WhenChillingContributestoWarmingHowCompetitionPolicyActsAsaBarriertoClimateAction1November2022WhenChillingContributesToWarming1TheInternationalChamberofCommerce(ICC)callsuponallgovernmentsandcompetitionauthoritiestodoeverythingpossiblewithintheirownlegalsystemstoreduceoreliminatethedisastrousinconsistencybetweentheimperativeoffightingclimatechangeandcompetitionlaworpolicy.Insomecases,thismaymeanachangeinthelaw;insomecasesmoreambitiousguidelines;andinothersitmeanschangesintheburdenofproofand/orpresumptionsinfavourofgenuineeffortstofightclimatechangeandmeettheclimatechangegoalstowhichgovernmentshavecommitted.Keymessages:•Businessescan,needandwanttoworktogethertohelpfightclimatechange.•Currentcompetitionpoliciesarechillingthis.•Competitionauthoritiesandlawmakerscan,andmust,domoretoreducethischillingeffect:practicalguidanceisneeded.•Thiscan(largely)bedonewithincurrentlegalframeworksforcompetitionlaw:whereitcannotthingsneedtochange.•Businesses,inturn,shouldtakereal-lifeexamplesofthechillingeffecttothecompetitionauthorities.1ThiswhitepaperhasbeenproducedbytheICCTaskForceonCompetitionandSustainabilityco-chairedbyPaolaPuglieseandSimonHolmesandwiththeinvaluableassistanceofIanGiles.OthermembersoftheTaskForceinclude:GeorginaBeasley,JohannBrück,ElżbietaBuczkowska,CarlosEdwinCamarillo,DanielCastelo,ArjunChandran,XiaofengCheng,PaoloChiricozzi,PolinaChtchelok,JorgeAlexanderCortés,PabloCortinez,ZhisongDeng,MauritsDolmans,ShahaEl-Sheemy,CarolinaEspitia,NatalieFlores,MorganFrontczak,ElisaGeraci,DoraCeciliaGómez,EdwinGonzález,JuanAndrésGortaire,IngridGuete,GönençGürkaynak,SarahHoskins,WessenJazrawi,AbdAlfatahKahale,SiobhanKahmann,NicoleKar,PerKarlsson,EmmanuelaLeal,ClaudiaAndreaLopezMonterrey,CarlosMena,AlejandroMendiolaDíaz,YanMeng,JuanDavidMorales,AlexisMunro,AdolfoNaranjo,GerritOosterhuis,JuanCamiloPinzón,AngelaMaríaPlata,AnneRiley,MaríaEugeniaRinaudo,KarinRoberts,IanRose,PaoloRotelli,AnaPatriciaRozo,AntonellaSalgueiro,MónicaSánchezSoliva,BeatrizSanzFernández-Vega,MariScimemi,PatrickThieffry,MarcelineTournier,KağanUçar,andSandyWalker.Moredetailsontheabovecontributorsareprovidedattheendofthedocument.November2022WhenChillingContributesToWarming2Part1:IntroductiontotheproblemandpurposeofthispaperTheclimatechangeemergencyisdrivingcompaniesworldwidetosetincreasinglyambitioussustainabilitytargets.Asfrequentlyoccurs,whenregulationlagsbehindindrivingandpromotingchange,theprivatesectorhassteppedforwardandtakenaction.Risingsustainabilityconcernshavecreatedincreasingpressureonbusinessestomakeenvironment-friendlyinvestments,innovationsandpurchasingdecisions.Businessexecutivesandtopdecisionmakersarenowfacedwiththedualchallengeofbecomingthedriversforchange,whilestilldeliveringgoodresultstotheirshareholders.Indeed,whilebusinesssuccesscannotbeputatrisk,beingthefirstmoverdoesnotgiverisetotheadvantagestypicallyattributedtopioneers,asinnovationandchangeforsustainabilitypurposesdonotnecessarilymeanthatpioneeringfirmswillreaptheprofitsgenerallyresultingfromearlyaction.Infact,itmaybequitetheopposite:actionstakenbybusinessestoadvancetheirsustainabilityobjectivesusuallyrequireinvestmentsintheshorttermandpossiblyhigheroperatingcoststhatoftencannotbepassedoninthepriceschargedtocustomers.Sometimes,thiscangoasfarascompanieschallengingconsumers’immediateinterestswhenintroducingnewhigherstandards,ashasbeenthecase,forexample,withtheterminationofplasticbagsinsupermarketsinavarietyofcountries.Aheadstartmaythereforemeanunhappyshareholdersandunhappycustomersintheshortterm,withthepioneers(andtheircustomers)becomingeasypreyforcompetitors.Theanswertothispuzzlecouldlieinacollectivemove:cooperationamongcompetitors.Whenall,ormost,competitorsmovetogetherandinthesamedirection,changewilloccur.Whatifsuchchangebenefitstheenvironmentandsociety,butatthecostoftemporarilyreducingcompetition?Howmuchofareductionofcompetitionarewereadytoaccept?Inotherinstances,theanswermaynotlieinacollectivemove,butitmayhaveanequaleffectoncompetition.Someunilateralcommitmentsundertakenbytheprivatesectorcanonlybeachievedthroughmergersandacquisitions.Forexample,becomingcarbonneutralbyacertaindatemayrequirethatcompaniesdramaticallyincreasetheirrecyclingcapabilitiesintheshortterm,whichcouldbehardorevenimpossibletodoorganically.Whatifbuyingoutrecyclingfacilitiesistheanswer?Again,howmuchconcentrationintherecyclingindustryarewereadytoaccept(ifany),toachieveagreatergood?Theinteractionofcompetitionlawandsustainabilityhasbecomealivequestionforcompetitionagenciesaroundtheworld,whicharebeingaskedtotakeapositionandtosaywhethertheywillstandinthewayofsuchinitiativesorpromotethem.Thefact,however,isthatmostcompetitionagenciesaretakinghesitantpositions,insearchoftherightanswerbetweentheseextremepositions.Someagencieshavebeenopenlysupportiveofincludingsustainabilityelementsintheirantitrustassessments;othershavebeenreactivetowhattheyseeasunorthodoxeconomicanalysis,orskepticalaboutsuggestionsthatareformofantitrustrulesisneededtosupportsustainabilityobjectives—andfearingthatsuchobjectivesmaybeusedascoverforanticompetitivepractices.Atbothendsofthespectrumthough,agencieshavebeenencouragingtheprivatesectortobringforwardreal-lifesituationsforconcreteassessments.November2022WhenChillingContributesToWarming3Businessesarecitingalackofsufficientclarityandcomfortaroundantitrustrulesasstiflingtheirsustainabilityeffortsinthecontextofindustry-wideinitiatives.Atagenerallevel,businessesseekingtoparticipateinEnvironmental,SocialandGovernance(“ESG”)initiatives—andin,particular,sustainabilityinitiatives—arefrustratedthattheantitrustframeworkinternationallyisnotprovidingthecertaintytheyrequirethatgenuinesustainability-focusedinitiativeswillnotbeconsideredtobreachantitrustrules.•Theyseetheresponsibilityforarticulatingsuchapositionasfallingprimarilyongovernments—andthecompetitionauthoritiesandcourtsultimatelyundertheircontrol.•Theyarefrustratedthat,despitesomeeffortsbeingmadeandguidanceprovidedincertainjurisdictionsregardingsustainabilityagreements,itremainsthecasethatcompaniesarebeingaskedtoaccepttheburdenofproof(andcommercialrisk)inbringingtestcasestoestablishaprecedentonthecircumstancesinwhichsustainabilitybenefitsfromcollectiveinitiativesoutweighanyeffectsoncompetition.•Inparticular,businessesseethatthelackofanagreedapproachamongcompetitionauthoritiesglobally(e.g.throughtheInternationalCompetitionNetwork)meansthatthepossibilityofimplementingglobalsustainability-relatedinitiativeswillpotentiallyrequireengagementwithnumerouscompetitionregimes,includingthoserequiringpre-approvalbeforeinitiativesareimplemented(whichcaninvolvelengthyandcostlyprocessescreatingmaterialdelaysforsuchinitiatives).Asfrequentlyhappens,whencompaniesareuncertainabouttheapplicationofantitrustrules,privatepractitionershavebeenfrequentlyaskedtoanticipatehowtheyexpectregulatorsintheirjurisdictionstoreacttoinitiativeswhichmayresultinareductionofcompetition(whichmayoftenbeonlytemporary)wherethebenefitsaccruetoconsumersandsocietymoregenerallyintheformofamoresustainableeconomy.However,competitionauthorityreviews,particularlyacrossnumerousjurisdictions,aretypicallylengthy,costlyforthepartiesinvolvedandcanbeunpredictable—inparticularoncomplexquestionssuchasevaluationofbenefitsarisingfromagreementswhichmightcountervailanyreductionsincompetition.Consequently,companieshavefrequentlybeenreluctanttosubmitcasestotheantitrustauthoritiesfortheirconcretereview.Whenbusinesscommunitiesarefacedwithlegaluncertaintyandcostanddelaytotheirplans,manyprojectsaresimplyabandonedbeforetheyareevenbroughttoanyhesitantagency.Ontheirend,andperhapsasaconsequenceoftheabove,someagencieshavebeenskepticalastothedegreeofpressurethatcompaniesareindeedfacing,whenthishasnotbeenreflectedinanysignificantnumberofcases,requestsforguidanceormergersfiledfortheirreview.Thisisthegapthatthispaperaimsatbridging.Inparticular:•thereluctanceofmanycompetitionauthoritiestotakeeffectiveactiontoensurethatcompetitionlawdoesnotstandinthewayofbusinesscooperationtofightclimatechange,whetherduetoalackofexperienceoftheissue;scepticismastotheextentoftheproblemor(usuallyundue)fearof“greenwashing”;2and2Inthepastcompetitionauthoritieshaveseemedmorereceptivetoactiontoachieveenvironmentalbenefits.AgoodexampleistheCECEDdecisionoftheEuropeanCommissionwhereitapprovedanagreementbetweenwashingmachinemanufacturerstoimprovetheenergyefficiencyofwashingmachines.Despiteexpectinganincreaseinprice,theCommissionacceptedthatthecollectivebenefitsforsociety(areductioninenergyconsumption)outweighedthesecosts[CECED[1999]L187/47OJ2000].November2022WhenChillingContributesToWarming4•thereluctanceofbusinessestocooperatewithcompetitorsfor(oftenunfounded)fearofcompetitionlaw,andareluctancetotaketheirconcernsorsubmitsustainability-relatedargumentstothecompetitionauthorities,toseekcomfort/guidance.TherestofthispaperisdividedintotwopartsandanAnnex:Part2introducessomereal-lifebusinesscaseswherecompaniesarelookingtocooperatetomakeasignificantcontributiontothefightagainstclimatechangeorwherecompaniesareconsideringsustainability-drivenactions,butwherefearofcompetitionlaw(whetherwellfoundedornot)isinhibitingprogress.Inthesecasesguidanceisbeingsoughtfromprivatepractitionersand,insomecases,thecompetitionauthorities.Part3callsoncompetitionauthoritiestoprovidemorepracticalhelptobusinesses—bothintheformofgeneralpracticalguidancebutalsogivingguidance/comfortinrelationtoindividualprojectsinatimelymannerandwithoutoverburdeningthosebusinesses(particularlySmall-andMedium-SizeEnterprises‘SMEs’)withexcessiveinformationdemands.Thisrequiresacarefulbalanceifcompetitionauthoritiesfeeltheyneedtosafeguardagainstwhattheyfeartobegreenwashing.Thisisaglobalproblemandwecalloncompetitionauthoritiestoworktogethersothatprojectswitheffectsacrossmultiplejurisdictionscanproceedinatimelymanner.Ifwecandothistoallowmergerstoproceed,weshouldbeabletodoittoallowagreementscombattingclimatechangetoproceed.Inthecontextofeffortstomakedynamicchangestomarketbehaviours,thechillingeffectoftheneedtoengagewithmultipleregulatoryprocesses—involvingpotentiallysignificantdelaysandmaterialcostsforthecompaniesinvolved—shouldnotbeunderestimated.TheAnnexidentifiesthekindofcooperationthatislesslikelytobeproblematicundercompetitionlaw(eithernotbeingcaughtatallormeritingsomeformofexemption/safeharbour)andsustainability-relatedargumentsthatauthoritiesmaysafelytakeintoconsiderationintheirdecisions.Italsobrieflyidentifiesthoseaspectsofcooperationorotheragreementsthataremorelikelytobeproblematicbutcallsonthecompetitionauthoritiestohelpovercomethesewheretheirpotentialbenefitsinthefightagainstclimatechangeareverysignificant(forexampleeffortstophaseoutfossilfuels).Itishopedthatthiswillencourageandhelpbusinesseslookingtoengageinthefightagainstclimatechange,butalsohelpthosecompetitionauthoritieswithlessexperienceofthisissue.November2022WhenChillingContributesToWarming5Part2:Thereal-lifecasesthatcompetitionagenciesneedtobeawareofTheGlobalCompetitionCommissionoftheInternationalChamberofCommerceestablishedinJune2022theTaskForceonCompetitionandSustainability(the“TaskForce”)ledbySimonHolmesinEuropeandPaolaPuglieseinSouthAmerica,withthegoalofbenefitingfromtheexperienceofover50lawyersrepresentingnofewerthan20jurisdictionstoprovideinsightsonanumberofreal-lifesituationsuponwhichtheiradvicehasbeensought.Advisorshaveseennumerousexamplesofcompaniesseekinglegaladviceinrelationtosustainability-relatedinitiatives.Althoughlegaladviceissoughtforguidanceandanargumentcantypicallybemadethatconsumerbenefitswilloutweighanynegativeeffectsoncompetitionfrominitiativeswhichseektocollectivelychangemarketbehaviours,itisclearthatbusinessesareconcernedabouthowcompetitionauthoritiesmayreacttocertaininitiatives(e.g.industrycodesofconduct),andthepotentialunpredictabilityregardingenforcement.Thissectionlistssomereal-lifebusinesscasesthatICCmembershaveencountered,wherebusinessesarelookingtocooperatetomakeasignificantcontributiontothefightagainstclimatechange,butwherefearofcompetitionlaw(whetherwellfoundedornot)isinhibitingprogress.Theexamplesprovidedarereal-lifecases,whichhavebeenanonymisedandgeneralisedintheinterestsofprotectingcorporateconfidentiality.3Businesscase1:Namingandshamingforthegreatergood•Atradeassociationaimstoputpressureonsupplierstoremovecommoditieslinkedtodeforestation[oranyotherunsustainable/unethicalbehaviour]fromthedistributionchain.•Anyindividualunilateral“boycott”ofsuppliersconnectedwithdeforestationwillnotchangesupplierbehaviour—astherewillalwaysbecompaniesprioritisingthecheapestinput,especiallyinthecurrentclimateofincreasinginputcosts.•Thetradeassociationinvitesmemberstosharesupplychainduediligencewithanexternalthirdpartyinordertoidentifywhichsuppliersare(i)involvedindeforestationor(ii)unabletoprovethattheircommoditiesarenotconnectedwithdeforestation.•Thetradeassociationthenpublishesthelistofsupplierswhichareonthe“badlist”(andrecommendsmembersnottopurchasefromthem),hopingthatby“namingandshaming”thesesuppliers,thiswillforceachangeofbehaviour.Businesscase2:Collective“boycott”ofpolluters•Atradeassociationaimstoforcesupplierstousealesspollutingtechniqueinminingaluminium.•Thelesspollutingtechniquecurrentlyhasahighercostthanthepollutingalternative,andthereforeislikelytobeahigherpurchaseprice(whichmightbepassedontoconsumers).3TheTaskForcereliedheavilyonasimilarcompilationproducedbysomeofitsmembers,likethepapersubmittedbytheEuropeanRoundTable(“ERT”)inresponsetothepublicconsultationonthedraftEuropeanHorizontalCooperationGuidelines.November2022WhenChillingContributesToWarming6•Anyunilateralactionbyanindividualcompanywillnotchangebehaviour,becausethecompaniesdeployingpollutingtechniqueswillfindalternativebuyersandthosebuyerswhohavelowercostsmaygainmarketsharebybeingabletopricemoreaggressively.•Thetradeassociationmembersagreenottobuyfromanysupplierswhousethepollutingtechnique,therebydenyingthemalargeportionofthepotentialpurchasingmarketandhopefullyforcingthroughchange.Businesscase3:Alternativebasematerials•Roadpollutioniscausedbyemissionsaswellasfineparticlesfromtyresandbrakes.•Industrysuccessfullycreatesanalternativematerialfortyresandbrakeswhichvastlyreducestheamountoffineparticles“emitted”.•Thisalternativeissignificantlymoreexpensivebutthecostcouldbesignificantlyreducedifadoptedbyallmanufacturers.•Industrywantstoagreethatallnewtyresandbrakesmanufacturedwillonlyusethenewmaterial.•Thiswillincreaseallmanufacturerscosts(atleastintheshortterm)andeachmanufacturerisfreetodecidewhetherandhowtopassonthepriceincrease.Businesscase4:Sponsoringupstreamsustainability•Theindustryaimstoencouragesustainablefarmingtechniquesonawide-scaleinordertomakeameasurabledifferenceinreducingtheneedforfertilizers,preventsoilerosionandmovetowardcarbonneutrality.•Inordertohaveameasurableimpact,aminimumof500farmsneedtodeploythesustainabletechniques.•Noindividualcompanycansponsorandbuyalltheoutputof500farms.•Anumberofcompetitorsagreetosupportthefarmsbyprovidingfinancialincentivesandtechnicalsupporttodeploythesustainabletechniques.•Itwillalsobenecessarytoensurethecropsareallpurchased.•Thecompetitorswillneedtoagreehowmucheachpartybuysandfromwhichfarm.Itmightevenbenecessarytoagreeuponacommonpriceinordertoconvincethefarmstojointheprogramme.•Therewillbenoagreementastohowanyincreasedcostsarepassedontocustomersandnomoreexchangeofcommerciallysensitiveinformationthanisstrictlynecessary.Businesscase5:Jointsustainabilityinitiativesintheproductionprocess•Industrialmanufacturingisoneofthekeydriversofgreenhouseemissions.Inordertoreducetheseemissions,alternativeproductionprocesseshavetobedeveloped.Thisisoftenassociatedwithextracosts(atleastintheshortterm),whichindustrialplayerscannotbearbythemselves.•Toovercomethisdilemma,jointdevelopmentofproductionfacilitieswithcompetitorsmightenhancethedynamicofagreentransformationofcarbonheavyindustry,e.g.byswitchingfromfossilenergysourcestohydrogen.•Inthiscontext,someinformationexchangewithcompetitorsiscrucialfortheplanningprocess.AlsotransferringproductioncapacitiestojointproductionfacilitieswithNovember2022WhenChillingContributesToWarming7competitors—bymeansofajointventureoracontractualcooperation—couldbeconsideredasarestrictionofcompetition.Businesscase6:Efficientuseofresourcesrelyingonagreementsamongcompetitors•Themainsourcesofenergyconsumptioninthetelecomsectoraretheoverlappingofnetworksandtechnologies,ratherthanthetotalamountoftrafficcarried.•NetworkSharingAgreementsamongcompetitorstocarrythesameamountoftrafficoverareducednumberofnetworksortechnologieswouldgreatlyreduceenergyconsumption.•Thiswouldrequirehoweversitesharingandtheexchangeoftheinformationnecessarytopermitsitesharingandnationalroaming.Businesscase7:Horizontaldatasharingforenergysavingpurposes•BigDataandartificialintelligenceapplicationsaremoreandmoreusedtooptimisesystemperformancetomakenetworksassustainableandcost-efficientaspossible.•Thedatatransmittedbysmartmetersisusedforthetargetedimplementationofenergyefficiencysolutions,suchastheapplicationofstandbymodetolimitenergyconsumptionwhentrafficissloweddown.•Sharingthisdataamongnetworkoperatorswouldallowforlargeenergysavings,butwouldalsorequirecompetitorstosharesomecompetitivelysensitiveinformationwhichcouldpotentiallyreducecompetitionamongthemBusinesscase8:Horizontaldatapoolingacrosssectors•Datacentres,cloudservicesandconnectivityaccountforalargepartoftheenvironmentalfootprintoftheinformationtechnologysector.•AgreementsamongcompetitorstosharesomeB2BdataandinfrastructuresandthecreationoflargedatapoolsenablingBigDataanalyticsandmachinelearningwouldresultinsubstantialenergysavingsandreducecarbonemissions,atthepotentialriskhoweverofreducingcompetitionamongthem.Businesscase9:Reducingcompetitiontofosterchange•Agroupoffinancialinstitutionswishtoensurethatmeatpackersmonitorthesupplychain,inordertoeliminatedeforestation.•Theyagreethattheywillonlyoffercertainfinancingproductstomeatpackersthatcandemonstrateefficientsupplychainmonitoring.•Individualactionbyanyofthosefinancialinstitutionswillnotproducethedesiredeffect,asthemeatpackerwhoisnotabletoevidenceconsistentmonitoringofthesupplychainwillresorttootherbanksforfinancing.•Asaresultofsuchcollectiveaction,thebanksarenotexpectedtoobtainanysupra-competitiveprofitsorgains,butratheronlyforcethemeatpackerstohavebettercontrols.Businesscase10:Acarbonfootprintcalculationtool•Abusinessassociationofhighlyenergyintensivemanufacturersinthemetalprocessingindustryrepresentsmorethan50individualcompanies.November2022WhenChillingContributesToWarming8•Itsgoalistoreachcarbonneutralproductionby2050.•Amongothers,theassociationprovidesa“carbonfootprintcalculationtool”basedoncomprehensivedataprovidedbymembercompanies.Thetoolfacilitatescalculationand/ordeterminationofindividualproductcarbonfootprints.•Datainputofindividualcompaniesincludesvisiblecompetitivelysensitiveinformationonproducts,productionprocessesandinteraction(supplier/customerrelationships)alongthesupplychain.Thatinformation/datacouldbeconsideredasenablinganinformationexchangewithpotentiallyrestrictiveeffectsoncompetitionamongparticipatingcompanies.Businesscase11:Agreementtoreducenumberofcompetingwastecollectionnetworkstodrivegreaterefficiencies•Wastecollectorsagreethatduetothesmallsizeofthemarketaparticularstatewouldonlyneedonegeneralwastecollectionnetworkoperatortomeettheneedsofthewholecountry.•Theywanttoagreethatonlyoneofthemwillbecomethesingleoperatorofanetworktohandlealltypesofwasteandfortheotheroperatorstorunspecificsub-networks.•Underthearrangementthewidersinglenetworkoperatorwouldpassallcollectedwastetothespecialisedsub-networksonnon-discriminatoryterms.•Theagreementwouldavoidduplicationofnetworksasduplicationmakesrecyclingwastemorecostly,decreaseefficiencyandincreaseenvironmentalcosts.•Thewasterecoveryoperatorsrecognisethisraisescompetitionconcernsandareuncertainastohowthecompetitionauthoritywouldrespond.Businesscase12:Competitivepressurescouldunderminesustainablepackaginginitiatives•IncertainluxuryandpremiumFMCGmarkets,endconsumersassociateweightierpackagingwithproductquality.•Suppliersmaybeabletoreducesignificantlytheenvironmentalfootprintoftheirproductsby“lightweighting”themorremovingunnecessarypackaging.Thiswouldhaveasignificantcascadingeffectongreenhousegasemissions—notonlywouldtherebeareductioninthecarbonperunitofproductfromnotproducingthe“excess”packaginginthefirstinstance,butalsocarbonreductionswouldbeachievedinthesubsequentstagesoftransportationandwaste/recyclinghauling.•However,suppliersarereticenttotakeunilateralactioninthisregard,astheycouldlosesalesto(“freeriding”)competitorswithlesssustainablepackagingthatconsumersassociatewithapremiumfeel.•Onewaytoquicklyovercomethisdeadlockisfortheindustrytotakecollectiveactionbyagreeingtoremoveunnecessarypackagingorminimiseitsweight.Collectiveactionwouldresultinreducedgreenhousegasemissionreductionsmuchmorequicklythanwaitingforindependentactionbycompetitorscompetingonthepremiumfeeloftheirproducts.•Therewouldbenodiscussionoragreementbetweencompetitorsoncosts,pricing,oractualproductquality.•Suchcollectiveactionwouldsignificantlyimprovetheenvironmentalfootprintoftheindustrybutwouldalsorequireagreementbetweencompetitorsonapotentialparameterofcompetition.November2022WhenChillingContributesToWarming9Theexamplesabove,takenfromreal-lifesituationsbroughttoexternalcounselfortheiradvice,illustratehowtherearenosimplesolutionstothelegalissuesraisedbysustainability-enhancingarrangements.Inallofthesecasesindividualactionwasinadequate,andsomeformofcollectiveactionwasnecessary(inparticulartoovercome“free-rider”problemsortoavoidafirstmoverdisadvantage).Theyarealllegitimatelyaimingtoproducesustainableresultsbuthavethepotentialtoacertaindegreetoresultinareductionofcompetition-atleastintheshortterm.However,theseexamplesarejustthetipoftheicebergasinmanycasespotentialprojectsare“stillborn”andnevergetasfaraslawyerswhomaybeabletofacilitatetheirexecution.ICCmembershaveidentifiedmanysituationswherecollectiveactiontofightclimatechange(ortoputmarketsonanecologicallysustainablebasis)isneededbutasaresultofcompetitionlawconcerns,collectiveaction,iseithernothappeningatallorishappeningtoamuchlesserextentthantheurgencyofthesituationrequires.4RacetoZeroInitiativesCertainwell-knowninitiativesthatdonotrequirefictionalisationbecauseoftheirpublicnaturearetheinitiativessponsoredbytheUnitedNations(“UN”)thatseektoencouragecompaniestocooperateinanefforttobecomecarbon-neutralby2050,undertheumbrellaoftheUN’sRacetoZeroinitiative.Theseinclude,amongothers,theNetZeroAssetOwnersAlliance(NZAOA),theNetZeroInsuranceAlliance(NZIA)andtheGlasgowFinanceAllianceforNetZero(GFANZ).DesignedtobealignedwiththeUN’sRacetoZerocampaign,theseinitiativeshavefocusedonimplementingmethodologiesformeasuringportfolioandinvestmentrelatedemissions,andthenaskingmemberstoagreeontargetsforreducingsuchemissionsovertimeinordertoachievetheoverarchingtargetofnetzeroemissionsby2050.TheUN’sRacetoZeroinitiativehassetoutanumberofcriteriaformembers,andarecentlyupdatedversionoftheInterpretationGuidetothesecriteriarequiredmemberstoaccept:“animmediatehaltonbuildingnewcoalplantsandaphaseoutofcoal-firedelectricitygenerationby2030inOECDcountriesand2040innon-OECDcountries,aswellasnonewoilandgasfields.”5Weremembersofthesealliancestoagreetosuchcriteriaasregardstheiroperations,theywouldeffectivelybeagreeingnottosupportanynewcoalventures,oroilandgasfields,andtosupportaphase-outofcoal-generatedpowerwithinaspecifiedtimeline.Theserequirementsarebasedonthelatestscientificresearchandintendedtosupporttransitiontoanetzeroglobaleconomyby2050.Todate,notallasset-owners,financialinstitutionsorinsurancecompaniesaremembersoftheseinitiatives.However,ifthatwerethecase,orevenifasubstantialmajorityofpotentialmembersweretosignup,andifsuchalliancemembersthenagreednottoengagewithhigh-emittingcompaniesorprojects,thiscouldhaveapotentiallysignificantimpactontheabilityofsuchhigh-emittingcompaniesorprojectstocontinuecurrentactivities.Forthisreason,thesealliancesarepotentiallyaverypowerfultoolinthefightagainstclimatechange.However,fromacompetitionlawperspective,ifcompaniesagreenottodealwithparticularmarketparticipants,thismaybeconsideredacollective“boycott”undertherulesofdifferentjurisdictions,andiscertainlycapableofdistortingcompetitioninsomerelevantmarkets(e.g.4See,forexamplethesubmissionbyUnilevertotheEuropeanCommissioninthecontextofitsearlyplanstoreviseitshorizontalguidelines.[https://www.unilever.com/sustainable-living/ourapproach-to-reporting/engaging-with-stakeholdrers/]undr“competitionlawandsustainability”.5https://www.edie.net/race-to-zero-toughens-up-membership-criteria-with-new-requirements-on-fossil-fuel-financing-and-lobbying/November2022WhenChillingContributesToWarming10userid:246491,docid:143820,date:2023-10-25,sgpjbg.comproductionofelectricityinjurisdictionswherethereiscurrentlymaterialcoal-firedgeneration,andwheresuchgenerationcouldfaceincreasedcosts—orinabilitytooperate—asaconsequenceofagreementsenteredbythemembersofthetypesofalliancesdescribedabove).Whilethesustainabilitybenefitsmightbeconsideredtofaroutweighanyharmstocompetitionarisingfromsucha“boycott”—orevenfromagreedchangesinmarketbehaviourwhichmakeitharderforhigher-emittingcompaniestocompete—provingsuchbenefitsmaybecomplex.Thelegalstandardandburdenofproofvarybetweenjurisdictions,andthiscancreateasignificantdisincentiveforthecompaniesinvolvedinengagingwiththesetypesofsustainabilityinitiatives.Indeed,inthiscontext,andfollowingreportedconcernsofmembers,theRacetoZeroultimatelyhasamendeditsInterpretationGuidetoretreatfromrequiringmemberorganisationstoexplicitlystopworkingonnewcoalprojects.6Furthermore,oneofthemostimportantofthenetzeroalliances,GFANZ,hasrecentlyannouncedthatitisdroppingtherequirementforitsmemberstosignuptotheUNRacetoZeroinitiative.Again,fearofthecompetitionlawimplicationsareattheheartofthisdecision.7WhileinitiativesliketheUNRacetoZerocampaignpushescompaniesinonedirectiontotryandmeetthescience-basedtargetsagreedtobygovernmentsundertheParisAgreements,competitionauthorities’actionsorinactionscanpushtheminadifferentone.Greaterconsistencyandclearguidanceareurgentlyneeded.Wecalluponallgovernmentsandcompetitionauthoritiestodoeverythingpossiblewithintheirownlegalsystemstoreduceoreliminatethisdisastrousinconsistencybetweentheimperativeoffightingclimatechangeandcompetitionlaworpolicy.Insomecases,thismaymeanachangeinthelaw(asinthecaseofAustriamentionedbelow);inothersmoreambitiousguidelines;andinothersitmeanschangesintheburdenofproofand/orpresumptionsinfavourofgenuineeffortstofightclimatechangeandmeettheclimatechangegoalstowhichthegovernmentshavecommitted.86https://www.bloomberg.com/news/articles/2022-10-08/wall-street-banks-win-key-net-zero-concession-a-month-before-cop?srnd=premium&sref=Hhue1scO7Reuters28/10/2022.[MarkCarney….dropsUNclimateinitiativerequirement]8Seefurtherbelow:”CompetitionAgencies:whatbusinessneedsfromyou”November2022WhenChillingContributesToWarming11Part3:BusinessneedsguidanceAlthoughitseemspossibleinsomeofthecasesdescribedabovetomitigatecompetitionrisks(introducingfirewalls,limitingthescopeofcertainarrangements,etc),companieshaveoftentakenaconservativeroutewhenconfrontedwithsomelevelofexposure.Forinstance,weareawareofbusinesses:•decliningtoparticipateinindustry-wideinitiativesinfavourofundertakingunilateralsustainabilityefforts(cognisantthatthesemaynotbeasimpactfulasindustry-wideinitiatives)forfearofpotentialantitrustrisks;•ensuringminimalpublicityaroundtheirbusiness’sustainabilityintentionsandachievements(eventhoughtheyareawarethismaybeoverlycautious)toavoidtheantitrustrisksassociatedwithpotential“signalling”totheirindustrypeers;and•beingconcernedaboutreportingdata,e.g.oncarbonfootprints,eveninresponsetomarketdemandfortransparency,duetoconcernsthatsuchdatacouldbeconsideredamechanismtoallowmonitoringofbehaviourbycompetitorsinbreachofcompetitionrules.Someoftheconcernsabovedonotappearjustifiedbasedonthecase-lawinmanyjurisdictions,andthehelpful(draft)guidancepublishedbyseveralcompetitionauthorities-forexamplebytheEuropeanCommissionandtheDutch,ACM.9TheseareverywelcomeandabigstepintherightdirectionbutthosefromtheEuropeanCommissionneedtogofurtherifEuropeanlaw/policyisnottoimpedevitalactiontofightclimatechange(seeICCcommentsontheEuropeandraftguidancedocument).Nonetheless,companieshavebeenfrequentlyverycautiousregardingcompetitionlawrisksgiventhepotentialseverityofsanctions.Whileseekinglegaladvicecanoftengoalongway,manybusinessesarereluctanttotakethestepstheywouldotherwisewishtotakeasanindustrytowardstacklingtheclimatecrisiswithoutgreaterclarityandpredictabilityfromcompetitionauthoritiesastohowtheantitrustruleswouldapply.Typically,severesanctionsarerequiredtodisincentivisecompaniesfromperpetratingconductsthatgeneratesubstantialprivategainsfortheperpetratorstothedetrimentofconsumersortothedetrimentofanyother“publicinterest”consideration.Whenbalancingthepotentialbenefitsandthepotentialrisks,theantitrustexposuremustoutweighthebenefitssoastogenerateadeterrenceeffect.Inthecaseofsustainablegoals,thefactisthatmostofthetimebusinessesarenotreapingimmediatesubstantialgainswiththeconductthatexposesthemtoantitrustrisks.Theywillobviouslybenefitfromtheresults,butnotimmediatelyanddefinitelynotalone,astheresultsaresharedwithsociety.Antitrustrisksmayfrequentlybecomeexcessivelyonerousinthatscenario.Companiescanoftenmakeavarietyofgoodlegalargumentsastowhytheiragreementsmightnotaffectcompetition,orwhytheyhavebenefitsfaroutweighingtheharms,buttheyarebeingaskedtodothisinaglobalcontextwhere:9EGsinclude:Chapter9(“SustainabilityAgreements”)oftheEuropeanCommission’sdraftGuidelinesof1March,2022onHorizontalAgreementsandthedraftguidelinesoftheDutchCompetitionAuthority(“ACM”)on“Sustainabilityagreements:opportunitieswithincompetitionlaw”of26thFebruary,2021(andvariouspressreleasesoftheACMinrelationtoindividualagreementstopromotesustainability).SeealsotheguidanceprovidedbytheEuropeanCommissionon8July,2021toGermancarmanufacturersonareasofcooperationonsustainabilitythatdidnotgiverisetoconcern(accompanyingitsdecisionfiningthosemanufacturersforrestrictingcompetitioninemissioncleaningtheso-called“AdBlue”decisionofthesamedate[IP/21/3581].November2022WhenChillingContributesToWarming12•thereisamultiplicityofregimeswithdifferentlegaltestsandpubliclystateddifferencesofopiniononhowsustainabilitybenefitsweighagainstrestrictionsoncompetition;•authoritiesareoftenscepticalinfearofbeinggreenwashed;•severaloftheseregimesoperatepre-approvalprocesses,whichincreasecostanddelayinengagingwiththem—orhaveactivelitigationregimeswherecompaniesriskbeingsuedby“victims”;•theburdenofproofwouldtypicallybeonthepartiestoshowthebenefitsandpotentiallytogoasfarastocalculateandshowhowthesebenefitsmightaccruetoconsumers.Businesseswillingtocooperatecanseekapprovalorcomfortfromrelevantcompetitionauthoritiesthattheirarrangementsmightbeconsideredtohave“benefits”outweighinganycompetitiveharmthattheymighthave.Thismaybeinthecontext,e.g.injurisdictionssuchasAustraliaandBrazil(butalsoseveralothers),ofaneedforpre-authorisationbeforesuchagreementsareimplemented.Butforcorporategovernancereasons,companieswillalsowantcomfortfromanumberofotherauthoritiesaroundtheworldbeforeengaginginsuchconduct,andinparticularfromthoseauthoritieswithatrackrecordforimposingsignificantpenaltiesforcompetitioninfringements.Inmostcases,thelegaltestfordemonstrating“efficiencies”orconsumerbenefitsistightlyconstrained,withveryfewprecedentcaseswheresuchbenefitshavebeenfoundtooutweighanticompetitiveeffects.Moreover,thesetestswilltypicallyputtheburdenofproofontheparties,andmayrequire—forexample—calculationofspecific(economic)benefitsaccruingtoconsumersinthemarketswherethelossofcompetitionhastakenplace.Inaworldwithnearly150competitionauthoritiesoperatingdifferentlegaltestsandwithdifferingproceduresforgrantofpre-approvalorcomforttopartiesparticipatinginsuchinitiatives,thiscreatesasignificantobstacletocompaniesthataremembers,forexample,ofalliancesadoptingpositionsalignedwiththelatestUNRacetoZerocriteria.TheefficacyoftheUN’sefforts,andthatofothersimilarinitiatives,thereforedependonmembercompaniesbeingcomfortablethatthearrangementstheyengageindonotraisecompetitionlawconcerns,andalsothattheycanbeimplementedquicklywithoutthecostandcomplicationoflengthyengagementswithnumerouscompetitionauthorities.10Thepublishedguidancefromanumberofcompetitionauthoritieshasbeenclearthatsustainabilityagreementswhichdonotrestrictcompetitionshouldnotraiseconcerns(see,e.g.theEuropeanCommission’sdraftHorizontalGuidelines),buttherehasbeenmuchmorelimitedguidanceorprecedent—orevenagreementbetweenagencies—astohowthebenefitsofsustainabilityagreementsmightbeweighedagainstanyrestrictiveeffectsoncompetition(SeetheICCpaperrespondingtotheEuropeanCommission’sdraftguidelinesreferredtoandlinkedabove).Totheextentthatdifferentnationalapproachesstarttodevelop,thiswillincreaselegaluncertainty,andthereforedeterbusinessesfromengaginginvitalindustrysustainabilityinitiatives.Competitionagenciesandlawmakers:whatbusinessneedsfromyou1.Clearguidelinesaboutwhatarethesafeharboursandwhatlevelofreductionincompetition(ifany)agenciesarewillingtoaccept,infavourofagreenereconomy.10ReflectingthistherehavebenseveralinstanceswherememberfirmshavesaidtheymaywithdrawfromkeynetzeroinitiativessuchasGFANZ.November2022WhenChillingContributesToWarming132.Case-law:assessmentofindividualcaseswillallowbusinesstodrawthelinesofwhatispermittedandwhatwillbeconsideredunlawful.3.Convergenceofincentives:inordertodrivebusinessinonecleardirection,avoidingconflictinggoals.4.Anagreedapproachamongcompetitionauthoritiesglobally(e.g.throughtheICN).Inthecontextofeffortstomakedynamicchangestomarketbehaviours,thechillingeffectoftheneedtoengagewithmultipleregulatoryprocesses—involvingpotentiallysignificantdelaysandmaterialcostsforthecompaniesinvolved—shouldnotbeunderestimated.5.Shiftingtheburdenofproof:thereisaneedforinternationalrecognitionthatpro-sustainabilityinitiatives,suchasthosechampionedbytheUNundertheRacetoZero,shouldbepresumedtogeneratebenefitsoutweighinganyharmstocompetition,unlessitisprovennottobethecase.116.Pre-authorisationprocessesforagreementscapableofproducinganti-competitiveeffectsshouldbereconsidered,topreventgenuinesustainabilityeffortsneedingtogothroughpre-authorisationprocesses,whichcausematerialdelayandcost,anddetercollectiveaction.Attheveryleasttheyneedtobespeededupandsimplified.Inrelationtothislastpoint,thecreationofafull-functionjointventure,towhichmergercontrolrulesapplyandwherethereforescrutinyoftheauthoritywithinashortperiodoftimeandthenlegalcertaintycouldbeexpected,isnotalwaysbusiness’preferredoption.Theotherwiseshortstatutorytimelinecanbesubstantiallyincreasedthroughprotractedpre-notificationdiscussionsandstoppingoftheclock.Inthemeantime,theriskofbeingfoundtohave“jumpedthegun”meansthatpre-transactionplanningmaybecomeextremelydifficult.However,settingupajointventureorotherpartnershipwhichdoesnotqualifyformergercontroleverywhereisalsodifficult.Insuchcases,whetherornotitisjustified,thepartiesmaybeconcernedthattheauthoritieswillmakeanassumptionof“greenwashing”,andthattheywilltreatthecollaborationwithsuspiciondespiteitsclearaims.Inanyofthestructuresconsideredforacollaboration,thepartiesneedatsomepointtoenterintodetaileddiscussionsaboutwhattheycanachievetogether,andthisislikelytoincludetheexchangeofsomeamountofcommerciallyconfidentialinformation.Companieshavedifferentapproachestotheconceptof“cleanteams”andtothehandlingofinformation,andthiscansignificantlyslowdowntheprogressofaprojectandleadtounnecessarymisunderstandingsandfrictionsbetweentheparties.11TheAustriangovernmentpassedlegislationmakingiteasiertomeettheconditionsforanexemptionunderAustrianlawinthecaseofagreementswithdemonstrableecologicalbenefits.[KartellundWettbewerbsrechtsanderungsgesetz(KaWeRAG)2021,AustrianFederalLawGazetteI2021/176].November2022WhenChillingContributesToWarming14AnnexSome“do’s”and“don’ts”ofsustainabilityagreementsWesetoutbelowsomeexamplesofthesortofarrangementsorprovisionsthatarelikelytomakeanagreementbetweenbusinesses:•lesslikelytobecaughtbycompetitionlaw(orbenefitfromsomesortofexemption/safeharbourifprimafaciacaught);orwhich•aremorelikelytobecaught/belesslikelytobeexempt.Itishopedthatthiswillencourageandhelpbusinesseslookingtoengageinthefightagainstclimatechange,butalsohelpthosecompetitionauthoritieswithlessexperienceofthisissue.Whilewebrieflyidentifythoseaspectsofcooperationorotheragreementsthataremorelikelytobeproblematicwecallonthecompetitionauthoritiestohelpovercomethesewheretheirpotentialbenefitsinthefightagainstclimatechangeareverysignificant(forexampleeffortstophaseoutfossilfuels).ThisisonlymeanttoprovidesomehelpfulindicatorswhichseemlikelytoberelevantacrossmanyjurisdictionsaroundtheworldbasedontheexperienceofICCmembersandtheircompetitionlawyers,andontheindicationsgivensofarfromvariouscompetitionauthorities.Morespecificguidancehasbeengivenbyanumberofauthoritiesandthesecanbeapplieddirectlyinrelationtospecificjurisdictionsandareofindicativevalueelsewhere.12Threeimportantpointsshouldbenoted:•Somecompetitionauthoritiesmaytakeastricterormorelenient/flexibleapproach.•Thesematterscanbeverycontext/factspecific.Forexample,whileagreementstopassonanyextracostsresultingfrommoresustainableproduction/sourcingaregenerallylesslikelytobeacceptedandclearedbycompetitionauthorities,theremaybecircumstanceswherethismaybejustifiable.13•Whereitseemslikelythatanagreementiscaughtbycompetitionlaw(orthereisaseriousriskthatthatisthecase)anditisnotclearthattherelevantcriteriaaremet,butthepotentialgainsfortheclimateareenormous,wecalluponbusinessandthecompetitionauthoritiestoworktogethertofindasolutionthatisbothsatisfactoryfromacompetitionlawperspectiveandwhichenablesthesegainstoberealised.Exampleswouldincludethevariousinitiativestophaseoutsupportforfossilfuels.141512Seeforexample,theguidancereferredtoinfootnote9.Furthermore,althoughoftennotreflectedinguidanceassuch,othercompetitionauthorities(suchastheChineseAML)’practicesometimesshowawillingnesstotakeintoaccountsustainabilityrelaterdfactorssuchasenergyconservationandenvironmentalprotection-evenintheareaofmergercontrol.13See,forexample,theUKOFT’sSubmissiontoOECDRoundTableonSustainabilityandCompetition,2010.14Forexample,thevariousUNsponsorednetzeroinitiativesdiscussedabove.15Thispartisnotdividedneatlybetween(a)factorsrelevanttonotbeingcaughtbycompetitionlaw(e.g.theArticle101(1)TFEUprohibitiononanti-competitiveagreements)and(b)thoserelevanttotheagreementbenefittingfromanexemption(e.g.underArticle101(3)TFEU.Thisisforthreereasons:first,thesamefactorsmayberelevanttoboththesequestions;secondly,theindicationshereareintendedtobeofgeneralapplicationandnotlimitedtoEUlaw(ornationallawswiththeidenticalstructure);thirdly,evenunderEUlaw,wherebusinessesaregenerallyexpectedto“self-assess”theiragreements,itisofsecondaryimportancewhethertheagreementescapestheprohibitioncompletelyorwhetheritiscaughtbutexempt(whatmattersisthattheagreementislawful).November2022WhenChillingContributesToWarming15A.Some“do’s”—andcircumstancesandprovisionsmakingitlesslikelythatcompetitionlawisaproblem.1.Cooperationonsustainabilitybetweencompaniesthatarenotcompetitorswillrarelybeaproblem.Obviousexamplesareagreementswithfirmsupanddownthesupplychain(e.g.withsuppliersandcustomers)16oragreementswithsuppliersofcomplementaryproducts(egbetweenasupplierofbrakesandbrakepadstoreducethereleaseofharmfulparticlesintotheatmosphere).2.Sustainabilitycooperationagreementsbetweencompetitorsmayinmanyormostcircumstancesalsocomplywithcompetitionlawandthepointsthatfollowapplyinrelationtosuchagreementsbetweencompetitors.3.Itisimportanttoshowthatcooperationbetweencompetitorsisnecessaryinthesensethatwithoutsuchcooperationthesustainabilitybenefitswouldnotbeachieved:atall;atthenecessaryscale;orwithinareasonabletimescale:i.e.thereisanenvironmentalproblem17thatthecooperationaddressesinaneffectivemanner).Helpfulevidencecouldinclude:—pastfailurestomakethetransitiontothesustainableproducts/methodofproduction;18—salesofsustainableproductsbeingstuckatalowlevelformanyyears(e.g.lessthan10%)despitethecompetingeffortsofsupplierswhenthereisaneedtomovethewhole(ormostof)theindustryontoasustainablebasis;and—increasedcostslinkedtothesustainablealternative(atleastintheshortterm)whichcustomersseemunwillingtopayforthroughhigherprices(ortoaninsufficientextent):i.e.thereisalow“willingnesstopay”.4.Wherecompetitorscooperateinrelationtothingswhichareunlikelytohaveanysignificantimpactoncompetitionbetweenthem.Themostobviousexamplesarewherethecooperationdoesnothaveanysignificanteffectonany“parameterofcompetition”suchasprice,quantity,quality,choiceorinnovation.195.Anotherexampleiswherethecooperationdoesrelatetoaparameterofcompetition(e.g.cost/price)buttheimpactislikelytobeinsignificant:egcooperationonaninputsuchasarawmaterialorthewagesofworkersintheglobalsouththatrepresentlessthan(e.g.10%)thecostofproduction.6.Nomoreinformationisexchangedthannecessarytoachievethesustainabilityobjective.207.Cooperationshouldbelimitedtotheproducts/processeswherethesustainabilitybenefitsaretobegained:egifworkingtomakeoneinputmoresustainable(e.g.recycledplastic),thecooperationshouldnotextendtoanyotherinput(unlessthatcanbejustifiedeitheronitsownaccountorbecauseofitsinteractionwiththefirstinput).16Itwillstillbenecessarytocomplywithanylocalcompetitionrulescovering“vertical”agreements-suchasthoseapplyingintheEUandUK(butlessintheUS).17Andwhateconomistswouldcalla“marketfailure”.18Forexample,in2019LidlpulledbackfromitsunilateralcommitmenttosellingonlyfairtradebananasinGermanyandSwitzerlandaftertherewasinsufficientcustomersupportforthemove.[https://www.bananalink.org].19TheCommissiongivesseveralexamplesofthisinitsdrafthorizontalguideless(seeFN9atparas551to554.TheACMalsogivesexamplesinitsdraftguidelines(FN9atparas23to29).20Aswithotheraspectsofcooperation,thesortofsafeguardstypicallyincludedinacompetitioncomplianceprogrammeshouldbeobserved(egdataexchangedbeinghistoric;aggregated;and/orpassedthroughathirdparty).November2022WhenChillingContributesToWarming168.Similarly,cooperationshouldbelimitedtothecommercialaspectsnecessarytoachievethesustainabilitybenefits:e.g.ifitisagreedtoprocureaninputonlyonasustainablebasis(orevenjointpurchasing),thereshouldgenerallynotbeanyagreementastohowandtowhichextentanyincreasedcostispassedontocustomers.9.Restrictionsthatarepurely“ancillary”toasustainabilityagreement(thatitselfcomplieswithcompetitionlaw)willalsofalloutsidecompetitionlaw.2110.Agreementsbetweencompetitorstocomplywithcertainminimumsustainabilitystandardscanusuallybesetupsoasnottobecaughtbycompetitionlaw(e.g.onlytouseaninputmeetingcertainminimumobjectivecriteria).Guidanceonthishasbeengivenbyanumberofcompetitionauthoritiesovertheyears.Themostimportantconsiderationsarethatthestandardshouldbetransparent;allinterestedpartiesshouldbeabletoparticipateintheprocessfordevelopingthestandard;andcompetitorsshouldbefreetogobeyondthestandard.2211.Thegreaterthesustainabilitybenefits(andthebettertheycanbesubstantiated/evidenced),thelesslikelyanagreementwillbeproblematicundercompetitionlaw.23Thisismostobviouslyrelevanttothecircumstancesinwhichanagreementiscaughtbycompetitionlaw(e.g.Article101(1)TFEU)butmaymeritanexemption(e.g.underArticle101(3)).24Inpractice,however,itisalsolikelytoberelevanttowhetheranagreementiscaughtinthefirstplace(e.g.itisrelevanttotheneedtocooperatediscussedinPoint3above)andastowhetherthearrangementiseverlikelytobechallengedbyacompetitionauthority.12.Manysustainabilityagreementsconcernonlybuyingproductsmeetingcertainsustainabilitystandards(oronlybuyingfromsuppliersmeetingthesestandards).Exampleswouldbeonlybuyingfish,soyaortimbersourcedonasustainablebasis.Sucharrangementsarelesslikelytobeproblematicif:thecriteriafortheproductsorapprovedsuppliersareobjectiveandtransparent;theyaredrawnupbyanindependentthirdparty;or,ifdrawnupbymarketparticipantsallinterestedcompetitorsandsupplierscanparticipateintheprocess;andthereisafair,objective(andideallyindependent)systemtomonitorandreviewtheapprovedproducts/approvedsupplierlist.13.Themoreitcanbeshownthatthebenefitsofthecooperationagreementwillbepassedontotheconsumers,thegreaterthechancethattheagreementwillbenefitfromanexemption(andthelesslikelythatitwillbechallenged).2521See,forexample,para548(andSection1.2.6)oftheCommission’sdrafthorizontalGuidelinesreferredtoinFN9.22Seefurther,forexample,paras561to575oftheCommission’sDraftHorizontalGuidelines[fn9]and,inparticular,the“softsafeharbour”inpara572.23Thisshouldnotbemisunderstoodtomeanthatjustbecauseanagreementhaslaudableobjectivesandwillhavesignificantsustainabilitybenefitsthatitwillautomaticallybeexemptfromcompetitionlaw.Thereisno“getoutofjailfreecard”forsustainabilityagreements.24See,forexample,paras577to579oftheCommission’sdraftHorizontalGuidelines(FN9).25TheEuropeanCommissionidentifies3typesbenefitstoconsumers:“individualusebenefits”(egvegetablesgrownwithorganicfertilisersmaytastebetterand/orbehealthier);“individualnon-usevaluebenefits”(egconsumersappreciatingthatfurnituremadefromwoodgrownandharvestedsustainablyisbetterasitreducesde-forestationetc-notbecauseitisofahigherquality;and“collectivebenefits”(egagreementsreducingpollutionorthereleaseofgreenhousegases).[Seeparas588to609oftheCommission’sdraftHorizontalGuidelines{FN9].November2022WhenChillingContributesToWarming1714.Inpractice,anagreementisprobablymorelikelytobenefitfromanexemption(ornotbechallenged)ifthesustainabilitybenefitrelatestoclimatechangeorsomeotheraspectofenvironmentalsustainability.2615.Themoreitcanbeshownthattherewillstillbecompetitioninthemarket(s)affectedbythesustainabilityagreements,thelesslikelythearrangementsaretobechallengedandthemorelikelythattheagreementmaybenefitfromanexemption.27B.Some“don’ts”—circumstancesandprovisionsmakingitmorelikelythatcompetitionlawisaproblem.Mostofthecircumstancesandprovisionsthatmakeitmorelikelythatasustainabilityagreementiscaughtbycompetitionlaw;lesslikelytobenefitfromanexemption;andbemorelikelytobechallengedbycompetitionauthoritiesareessentiallytheobverseofthosediscussedatPointAabove.Inviewofthisonlysomeofthemoreimportantindicatorsarebrieflyflaggedhere:•Wherethefirmsconcernedhaveahighmarketshare.28•Wherethefirmsconcernedcouldachievethebenefitssoughtunilaterally(atasufficientscaleandinareasonabletimescale)•Wherethecooperationislikelytohaveasignificanteffectonanimportantparameterofcompetitionsuchasprice.•Wherecooperationspillsoverintootherareasorotheraspectsofcompetitionbetweenthebusinessesconcerned.•Wherethereislessevidenceastohowconsumerswillbenefitfromthecooperation.Noneofthesearenecessarilyabartocooperationbetweencompanies,buttheyareallfactorsthatmeanthespecificcontextofthecooperationwillneedtobelookedatcarefullyandadvisesoughtinrelationtokeyjurisdictionslikelytoberelevanttotheproject.26AlthoughtheEuropeanCommission’sDraftGuidelinesgiveaverybroaddefinitionof“sustainability”(para543),inpracticemuchofthefocusisonenvironmentalsustainabilityinthelightoftheEuropeanGreenDeal.TheACMhassingledout“environmental-damage”agreementsformorefavourabletreatmentunderDutchlaw(seeparas45to52)oftheDutchdraftGuidelines[FN9].SeealsothechangetoAustrianlawreferredtoinfootnote11.27Indeed,underEU(andmanynationallaws)thecontinuanceofsomedegreeofcompetitionisapre-conditionforanexemption(SeeArticle101(3)andparas610to614ofthedraftHorizontalGuidelines[FN9].28Althoughinsomeinstancesahighmarketsharemaybeessential(andjustified)ifthenecessarychangesaretoberealised-inparticularwherefreeridingisarisk(apointrecognisedbytheEuropeanCommissionatpara575ofitsdraftguidelines(citedinfootnote9).November2022WhenChillingContributesToWarming18ICCTaskforceonCompetitionPolicyandSustainabilityICCArgentinaPabloCortinez,Professor,ArgentineChamberOfCommerceAndServicesICCBoliviaPolinaChtchelok,Partner,ESPCSCorporate&EnvironmentalAdvisorsClaudiaAndreaLopezMonterrey,LegalRepresentative,ESPCSCorporate&EnvironmentalAdvisorsICCBrazilPaolaPugliese,Partner,DemarestICCChileElżbietaBuczkowska,Counsel,BakerMckenzieNatalieFlores,Lawyer,BakerMckenzieICCChinaXiaofengCheng,Lawyer,Jingtian&GongchengLawFirmZhisongDeng,SeniorPartner,DentonsBeijingOfficeYanMeng,ComplianceManager.,JASolarTechnologyCo.,Ltd.ICCColombiaCarlosEdwinCamarillo,Dean,Engineering&Science,UniversidadÁreaAndinaJorgeAlexanderCortés,Professor,InstituciónUniversitariaColegiosDeColombiaCarolinaEspitia,DirectoroftheEnvironmentalEngineeringProgram,CentralUniversityDoraCeciliaGómez,DirectorofCooperation,UniversidadLaGranColombiaEdwinGonzález,Dean,EnvironmentalEngineering,AntonioNariñoUniversityIngridGuete,Adviser,CCBEmmanuelaLeal,BusinessInternational,GlobalInternationalP&ROfColombiaJuanDavidMorales,SustainabilityManager,ConsejoEmpresarialColombianoParaDesarrolloSostenibleAdolfoNaranjo,Professor,CentralUniversityJuanCamiloPinzón,OperationsManager,CorporaciónPuntoAzulAngelaMaríaPlata,DirectoroftheMasterinMitigationandAdaptationtoClimateChange,UniversidadSergioArboledaMaríaEugeniaRinaudo,SustainabilityCoordinator,EanUniversityAnaPatriciaRozo,DirectoroftheBiologyprogram,CentralUniversityICCEcuadorDanielCastelo,Director,BustamanteFabaraJuanAndrésGortaire,Partner,HekaLawFirmICCFranceNicoleKar,Partner,LinklatersPatrickThieffry,MemberofParis&NewYorkBars,IndependentArbitratorNovember2022WhenChillingContributesToWarming19ICCGermanyJohannBrück,Lawyer,HermannsWagnerBrück—RechtsanwälteICCItalyPaoloChiricozzi,FunctionEurope,HeadofAntitrustandStateAid,EnelSPAElisaGeraci,Corporate,M&A,Finance,Sustainability,FreeblyBenefitLawFirmPaoloRotelli,Engineer,ConsorzioPoloTecnologicoMagonaICCMexicoCarlosMena,Partner,Creel,García-Cuellar,AizaYEnriquez,S.C.AlejandroMendiolaDíaz,Partner,Nader,HayauxYGoebel,S.C.ICCNetherlandsGerritOosterhuis,Partner,HouthoffICCParaguayAntonellaSalgueiro,Partner,ICCParaguayICCSpainMónicaSánchezSoliva,SeniorCompetitionCounsel,TelefonicaSaBeatrizSanzFernández-Vega,DirectorofCompetition,TelefonicaS.A.ICCSwedenSarahHoskins,HeadOfSustainability,MannheimerSwartlingPerKarlsson,FoundingPartner,AdvokatfirmanPerKarlsson&CoAbKarinRoberts,Lawyer,DelphiIanRose,VicePresident,Compliance,VolvoTrucksICCSwitzerlandMarcelineTournier,GlobalHeadofAntitrust,NestléICCSyrianArabRepublicAbdAlfatahKahale,GeneralManager,KahaleTechnicalGroupICCTurkeyGönençGürkaynak,Partner,EligGürkaynakAttorneys-At-LawKağanUçar,Counsel,EligGürkaynakAttorneys-At-LawICCUnitedKingdomGeorginaBeasley,SecretaryGeneral,NetZeroLawyersAllianceMauritsDolmans,Partner,ClearyGottliebShahaEl-Sheemy,SeniorAssociate,NortonRoseFulbrightLlpMorganFrontczak,SeniorAntitrustCounsel,ShellInternationalPetroleumCoLtdIanGiles,HeadofCompetition,Partner,NortonRoseFulbrightLLPSimonHolmes,Judge,CompetitionAppealTribunalWessenJazrawi,Partner,HausfeldSiobhanKahmann,OfCounsel,CMSCameronMckennaNabarroOlswangLLPAlexisMunro,Climate&EnvironmentManager,NatwestAnneRiley,Lawyer,AnneRiley—IndependentMariScimemi,Director,GlobalCompetitionTeam,BarclaysICCUnitedStatesArjunChandran,AntitrustCounsel,DiageoSandyWalker,Partner,DentonsUSLLPNovember2022WhenChillingContributesToWarming20AbouttheInternationalChamberofCommerce(ICC)TheInternationalChamberofCommerce(ICC)istheinstitutionalrepresentativeofmorethan45millioncompaniesinover130countries.ICC’scoremissionistomakebusinessworkforeveryone,everyday,everywhere.Throughauniquemixofadvocacy,solutionsandstandardsetting,wepromoteinternationaltrade,responsiblebusinessconductandaglobalapproachtoregulation,inadditiontoprovidingmarket-leadingdisputeresolutionservices.Ourmembersincludemanyoftheworld’sleadingcompanies,SMEs,businessassociationsandlocalchambersofcommerce.33-43avenueduPrésidentWilson,75116Paris,FranceT+33(0)149532828Eicc@iccwbo.orgwww.iccwbo.org@iccwboNovember2022WhenChillingContributesToWarming21
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