Companies often point out that there is a tension between sustainability and antitrust/competition. They argue that European Union (EU) – and EU Member States’ national – competition rules hamper competitor cooperation and innovation regarding sustainability because such rules prohibit arrangements that companies believe are necessary.
On June 1, 2023, the European Commission (EC) adopted new Horizontal Block Exemption Regulations (HBERs) and accompanying Horizontal Guidelines (Guidelines). The HBERs exempt certain research and development and specialization agreements from the EU cartel prohibition provision (Article 101(1) of the Treaty on the Functioning of the EU (TFEU)). The idea being that such agreements can be considered more beneficial than harmful to competition. The HBERs and the Guidelines are expected to enter into force in July 2023.
For the first time, the EC has included guidance on “sustainability agreements”[1] on a European level.[2] A new chapter of the Guidelines provides a framework for companies to self-assess the compatibility of their joint sustainability initiatives with the EU competition rules. As such, the EC clarifies that EU competition rules are not intended to prohibit agreements between competitors that want to pursue sustainability goals. In this regard, the EC has aligned its definition of sustainability objectives with the UN Sustainable Development Goals – and emphasized the importance of sustainable development as one of the EU’s main objectives.
The Guidelines provide “soft safe harbor” criteria. If a sustainability agreement fulfills these six cumulative criteria, such agreement is unlikely to restrict competition. These criteria include, inter alia, transparency and efficiency gains requirements. Only agreements which restrict competition by object or have an appreciable actual or likely negative effect on competition raise competition concerns. However, agreements that do not meet the soft safe harbor requirements may – potentially – still be individually exempted on a case-by-case basis if the four conditions of Article 101(3) TFEU are fulfilled.
The Guidelines additionally note that companies wishing to enter into a sustainability agreement may request informal guidance from the EC to ensure compliance with EU competition rules. Previously, the EC’s practice was to limit the circumstances under which it would provide informal guidance, but it is committed to providing informal guidance regarding novel or unresolved questions on individual sustainability agreements.
Following the adoption by the EC, EU Member State national competition authorities that have adopted their own prior guidance on sustainability agreements – such as the Dutch Competition Authority (ACM) – will have to bring it in line with the EC legal instruments. The ACM expects to publish its revised draft guidelines after the summer.
[1] A “sustainability agreement” in this regard is any type of horizontal cooperation agreement between companies that pursues a sustainability objective regardless of the form of the cooperation.
[2] Among other things, the EC has also eased the EU competition rules for some joint buying alliances and data sharing arrangements.