The European Commission has eased antitrust guidelines for companies joining forces to tackle climate change in response to concerns that a cartel-like green coalition is driving up energy prices.
U.S. Republican politicians have accused the push to phase out fossil fuels as violating antitrust rules, putting pressure on competition authorities around the world to take a stand.
In a major setback for the financial sector climate coalition known as the Glasgow Net Zero Financial Alliance, big insurers pulled out of the Net Zero Insurance Alliance (NZIA) last week over fears of being accused of breaching competition law.
The European Commission says that from 1 July it will create a “Safe Harbor” for prosecution For groups of companies that enter into “standardization agreements” – for example, boycotting plastics, fossil fuels or steel from coal-fired power plants – even if that drives up prices.
Under the guidelines, companies must not capture more than one-fifth of a given market, exchange commercially sensitive information unless necessary, or prevent other companies from joining the agreement.
Published on Thursday, the guidelines are not legally binding but are intended to help the European Commission, the European Court of Justice and national regulators interpret EU treaty bans on cartels.
The committee said its new guidelines were designed to help companies assess “legitimate” and “genuine” sustainability collaborations, rather than “cartels disguised as ‘sustainable’ cloaks'”.
The new guidelines also offer the possibility of exemptions for companies that band together to comply with the Paris climate agreement to limit global warming to 1.5C above pre-industrial levels.
According to the guidelines, initiatives whose sole aim is to meet the requirements of international treaties are “unlikely to raise competition concerns” and would fall entirely outside the scope of the EU’s competition regime.
The Glasgow Net Zero Financial Alliance said it welcomed the EU’s decision and encouraged other jurisdictions to “follow suit”.
The disproportionate impact of rising temperatures on developing countries has tested the limits of the modern competition system, legal experts say. What they fail to recognize is that some consumers are willing to pay higher prices for “ethical” products whose positive impact will only be felt by people in other continents or by future generations.
ICC secretary general John Denton told the Financial Times that the new EU rules were “certainly very positive”.
He added that the UK’s competition watchdog had gone even “bolder” with “the safeguards needed to encourage more businesses to work with competitors to accelerate climate action”.
Britain’s Competition and Markets Authority published a draft proposal in February to give the green light to climate collaborations as long as they have a substantial and demonstrable impact on climate change without any explicit restrictions on market share.The “absolute scale of risk” climate change represents and the “level of public concern” surrounding it demonstrates A more “loose” approach For this type of agreement, it said.
The EU’s new rules are more subtle, recognizing “collective interests” and “non-use values” that can only justify anticompetitive agreements in certain circumstances. “Consumers may choose a particular washing liquid not because it cleans better, but because it pollutes the water less,” they cite as an example.
Speaking on his own behalf, Maurits Dolmans, an antitrust expert and partner at law firm Cleary Gottlieb Steen & Hamilton, said the EU had “missed a policy as ambitious as the UK or the Netherlands”. Chance”. “The glass is a little more than half full, but not as much as it is full.”
A collective commitment to net-zero emissions may now be “good from the EU’s point of view”. But Dolmans added that given that invoking antitrust in the US was about “politics, not law”, it would do little to protect groups like NZIA.
The Netherlands said last year it would ratify sustainable development agreements aimed at limiting environmental harm. But, unlike the UK, it is constrained by positions held by the entire EU bloc. The head of the Dutch Consumer and Markets Authority has previously told the Financial Times that if companies cannot cooperate on climate issues, they should challenge the European Commission at the European Court of Justice in Luxembourg.
The group was stung in 2014 by a cartel of Europe’s largest truckmakers, which banded together to fix prices and delay the introduction of new emissions technology.
“The natural caution of competition authorities is something you have to overcome: if they say anything more permissive, it can be abused,” said Simon Holmes, a member of the UK’s Competition Appeals Tribunal and visiting law professor at Oxford University.
climate capital
Where climate change meets business, markets and politics. Explore the FT’s coverage here.
Are you curious about the FT’s commitment to environmental sustainability? Learn more about our science-based goals here