Competition Law and Sustainability: Time to Take a Long, Hard Look in the Mirror
Image Credit: Master Wen via Unsplash
14th February 2020
Increasingly, the competition law community has begun to examine the role that competition law could, and should, play in the creation of a sustainable society. ‘In a world marked by financial instability, limited growth, rising inequality, deteriorating environment, growing corporate consolidation, and political turmoil’1, a growing body of literature is calling for ‘the dominant competition law paradigm’2 to be shifted in new directions.
The question of sustainability, and how it intersects with competition law was discussed at a recent European Union conference, with the aim of understanding how these ‘two worlds’ could be brought together for the purpose of enabling a fairer economy ‘within the limits of the planet.’ Particular focus was given to how ‘competition policy can give weight to sustainability values’.3 One challenge that exists when addressing the ‘tension between European competition law and sustainability-focused agreements’4 is the disagreement as to the ‘proper’ goals of competition policy. The consumer welfare standard, considered by many to be the ‘ultimate objective’ of European competition law5, has become one of the principal targets for debate.
One of the more cited criticisms of the consumer welfare standard in the context of sustainability concerns is that it makes it ‘difficult to give non-economic interests’ due consideration.6 Indeed, under the narrow approach preferred by the European Commission, agreements that lead to increased prices, limitation of output (whether by way of quantity, quality or range), or a limitation of innovation, are prohibited, whilst ‘[o]ther interests are assumed to lie outside its scope.’7 In practice this has meant that in some cases, instead of competition law operating as part of the solution, it indirectly becomes part of the problem.8
The collaboration of businesses in pursuit of sustainability goals can have real world benefits, both to immediate consumers and future generations, and whilst some have been approved, famously (or infamously) others have not.9 More importantly however, even more have probably not even been pursued. A lack of a clear policy direction from authorities and indeed the lack of a definitive answer to what consumer welfare means in the context of competition law enforcement in general, and in relation to sustainability initiatives in particular, have no doubt resulted in an overly risk-averse approach from business, predicated upon ‘advice that is unduly conservative’.10
The severity of the ongoing sustainability challenges means that time has come to address the reality that ‘competition laws have generally allowed and contributed to the creation of markets based on cheap products, disregarding their environmental and social sustainability’.11 Short-term economic effects, together with long-term sustainability benefits, must find a way to co-exist if more inclusive, sustainable development is to be achieved. In order for that to happen, the competition law community must be open to a serious re-evaluation of some of its more cherished principles.
Bev Williamson has a PhD in Competition Law, and having previously worked at the Competition Commission, now works as a competition compliance consultant. She is a member of the Inclusive Competition Forum think tank.