ESG And Antitrust: The Austrian Rules Exempting Environmental Collaborations Explained

• Jurisdiction: European Union,Austria
• Law Firm: Arnold & Porter
• Subject Matter: Antitrust/Competition Law, Environment, Antitrust, EU Competition , Cartels, Monopolies, Environmental Law, Climate Change
• Author: Mr Niels Christian Ersb'll and Lazarinka Naydenova
• Published date: 17 May 2023

In September 2022, the Austrian Federal Competition Authority (FCA) published its Guidelines on sustainability cooperation agreements between companies (Guidelines). The Guidelines explain how to assess these agreements under the sustainability exemption, which was introduced a year earlier.

Background

Section 2(1) of the Austrian Cartel Act is the equivalent of Article 101(3) TFEU. It establishes an exemption from the ban on agreements that restrict competition, provided certain cumulative conditions are met.

In September 2021, Section 2(1) was amended, expanding the scope in favor of certain sustainability agreements.

Before the revision, agreements that lead to efficiencies in the production or distribution of goods or "to promote technical or economic progress" could be exempted under certain conditions, including the requirement that consumers receive a fair share of the resulting benefits.

The amended Section 2(1) establishes a presumption that an agreement that "significantly contributes to an ecologically sustainable and climate neutral economy" will allow a fair share of those benefit to accrue to consumers.

Scope of the exemption and the Guidelines

As discussed below, the amendment to Section 2(1) and the accompanying Guidelines are an effort by the FCA to show the way in an area where significant discussions remain regarding application of EU competition rules to sustainability agreements.

Acknowledging this, the presumption introduced in Section 2(1) is applicable only to agreements that are focused on Austria and that do not affect trade between EU Member States.

Further, the new construct is limited to collaboration agreements with an environmental benefit. It does not extend to other aspects of ESG collaboration, such as social and governance.

As detailed by the Guidelines, the "exemption is limited to specific types of sustainability goals, namely a contribution to ecological sustainability (particularly including transition to a circular economy, the prevention and reduction of environmental damage, the protection and restoration of biodiversity and ecosystems, and the sustainable use and protection of water resources) or a climate-neutral economy."

Conditions for application

Where a sustainability agreement with environmental benefits, as described above, entails a restriction of competition, it will qualify for exemption under Section 2(1) if the following five conditions are satisfied:

1. The agreement leads to efficiency gains in the...