Sustainability solutions sussed out soon

Draft revised horizontal rules

On 1 March 2022, the European Commission released draft Horizontal Block Exemption Regulations on Research & Development and Specialisation agreements, together with draft revised Horizontal Guidelines. Stakeholders can comment on the drafts until 26 April 2022; with finalised rules entering into force on 1 January 2023.

The draft Horizontal Guidelines include a specific section on sustainability agreements, aimed to provide more clarity for companies in pursuit of green initiatives. According to this new section, sustainability agreements generally only require self-assessment under the competition rules as soon as they affect “parameters of competition, such as price, quantity, quality, choice or innovation”. If one or more of these parameters are affected, sustainability arrangements may still qualify for an individual exemption under Article 101(3) TFEU if the resulting sustainability benefits generate sufficient efficiencies to outweigh negative effects on consumers. 

The draft Horizontal Guidelines stick to the earlier Policy Brief’s view that associated benefits for society as a whole (for instance, through collaborations to cut pollution) can play a role in this assessment, but only in so far as a these (out-of-market) ‘collective’ benefits are significant enough to compensate (in-market) consumers for the harm suffered (see our October 2021 newsletter). For these collective benefits to be taken into account, the parties should be able to:

• clearly describe the claimed benefits and provide proof of their (likely) occurrence;
• clearly define the beneficiaries;
• demonstrate that the in-market consumers substantially overlap with the beneficiaries or are part of them, and 
• demonstrate what part of the collective benefits accrue to the in-market consumers.

ACM’s first sustainability precedents 

Whereas in-market consumers therefore remain the main focal point in the draft Horizontal Guidelines, the ACM promotes a less ‘conservative’ approach in its draft sustainability guidelines (see our September 2020 newsletter and the ACM’s legal memo on fair share for consumers in a sustainability context). The ACM recently used these draft guidelines for its assessment of two sustainability collaborations in the energy sector. 

The joint purchasing of sustainable energy from a single wind farm by members of VEMW, an association for business energy and water users, was considered to raise no competition concerns: sufficient opportunities remained for companies and wind farms to buy and sell sustainable energy elsewhere. Furthermore, an initiative by regional grid operators to use a fixed purchase price per tonne of CO2 in their calculation models to reduce CO2 emissions was found to fall under the national equivalent of the individual exemption of Article 101(3) TFEU. According to the ACM, the sustainability benefits emanating from the initiative outweigh the possible costs for users. In fact, all energy users will benefit from the initiative if CO2 emissions are reduced.

Conclusion

The draft revised Horizontal Guidelines and the ACM’s informal approvals provide more clarity on the antitrust leeway for sustainability collaborations. However, since it is unclear whether both competition authorities see eye to eye on all elements of the antitrust assessment, there may still be a patchwork enforcement pattern for green initiatives across the EU. Companies have until 26 April 2022 to call for more room to manoeuvre in the Horizontal Guidelines. 

This article was published in the Competition Newsletter of March 2022. Other articles in this newsletter:

• Duality on dual distribution resolved?
• Pfizer may be off the hook, but ACM pharma supervision continues
• Employers beware: final warning for “job cartels”