Making competition law part of the solution to the climate challenge

Issued on the eve of the fifth anniversary of the landmark Paris Agreement, the paper highlights how competition law – and, more specifically, the fear of unnecessarily restrictive antitrust enforcement – currently inhibits companies from working together to reduce their carbon footprints.

There are signs that many businesses are eager to partner on sustainability efforts – recognising that  co-operation is vital to achieve meaningful scale in addressing climate change and other environmental challenges. However, a growing body of evidence suggests that perceived competition law risks ultimately deter them from doing so.

Commenting on the release of the paper, Simon Holmes – a member of the UK Competition Appeal Tribunal and one of the lead authors of the ICC paper – said:

“Companies want to do more, but the fear of unnecessarily restrictive or unpredictable competition law enforcement can discourage them from reaching their sustainability goals. Competition policy cannot solve everything, but it can play an important role in helping business be cleaner, greener and more socially responsible.”

The paper places a particular focus on how changes to the application of competition law in the European Union could help speed attainment of the bloc’s ambitious new climate and environmental targets under its “Green Deal” programme. In this context, ICC suggests that issuing clear guidance within the EU on enabling  co-operation between businesses within the region could act as a powerful tool to encourage other countries to the same, and thus,  promote a global level playing field in the absence of comparable policies in third countries.

To curb the potentially chilling effect of competition law on corporate sustainability partnerships, ICC encourages all competition authorities to:

• adopt clear, practical and consistent guidance on the types of cooperation arrangement which do not typically give rise to concerns under competition laws;
• adapt their procedures to be ready to provide timely advice – for example, in the form of “comfort letters” – or individual decisions in relation to arrangements where businesses require a greater degree of legal certainty in order to proceed; and
• set out clear enforcement priorities with respect to arrangements designed to meet sustainability objectives.

The paper also emphasises the vital role of governments and international bodies in facilitating a common understanding of the role competition law can play in tackling climate change and other environmental threats such as widespread nature loss.

The working paper on “Competition Policy and Environmental Sustainability” was featured at an OECD Roundtable on Sustainability and Competition on 1 December 2020 – and forms an integral part of ICC’s global agenda to accelerate climate action as part of a “resilient rebuild” from the Covid-19 pandemic.

To download the paper, please click here.