Sustainability And Antitrust ' What Companies Need To Know About Sustainability Collaborations In Europe

• Published date: 02 March 2022
• Subject Matter: Corporate/Commercial Law, Anti-trust/Competition Law, Environment, Corporate and Company Law, Antitrust, EU Competition , Environmental Law, Clean Air / Pollution
• Law Firm: Morrison & Foerster LLP
• Author: Mr Jens Hackl

Becoming more sustainable is an epic task. Not only for governments, but for society as a whole. Companies notice this as customers are increasingly demanding sustainable products. To remain competitive, it is important for companies to take an active role in fostering sustainability initiatives. Such initiatives often require joining forces and include an alignment on certain competitive parameters, like on the use of certain sustainable production standards to reduce environmental pollution. But alignment on competitive parameters brings EU antitrust laws to the table. This client alert describes what all companies need to know to avoid a breach of EU antitrust laws when entering into sustainability collaborations.

Sustainability - The need for private collaborations

Sustainability is one of the key policy priorities for the next few decades. In Europe, the EU Commission ("EC") announced the "Green Deal" in order to become climate neutral by 2050.¹ But sustainability is more than climate neutrality or environmental protection in general; it also encompasses environmental, social and governance aims, inter alia, public health, animal welfare, biodiversity, fair trade, fair working conditions, and human rights.² While companies could independently promote ambitious sustainability initiatives going beyond what is legally required, they often fear competitive disadvantages. Such competitive disadvantages particularly arise due to high costs associated with such initiatives and the related price increases for customers ("first-mover disadvantage"). Sustainability initiatives thus often require joining forces and collaborating to achieve a critical participating mass. Collaborations aiming to achieve sustainability benefits typically include an alignment between companies on certain competitive parameters, such as the use of certain sustainable products or production standards to reduce environmental pollution. Due to such alignments on competitive parameters, collaborations promoting sustainability are subject to the EU's prohibition on anticompetitive agreements (Art. 101 TFEU), which needs to be considered carefully due to the associated risks (such as fines, or follow-up damage claims).

No clear guidance at EU level - Mixed signals from the EC

Companies generally need to conduct a "self-assessment" with respect to antitrust compliance of their respective collaborations. To support companies in this assessment, the EC provided guidance on several...