoids the cost of disposing of waste products responsibly: e.g. by dumping them on land or in rivers while it’s smaller rivals properly incur those costs – thus unfairly suffering a competitive disadvantage.

Using the competition sword in this way would complement environmental (and potentially social sustainability) regulations – either because regulation is absent, or because it is not being properly enforced (or not enforced at all).

Shield
However we should never lose sight of the fact that many dominant companies are amongst our largest and most successful companies which also have the potential to make the greatest contribution to the transition to a more sustainable economy and to the fight against climate change. We must be careful not to discourage such companies (and individuals within them) from making this contribution- and avoid wrongfully classifying efforts in this direction as abusive. One example might be a dominant company charging different customers different prices according to the use to which their product is put – e.g. how environmentally friendly it is (e.g. whether products are recycled or the energy efficiency of the downstream production process). Such actions should not be seen as illegal discriminatory pricing or some sort of illegal constructive refusal to supply (as might be the case in other contexts). Where the actions of the dominant company are genuinely intended to combat climate change, reduce environmental damage, or otherwise contribute to sustainable development, it is difficult to see how as a matter of common sense and language that can properly be seen as an abuse that the law intended to prohibit.

Some Conclusions.
The law on abuse of dominance in the sustainability context is still underdeveloped. However, I believe this is changing. First, there are now several cases where national competition authorities have attacked conduct by dominant companies as an abuse and taken into account the environmental implications (and there are several such cases pending at both the European and national level). Secondly, this is being increasingly written about and discussed in conferences – for example one which the ICC did jointly with the OECD in October 2024. Thirdly, the ICC is advocating that the European Commissions’ up-coming guidelines on certain types of abuses of dominance should include a specific section on sustainability.
If you are a  company with potentially a dominant position in some market, or a smaller company competing with such a company, the laws prohibiting an abuse of a dominant position may well be relevant to  practices inconsistent with climate change and the transition to a sustainable economy- or to action to tackle such practices.