At the United Nations Conference of the Parties in November 2022 (COP27), the International Chamber of Commerce published a white paper1 calling upon governments, legislators and competition authorities to do everything in their power to eliminate the inconsistency between the imperative to fight climate change and competition policies which were preventing companies from cooperating in a meaningful manner for purposes of transitioning to a green economy.

The white paper is built on ICC members’ experience with competition authorities expressing doubts about competitors’ real need to cooperate to neutralise the potential disadvantages of being a pioneer of change and to reach sustainability goals sooner and more efficiently. Authorities were hesitant to embrace sustainability considerations fearing that competitors were in fact looking for an excuse to collude and that greenwashing was their real intention.

Similarly, the white paper presents twelve real-life examples of cooperations among competitiors which were eventually abandoned for fear of antitrust sanctions. The examples supported what is widely agreed in the business community: that competition authorities and legislators could and should adjust antitrust policy to ensure a more transparent and certain environment for companies to pursue sustainability goals jointly, and to assess cooperations pragmatically when the parties can demonstrate that the main objective is reaching a sustainability goal.

Antitrust policy should properly integrate sustainability economics, taking account of market failures and collective action problems. These measures should encompass issuing guidelines, assessing concrete cases involving in-depth discussions on the intersection between sustainability and competition, or even shifting the burden of proof in such cases, acknowledging that the benefits of sustainability should outweigh potential negative effects on competition.

Launched at COP27 in 2022, the white paper was then promoted to several agencies in 2023. In parallel, the sustainability agenda and its interplay with competition laws got traction in academia and in numerous fora. Overall, the attention given to this topic has increased tremendously since COP27.

“Green guidelines” have been issued in several jurisdictions. That is not to say that no agency had until then given it proper attention: great contributions had already been made by pioneers like the Dutch, the Austrian, the Greek, the Japanese and Singaporean authorities, while the Germans had produced some initial relevant case law. But it is unequivocal that the regulatory framework has been enhanced considerably since November 2022, with the European Commission, the United Kingdom Competition and Markets Authority, and other jurisdictions having introduced, or considering introducing, sustainability considerations into their assessments of cooperations among competitors. ICC welcomes Brazil, India, Singapore, Belgium, Australia and Mexico joining the discussions. Even though this is undoubtedly positive, much remains to be done in China and the United States.

The present progress report complements the work presented in 2022. It aims to cover the global development of the regulatory framework to support climate action.

The progress report is divided into three parts:

Part 1 reports on the recent developments undertaken by competition authorities aimed at providing practical guidance to business to move green projects forward. Not only guidelines and soft law documents have been issued in order to clarify how these authorities will assess sustainability agreements. In addition, legislative amendments have been considered, new case law has been produced and sandbox projects and seminars have been promoted by the authorities to keep the agenda moving forward.

Part 2 calls on the United States and China, in particular, to engage on the matter. While there is a growing consensus in various jurisdictions around the world that competition authorities have a role to play (e.g. by ensuring that competition law does not impede legitimate collaboration between businesses in relation to environmental sustainability) there is still little discussion on this subject in the United States and China – even though US law could accommodate sustainability under a “rule of reason” and Chinese law contains a specific provision allowing exemption of sustainability agreements. Debate in certain other jurisdictions is only in its infancy.

Part 3 provides overall conclusions, highlighting the importance of a transparent set of policies and regulations to encourage companies to pursue sustainability goals jointly.

Read the full report here: https://iccwbo.org/news-publications/policies-reports/how-competition-policy-acts-as-a-barrier-to-climate-action/


Footnote
1 ICC, How competition policy acts as a barrier to climate action, November 2022