The European Green Deal and EU competition law: a sustainable interpretation of Article 101(3) TFEU

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The European Green Deal and EU competition law:

a sustainable interpretation of Article 101(3) TFEU

MASTER THESIS

Author: E.J.A. Berger

eline.berger@gmail.com

Student ID: 12938106

EU Competition Law and Regulation Track

Supervisor: mw. dr. M. (Maria) Weimer

Date: 24th of July 2020

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Abstract

The European Green Deal provides a good illustration of the greening of the current political climate in Europe. Furthermore, promoting sustainable development is at the core of the EU Treaties. However, the current interpretations of EU competition law provide insufficient space for sustainability initiatives to flourish. The cartel prohibition of Article 101 TFEU, and the fines resulting from it, lead to a hesitant attitude in the business community regarding participation in sustainability initiatives. This obstacle to more sustainable development in the EU needs to be addressed.

The thesis therefore examines whether there is an interpretation of Article 101(3) TFEU which allows sustainability initiatives to be compatible with Article 101 TFEU. To answer this question, the objectives of EU competition law and the sustainability framework in the EU are assessed as they constitute important guidance for how to interpret the competition law provisions. Furthermore, an assessment is made of why sustainability initiatives are liable to infringe Article 101(1) TFEU. The core of the research constitutes a discussion of how Article 101(3) has been interpreted previously by the Commission, CJEU and NCAs. A specific study of cases before the Dutch NCA has been included as it has provided detailed decisions on why certain sustainability initiatives could not be exempted pursuant to Article 101(3) TFEU.

The research shows that there is an interpretation of the conditions in Article 101(3) TFEU that allows sustainability initiatives to be compatible with Article 101 TFEU. The more sustainable interpretation of Article 101(3) TFEU is supported by the fluidity of competition law objectives, the integration principle in Article 11 TFEU and the CJEU’s holistic approach to interpreting Treaty provisions. The thesis argues that this interpretation of Article 101(3) TFEU should include a wider consumer concept and a more central role for the proportionality test.

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1 Introduction

Climate change is a topic that divides politicians on a global, continental and national level. It is challenging, inter alia, because it affects the next generation more than our own and requires action on a global level. Whilst some world leaders still refuse to acknowledge the importance of addressing climate change, it is a challenge the EU has recognized and accepted.1 The new European Commission has introduced “The European Green Deal” in its first 100 days, striving for a natural and healthy continent. The deal aims to: “transform the EU into a fair and prosperous society, with a modern, resource-efficient and competitive economy where there are no net emissions of greenhouse gases in 2050 and where economic growth is decoupled from resource use.” The introduction of this deal depicts the EU’s intention to

become a global leader in the field of climate action, in part, by setting a credible example.2

In order to achieve the aims of the EGD, the Commission calls upon the private sector to aid in making the economy more sustainable.3 However, private sustainability initiatives have not always been compatible with EU law as they often concern agreements between competitors.4 They are liable to fall within the ambit of the cartel prohibition in article 101 TFEU.5 This article prohibits cooperation and/or agreements between undertakings that have an anti-competitive effect. Sustainability initiatives often raise prices to achieve their goals, such as goals related to environmental protection, and may therefore lead to anti-competitive behaviour. This can result in the prohibition of the agreement by EU competition law.

An example of such a prohibition is the case concerning the Dutch Energy Accord, which aimed at making energy supply in the Netherlands more sustainable.6 One of the elements was an agreement between energy companies to close down five coal power plants. The Dutch Competition Authority (“ACM”) considered it to be an anti-competitive agreement, falling within the scope of Article 101. Although the agreement produced significant environmental benefits, in the ACM’s view these were not sufficient to offset the price increase for the Dutch energy consumer which would follow the agreement.

1_{Frans Timmermans, ‘Check against delivery’ (Speech at Conference on the first European Climate Law,} Brussels, 28 January 2020) <https://ec.europa.eu/commission/presscorner/detail/en/SPEECH_20_144> 2_Ibid

3_Ibid

4_{See the examples of Chicken of Tomorrow (n 86) and Energy Accord (n 6)}

5_{Consolidated version of the Treaty on the Functioning of the European Union [2012] OJ C326/47 (hereinafter:} “TFEU”), article 101 (hereinafter: “Article 101”)

6_{Autoriteit Consument & Markt, ‘ACM Analysis of closing down 5 coal power plants as part of SER}

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These analyses and the general liability of sustainability initiatives to infringe Article 101 have led to hesitancy in the business community in undertaking such initiatives. As an example, an initiative aimed at preventing the depletion of fish stock was almost obstructed due to fears of competition law risks.7 Similarly, an initiative by the Fair Wear Foundation to ensure minimum wages for employees in clothing factories, allowing employees to meet their basic needs, was at risk of being derailed due to fears that it could be seen as a buying cartel.8 Reluctance from businesses to participate in sustainability initiatives is very much at odds with the Commission’s goal to create a more sustainable economy. This is exacerbated by industries being best informed on how to improve the sustainability of their production processes. Consequently, it is essential that sustainability initiatives can be reconciled with EU competition law.

Sustainability initiatives within this research paper are defined as private initiatives that contribute to sustainable development. Similarly, where a reference is made to sustainability objectives, this entails objectives regarding sustainable development. Sustainable development itself has been defined as ‘development that meets the needs of the present without

compromising the ability of future generations to meet their own needs’.9 This encompasses a wide variety of activities and perhaps most importantly those aimed at environmental protection. Contributing to sustainable development has also been established by the EU in the Treaties as a core objective.10

In light of pursuing that objective, this research will centre around the following question: “Is there an interpretation of Article 101(3) TFEU that allows for sustainability initiatives to

be compatible with Article 101 TFEU. And if there is not, what are the other possibilities for reconciling sustainability initiatives with Article 101 TFEU?”

In order to address that question, Chapter 2 will first set out how sustainability initiatives are liable to infringe EU competition law and which objectives EU competition law intends to achieve. It will show that the objectives pursued by competition law in the eyes of the Court of Justice of the European Union (“CJEU”), Commission and National Competition Authorities (“NCAs”) are quite divergent. Chapter 3 will then elaborate on the sustainability framework, i.e. the relevant EU legal provisions regarding sustainable development. Most importantly, this

7_{Simon Holmes, ‘Climate change, sustainability, and competition law’ (2020) JAE 1, 4} 8_Ibid

9_{World Commission on Environment and Development Our Common Future (OUP 1987), 43}

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chapter will address the integration principle of Article 11 TFEU and discuss how this principle requires a more ‘sustainable’ interpretation of EU competition law.

Chapters 4 will address Article 101(1) and includes a discussion of how sustainability initiatives are liable to infringe Article 101(1) and the possibilities that exist for falling outside the scope of the prohibition. Chapter 5 will follow with a detailed examination of the four conditions of Article 101(3) which need to be fulfilled for an agreement to be exempted from the prohibition of Article 101(1). The chapter will elaborate on the narrow and broad interpretations, following from divergent objectives of competition law, and argue that the CJEU’s case law and an application of Article 11 TFEU allow for a broader interpretation of the conditions than the one currently adopted.

After this examination of the conditions in Article 101(3), Chapter 6 will address the limitations that need to be accounted for in a broad interpretation and how the objectives of competition law ought to change given the current political climate. Henceforth it will provide an answer to the research question by showing that there is an interpretation of Article 101(3) that allows for sustainability initiatives to be compatible with Article 101. Chapter 6 will conclude a broader interpretation of Article 101(3) is possible. This is argued based on the flexibility of EU competition law goals, the integration principle and the Court’s constitutional approach to interpreting Article 101(3).

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2 Competition law objectives

This chapter will provide a more in depth examination of the objectives pursued by EU competition law in general. That will include the Commission’s enforcement priorities, the enforcement by NCAs and finally, arguably most importantly, the case law of the CJEU. 2.1 The Commission’s enforcement

Over time and in different jurisdictions there have been a number of objectives that have guided competition policy.11 Within the EU, there has not been one clear historical goal of competition policy. The objectives can rather be seen as an expression of the current political views and aims of our society.12_{Given that the objectives are not set in stone, it is useful to}

reflect on what has driven EU competition policy so far and the changes that have occurred. A significant change in the objectives that were pursued occurred when the enforcement of EU competition law was decentralized. In light of that change, the eras before and after decentralization will be discussed separately.

2.1.1 Centralized era of enforcement

Going back to the beginning of EU competition policy, many scholars present the view that the policy was strongly influenced by the Freiburg Ordoliberal School.13 This school maintained the view that economically optimal outcomes would be achieved through the market mechanism. The other goal in the early years was quite unique for EU competition policy in

comparison with other competition regimes, namely the establishment of the internal market. In conjunction with the objective of economic freedom, this shaped the beginning of EU competition policy.14 Furthermore, the Commission took a number of different policy considerations into account when assessing agreements under Article 101.15 Therefore, in the

11_{Massimo Motta, Competition Policy (12}th_{edn, CUP 2009) 17-30.}

12_{Richard Whish and David Bailey, Competition Law (9}th_{edn, OUP 2018), 19}

13_{Anna Gerbrandy, ‘Rethinking Competition Law within the European Economic Constitution’ (2019) 57 JCMS} 127, Dzmitry Bartalevich, ‘The influence of the Chicago School on the Commission's guidelines, notices and

block exemption regulations in EU competition policy’ (2016) 54 JCMS 267 and Frédéric Marty, ‘Towards an Economics of Convention-Based Approach of the European Competition Policy’ (2015) 40. Note however that

other scholars have argued that the influence is exaggerated, for example Yannis Karagiannis ‘The origins of

European competition policy: redistributive versus ideational explanations’ (2013) 20 Journal of European

Public Policy 777

14_{Kamiel Mortelmans, ‘Towards Convergence in the Application of the Rules on Free Movement and on}

Competition?’ (2001) 38 CMLR 613

15_{Inter alia industrial and environmental policy considerations, see Ford/Volkswagen (IV/33.814) Commission} Decision 93/49/EEC [1993] OJ L 20/14; Exxon/Shell (IV/33.640) Commission Decision 94/322/EC [1994], OJ L 144/20; Philips-Osram (IV/34.252) Commission Decision 94/986/EC [1994] OJ L 378/37; EACEM energy

saving commitment (IV/C-3/36.494) Commission Notice 98/C [1998] OJ C 12/2; ARA, ARGEV and ARO

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centralized era of enforcement, the Commission adopted a more holistic view of the Treaties, where the core objectives of the Treaties were essential when interpreting the competition law provisions. Most notably, environmental considerations were taken into account by the Commission when applying Article 101(3).

Returning to sustainability initiatives anno 2020, a discussion of the Commission’s

CECED case is still extremely relevant in light of the environmental objectives that were

already pursued by private parties 20 years ago.16 The facts of the case centred around the production of washing machines. There had been an agreement of an association of undertakings that the members would cease to manufacture or import certain washing machines that were extremely inefficient as regards their energy consumption. The Commission held this agreement fulfilled all three conditions of Article 101(1) and was thus liable to infringe Article 101.17_{However, the agreement also produced significant benefits due to the reduction in energy}

consumption.18_{Aside from considering the individual economic benefits to consumers resulting}

from reduced energy consumption,19_{the Commission most notably considered the collective}

environmental benefits following from the agreement.20_{Based on these benefits, and the}

agreement having fulfilled the other conditions of Article 101(3), the Commission exempted the agreement from the prohibition of Article 101(1).

2.1.2 Decentralized era of enforcement

One might have been hopeful for sustainability initiatives surviving within the scope of competition law after the Commission’s considerations and decision in the CECED case. However, a few years after the decision the EU competition regime radically changed when its enforcement was decentralized. The decentralization was brought on by the intended enlargement of the EU and entailed that NCAs were now allowed to apply EU competition law in parallel with the Commission.21 In order to ensure a uniform enforcement in a decentralized regime, the Commission introduced the consumer welfare standard into EU competition law,

16_{CECED (IV.F.1/36.718) Commission Decision 2000/475/EC [2000] O.J. L 187/47} 17_{Ibid, paras 27, 37, 46}

18_{Ibid, paras 47-51} 19_{Ibid, paras 52-54} 20_{Ibid, paras 55-57}

21_{Commission, White Paper on modernisation of the rules implementing Articles [101] and [102] of the EC} Treaty [1999] OJ C 132 (hereinafter: “Modernization White Paper”), para 46

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as expressed in the Commission’s soft law documents regarding Article 101 TFEU22 as well as Article 102 TFEU23.

A part of the Commission’s fear of divergence in enforcement emerged from the idea that NCAs would incorporate national interests when applying Article 101(3).24 To prevent political considerations from playing a part in competition law assessments, the Commission introduced the purely economic assessment.25 As this was in practice applied through the concept of consumer welfare, consumer welfare as an objective of EU competition law had a dual purpose. On the one hand it was a means to ensure uniform application of the law, on the other hand it was an objective on its own, i.e. protection of the consumer.

Consumer welfare is the benefit that an individual derives from consuming goods and services.26 It is often measured by calculating the consumer surplus, which is the ‘excess of

social valuation of product over the price actually paid’.27_{Applying this consumer welfare}

standard to competition law entails a more effects based approach to enforcement, where the Commission has put an emphasis on price and output.28_{The approach measures the impact that}

undertakings’ behaviour has on prices, output, quality and innovation in the relevant market. This effect is then balanced against benefits occurring within these same parameters. Due to this focus on economic efficiency, this effects based approach can be defined as a purely economic approach to competition law enforcement.

Aside from enhancing consumer welfare, the era of decentralization also introduced the efficient allocation of resources as a new objective of competition law.29 Although this aim seems to have been overshadowed by the Commission’s pursuit of enhancing consumer welfare, it does provide opportunities for interpretations of Article 101 in favour of sustainability initiatives. The allocation of resources between the present and future is

22_{Guidelines on the application of Article [101(3)] of the Treaty [2004] OJ C 101/97, para 11 (hereinafter:} “Guidelines Article 101(3)”), para 13; and Guidelines on Vertical Restraints [2000] OJ C 130/01 (hereinafter: “Vertical Guidelines”), para 7

23_{DG Competition Discussion Paper on the Application of Article [102] of the Treaty to Exclusionary Abuses} [2005], paras 4, 54, 88

24_{Commission, ‘Proposal for a Directive of the European Parliament and the Council to empower the}

competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market’ COM (2017) 142 final, 17

25_{Modernization White Paper (n 21), paras 57, 72} 26_{OECD Glossary of Statistical Terms}

27_Ibid

28_{Katalin J. Cseres, ‘The Controversies of the Consumer Welfare Standard’ (2007) 3 The Competition Law} Review 121

29_{Neelie Kroes, (former) EU Competition Commissioner, ‘European Competition Policy – Delivering Better} Markets and Better Choices’ (Speech at the European Consumer and Competition Day, London, 15 September 2005) <https://ec.europa.eu/commission/presscorner/detail/en/SPEECH_05_512>

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especially relevant here. For example, agreements that prevent the depletion of the fish stock by limiting overfishing would restrict competition in the present, but simultaneously ensure a more efficient allocation of long-term fish production.

2.2 National Competition Authorities

The Commission’s attempt at ensuring uniform application of competition law by economizing it turned out to be counterproductive. It actually resulted in a situation where NCAs adopted diverging approaches as to if and how they would apply Article 101.30 A recent paper by Brook argues that the Commission’s depoliticization had an impact on whether NCAs would apply competition law at all.31 Rather than removing policy considerations, it led to a shift in the policy considerations from the substantive scope of Article 101(3) to procedural priority setting.32 For sustainability initiatives this entails that rather than being assessed within Article 101(3), NCAs have chosen not to investigate them at all by deprioritizing them in their enforcement.

Where Article 101 was applied, Brook identified three categories of approaches in an empirical analysis of the decisions of 5 NCAs from 2004 until 2017: (i) NCAs following the strict economic approach (UK and Hungary); (ii) NCAs that allow indirect and non-economic benefits (France and Netherlands), and; (iii) NCAs taking an intermediate approach (Germany). The diverging approaches to the application are relevant since they prove that EU competition law has not been depoliticized, and its objectives and interpretations are therefore subject to national political climates.

2.3 CJEU

Where the Commission has adopted a more economic approach and NCAs seem to interpret and apply Article 101 as they see fit, the CJEU has remained remarkably silent, but consistent. This section will show that the Court has not followed the Commission’s radical change to its economic approach, but rather maintained the more holistic view of the Treaties which was adopted before the decentralization. This view is known as the constitutional approach and entails that competition law provisions ought to be applied in light of the Treaty’s primary objectives.

30_{Or Brook, ‘Struggling With Article 101(3) Tfeu: Diverging Approaches Of The Commission, Eu Courts, And}

Five Competition Authorities’ (2019) 56 CMLR 121

31_{Or Brook, ‘Priority-Setting as a Double-Edged Sword: How Modernisation Strengthened the Role of Public}

Policy’ (2020) JCLE (forthcoming)

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2.3.1 Limited importance of consumer welfare

Although the Commission has been quite clear in opting for consumer welfare as an enforcement priority, the CJEU has defined other goals. For example in T-Mobile, where it held that competition rules were also ‘designed to […] protect the structure of the market and competition as such’.33_{The case concerned a buyer cartel which intended to reduce costs for}

the undertakings involved, which had the potential of actually lowering prices for the consumers. However, according to AG Kokott, with whom the Court agreed, proving harm to ‘consumer welfare’ was not even relevant, because the agreement restricted competition as such.34

Moreover, the CJEU did not mention, use or define the concept of consumer welfare until the Post Danmark judgment of 2012.35 However, neither in this judgment, nor in following ones, did the Court provide a concrete definition of what it considers to be consumer welfare.36

Furthermore, similar to the judgment in T-Mobile, in a judgment by the General Court in the

Intel case, it was once again held that proving consumer harm, which also constitutes harm to

consumer welfare, was not necessary.37_{The foregoing illustrates the little importance the CJEU}

has attached to the concept of consumer welfare.38 Given that it does not expressly accept this as a standard for assessing infringements of EU competition law, one can assume that the Court does not fully endorse the central importance the Commission has attached to consumer welfare.

2.3.2 The constitutional approach

The approach the Court does endorse follows from the landmark judgment of Metro I in which the Court set out its views.39 In this case the Court assessed a selective distribution system

in Germany, set up by a manufacturer of electronics consumer goods. The distribution system was challenged by one of the wholesalers who was denied access for not fulfilling the conditions for access required by the manufacturer.40 The judgment centred around the

33_{Case C-8/08 T-Mobile Netherlands BV v. Raad van bestuur van de Nederlandse Mededingingsautoriteit} EU:C:2009:343, para 38

34_{Ibid, para 36 and Opinion of AG Kokott, para 59}

35_{Case C-209/10, Post Danmark A/S v Konkurrenceradet ECLI:EU:C:2012:172 and Victoria Daskalova,} ‘Consumer Welfare in EU Competition Law: What is it (not) about?’ (2015) 11 The Competition Law Review 133, 151

36_{Daskalova (n 35), 155}

37_{Case T-286/09 Intel Corporation v Commission ECLI:EU:T:2014:547}

38_{For a more detailed discussion of why the Court attaches little importance to the concept of ‘consumer} welfare’, see Daskalova (n 35), 151-156

39_{Case C-26/76 Metro v. Commission ECLI:EU:C:1977:167} 40_Ibid

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application of Article 101(3) to this distribution system since it produced considerable efficiencies for the consumer. When applying the exemption possibility of Article 101(3), the Court held that non-economic considerations could be taken into account to justify the exemption.41

Most notably, the Court stated that competition is only protected under Article 101 to the extent that it is “necessary to ensure the observance of the basic requirements and the

attainment of the objectives of the Treaty”.42 That degree of competition was defined as ‘workable competition’ by the Court and it stated that this concept, rather than the ideal of perfect competition, ought to be protected by EU competition law.43 Therefore, the Court adopted the view that the competition law provisions cannot be enforced separately from the other objectives set out in the Treaties. This clearly supports the view that competition law must be interpreted in line with the Treaty’s primary objectives, which can be called the ‘constitutional approach’ and is supported by several scholars.44_{For the Metro I case, it entailed}

that the Court allowed for employment considerations to be taken into account in the assessment of Article 101(3).45

Regarding the assessment of sustainability initiatives within the competition law framework as it stands today, the constitutional approach would mean that the competition law provisions need to be interpreted in light of the environmental objectives set out in the Treaty.46 This is also an obligation that follows from Article 11 TFEU, which will be discussed in more detail in the next chapter. Although the case law of the CJEU is extremely limited in this regard, the constitutional approach is supported by the ruling of the General Court in Stim.47 This case concerned a geographical division of public performance rights in the music industry. The General Court ruled that provisions on cultural diversity had to be taken into account when interpreting the conditions set out in Article 101(3).48 This ruling reiterates the CJEU’s earlier

41_{Ibid, paras 21-22, 43} 42_{Ibid, para 20} 43_Ibid

44_{Holmes (n 7), 6-12 and Suzanne Kingston, ‘The Uneasy Relationship between EU Environmental and} Economic Policies, and the Role of the CJEU’ in B. Sjåfjell and A. Wiesbrock (eds), Sustainable Public

Procurement (CUP 2015). Note Kingston’s conclusion that the CJEU is a “constitutional actor” after an

extensive review of CJEU case law concerning integration of environmental objectives into economic policies. 45_{Metro I (n 39), para 43}

46_{Article 3(3), 3(5) TEU and Article 11 TFEU}

47_{Case T-451/08 Föreningen Svenska Tonsättares Internationella Musikbyrå u.p.a. (Stim) v. Commission} ECLI:EU:T:2013:189

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stance that the Treaty’s other objectives must be taken into account when applying the competition law provisions.

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3 Sustainability framework

Further arguments to that effect are provided by Treaty provisions, CJEU case law integrating sustainability objectives into other policy areas, and recent communications and legislative proposals from the Commission. This section will establish the importance the EU attaches to sustainable development by addressing the relevant Treaty provisions and the Commission’s new growth strategy.

3.1 Treaty framework

The fundamental value of sustainability is expressed in the EU Charter on Fundamental Rights: ‘A high level of environmental protection and improvement of the quality of the

environment must be integrated into the policies of the Union and ensured in accordance with the principle of sustainable development’.49_{Furthermore, the Treaty provisions discussed}

below will show that sustainability is enshrined in the TEU and TFEU.

3.1.1 Constitutional provisions

First and foremost, it is included in the primary aims that are set out in article 3 TEU, where paragraph 3 states: ‘The Union […] shall work for the sustainable development of Europe

[…] and a high level of protection and improvement of the quality of the environment’.50_{It is}

stressed once more in paragraph 5 of the same article where it is said that: ‘it shall contribute

to […] the sustainable development of the earth’ and to ‘free and fair trade’.51_{These are the}

aforementioned ‘constitutional provisions’. It follows from article 7 TFEU52_{that they are}

required to be taken into account for all Union policies and activities. This provision, in conjunction with article 3(3) and 3(5) TEU results in the existence of a legal obligation for sustainability objectives to be integrated into the competition law framework. It can be regarded as the basis for the constitutional approach adopted by the CJEU set out in section 2.3.2.

3.1.2 Integration principle

Article 11 TFEU strengthens the obligation to take into account environmental considerations and states that: ‘Environmental protection requirements must be integrated into

the definition and interpretation of the Union policies and activities, in particular with a view

49_{Art. 37 Charter of Fundamental Rights of the European Union [2000] OJ C 364/1} 50_{Art. 3(3) TEU}

51_{Art. 3(5) TEU}

52_{Which states that: ‘The Union shall ensure consistency between its policies and activities taking all of its}

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to promoting sustainable development’.53 This is known as the ‘integration principle’ and is one of the most important principles in EU environmental law.54 It is also seen as a codification of the sustainable development principle.55 Aside from the fact it constitutes a legally binding rule, it has been reaffirmed by the CJEU in several instances.56 Although the obligation already exists pursuant to article 3 TEU in conjunction with article 7 TFEU, article 11 TFEU once more emphasizes the necessity of taking into account environmental considerations in all EU activities and policies. The article therefore provides an additional basis for the constitutional approach adopted by the CJEU as regards sustainability agreements and competition law. Although the CJEU has not yet applied the integration principle in the context of Article 101, it has had ample opportunity to address other measures where economic and environmental aims were in conflict with one another.57 In light of that case law, the CJEU strongly advocates the integration of environmental protection into economic policies.58

The case of Alands Vindkraft provides a good example.59_{This case concerned the}

application of Article 34 TFEU to a Swedish support scheme to promote the production of renewable energy in Sweden.60_{Within that support scheme, only the producers of renewable}

energy located in Sweden could receive economic support. Based on that limitation, the scheme was contested by a Finnish producer of renewable energy who was not eligible to receive the support.61 The CJEU ruled that the measure was allowed, because it pursued a legitimate objective, namely the increased use of renewable energy sources, and it was proportional to the attainment of this objective.62 In practice, the integration principle therefore allows the objective of sustainable development to prevail over purely economic considerations.

Remarkably, the CJEU not only ruled on the proportionality of the measure at hand, but also on the proportionality of using a market mechanism for the achievement of environmental

53_{Art. 11 TFEU}

54_{Anja Wiesbrock and Beate Sjåfjell, ‘The importance of Article 11 TFEU for regulating business in the EU:} Securing the very basis of our existence’ in The Greening of European Business under EU Law: Taking Article

11 TFEU Seriously, Beate Sjåfjell and Anja Wiesbrock (eds) (Routledge 2015)

55_{Beate Sjåfjell, ‘The Legal Significance of Article 11 TFEU for EU Institutions and Member States’ in Beate} Sjåfjell and Anja Wiesbrock (eds) The Greening of European Business under EU Law: Taking Article 11 TFEU

Seriously (Routledge 2015)

56_{Case C-62/88 Chernobyl I ECLI:EU:C:1990:153 and Case C-379/98 Preussen Elektra ECLI:EU:C:2001:160} 57_{Kingston (n 44), 10. The measures include/concern (national) laws aimed at promoting green products,} granting exclusive rights and emission trading schemes.

58_Ibid

59_{Case C-573/12 Ålands vindkraft AB v Energimyndigheten ECLI:EU:C:2014:2037} 60_{Ibid, paras 23-25}

61_Ibid

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goals.63 The Court held that in general it would be proportional where the market functions effectively and fairly, and then continued to elaborate on what would be required for the market for green certificate schemes to be effective and fair.64 Consequently, the environmental considerations cannot be held to prevail unconditionally pursuant to the integration principle, but are limited by what the Court deems to be effective and fair. However, the application of the integration principle does show that markets are not sacred either and are a means rather than an end from a policy perspective.65

3.2 European Green Deal

Given the Treaty provisions discussed above, which prove the value the EU attaches to sustainable development, the introduction of the EGD is no surprise. It is Europe’s new growth strategy and the main driving force behind creating a more sustainable society. The Commission has indicated that all EU policies should contribute to reaching the objectives that have been set.66_{The ambitious goals set out by the Commission will require a significant amount of}

transformative policies. Moreover, the Commission calls upon the private sector to take responsibility and increase investments in sustainable efforts.67_{However, the Commission is}

remarkably silent with regard to possible friction with competition law and/or enforcement. Commissioner Vestager has only stated that reforming EU competition law is a top priority and that EU state aid rules could be of assistance in achieving the EGD objectives.68

The Commission has yet to address concerns regarding the compatibility of sustainability initiatives with Articles 101 and how all the ambitious EGD objectives will be integrated into the current competition framework. In its communication, the Commission only mentions that: ‘careful attention will have to be paid when there are potential trade-offs between economic,

environmental and social objectives.’69 It does not give any further indication on how these trade-offs are to be balanced. Although having stated that all EU policies should contribute to the sustainability goals of the EGD, one could interpret this statement to mean that environmental considerations will be given more importance in future trade-offs. For example

63_{Kingston (n 44), 13-15}

64_{Alands Vindkraft (n 59), para 113} 65_{Kingston (n 44), 19-20}

66_{EGD (n 2)} 67_Ibid

68_{Margarethe Vestager, ‘State aid and a green, digital future’ (Speech at Conference of Europe Ministers of the} German Länder, Brussels, 30 January 2020) <

https://ec.europa.eu/commission/commissioners/2019-2024/vestager/announcements/state-aid-and-green-digital-future_en> 69_{EGD (n 2)}

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within the application of Article 101(3). Such speculations do not however lead to the legal certainty businesses need with regard to competition law.

3.3 European Climate Law

In light of that legal certainty, the Commission’s proposal for the new European Climate Law might offer more clarity. This proposal is based on article 192(1) TFEU and aims to set out the framework for achieving the goal of climate neutrality.70 The Commission states that creating such a framework intends, inter alia, to: “enhance certainty and confidence on the EU’s

commitment for businesses, workers, investors and consumers”.71 Therefore it seems this proposal will provide some answers for the questions arising around the interplay between competition law and the sustainability goals set out in the EGD.

Unfortunately, no such clarity is offered. The Commission remains just as vague in its proposal for the European Climate Law with regard to this issue as it does in its communications around the EGD. There are only two provisions in the proposal that could offer insight. First of all, article 3(3)(b) states the “competitiveness of the Union’s economy” as a factor to be taken into account when setting out the trajectory for achieving climate neutrality. Secondly, article 5(2)(a) provides that the Commission must review: “the consistency of Union measures with

the climate-neutrality objective”. The latter article could form a basis for reviewing the current

approach to sustainability agreements under article 101 TFEU, since prohibiting such initiatives could be deemed inconsistent with achieving the climate-neutrality objective. Although we are once more left to speculate as to the specifics of how the Commission will balance the objectives, if this proposal is accepted, it will be nearly impossible for the Commission to disregard environmental considerations in competition law completely.

70_{Ibid, 2} 71_Ibid

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4 Article 101(1) TFEU

As mentioned in the introduction, the provision that concerns undertakings most, when entering into sustainability initiatives, is the cartel prohibition of Article 101. Assessment of agreements under Article 101 consists of determining two matters: (i) whether the conditions set out in Article 101(1) are fulfilled, in which case an agreement is prohibited, and; (ii) whether the conditions for the exception of Article 101(3) are satisfied.72 This chapter will discuss the first step in the assessment, by examining in detail the conditions of Article 101(1).

There are three cumulative conditions that must be satisfied for Article 101(1) to be applicable. There must be: (i) an agreement between undertakings, a decision by an association of undertakings or a concerted practice; (ii) that affects trade between Member States, and; (iii) that has as its object or effect to prevent, restrict or distort competition in the internal market.73

The general principle underlying Article 101(1) is that undertakings should choose their policies and behaviour independently.74 The article therefore intends to prevent coordination of behaviour between undertakings, both explicit and tacit75

4.1 Agreement, decision by association of undertakings or concerted practice

There are three categories of behaviour that are “caught” by Article 101. All three categories must be interpreted broadly and they can all apply to sustainability initiatives.76 The first category is agreements. These are constituted where there is a ‘concurrence of wills’ between parties.77 Sustainability initiatives can intend to increase sustainable production or prevent exploitation of people and animals. Since all parties wish to achieve this common objective and are setting up an ‘initiative’ to do so, a concurrence of wills is easily established.

Secondly, there are decisions by associations of undertakings. These are applicable when a trade association is involved, which is especially relevant for sustainability initiatives that intend to introduce sustainable production in a complete sector. An example of this type is the

Energy Accord discussed in the introduction. In that case the agreement was a result of

discussions conducted within the association of undertakings in the Dutch energy sector.78

72_{Guidelines Article 101(3) (n 22), para 11} 73_{Article 101(1)}

74_{Case C-49/92 Anic Partecipazioni ECLI:EU:C:1999:356, para 116}

75_{Tacit collusion requires an invitation from one undertaking to the other to fulfil a joint goal. See Joined Cases} C-2/01 P and C-3/01 P Bundesverband der Arzneimittel-Importeure ECLI:EU:C:2004:2, para 102

76_{Whish and Bailey (n 12), 101-119}

77_{Case T-41/96 Bayer v. Commission EU:T:2000:242, para 69}

78_{Energy Accord (n 6), 1. Note that the term ‘decision’ is given a wide meaning, for a discussion to that effect} see Whish & Bailey (n 12), 114-115

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The last category is a concerted practice, which covers types of coordination that have not yet reached the stage of an agreement.79 This category is extremely broad and even covers the mere exchange of information.80 Therefore, any type of initiative that is not considered to be an agreement, or a decision by an association of undertakings can still be deemed a concerted practice. Given the aforementioned examples, and the fact that NCAs need not expressly state which category is applicable, sustainability initiatives are very likely to fulfil this first condition. 4.2 Effect on trade between Member States

The second condition is that there must be an effect on trade between Member States. This constitutes a jurisdictional criterion, limiting the scope of application of EU competition law to agreements that are capable of appreciably affecting trade between Member States.81 The condition requires impact on cross-border economic activity, where at least two Member States are involved.82_{Sustainability initiatives are likely to have this cross-border element. As an}

example, pollution rarely has an effect on the territory of just one Member State, especially air or river pollution. Therefore, agreements to prevent pollution can be between companies from different Member States and thus have an effect on trade between Member States.

Furthermore, this condition may also be fulfilled if it concerns a national or regional situation.83 An example of such a situation is the Dutch case of the Chicken of Tomorrow, which concerned the issue of animal welfare. 84 In 2013 a group of Dutch chicken producers gathered in order to ensure a more sustainable supply of chicken meat in the Dutch supermarkets. To that effect, they set up an agreement, fulfilling the first condition in Article 101(1). Although the agreement only covered the Dutch market, the ACM concluded that there was an effect on trade between Member States.85 It reiterated the CJEU’s stance that agreements covering the whole territory of a Member State have this effect if the undertakings involved have a high market share.86 The supermarkets involved in the agreement were responsible for the sale of over 95

79_{T-Mobile (n 33), para 26 and the cases cited therein}

80_{Guidelines on Horizontal Cooperation Agreements [2011] OJ C 11/1, paras 60-63 (hereinafter: “Horizontal}

Guidelines”).

81_{Guidelines on the effect on trade concept contained in Articles [101] and [102] of the Treaty [2004] OJ C} 101/07, paras 12-13 (hereinafter: “Effect on Trade Guidelines”) with reference to Joined Cases 56/64 and 58/64, Consten and Grundig ECLI:EU:C:1966:41 and Case 22/71 Béguelin ECLI:EU:C:1971:113, para 16 82_{Ibid, para 21}

83_{Ibid, para 22}

84_{Autoriteit Consument & Markt, ‘Analyse ACM van duurzaamheidsafspraken Kip van Morgen’ [2015] 2-3} (hereinafter: “Chicken of Tomorrow”)

85_{Chicken of Tomorrow (n 84), 4}

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percent of consumer bought chicken meat in the Netherlands. A sufficiently high market share was therefore established, resulting in the application of EU competition law.87

4.3 Object or effect restriction of competition

The third condition requires the agreement to contain a restriction of competition by object or effect. ‘Object restrictions’ concern agreements that by their very nature have the potential to restrict competition.88 Article 101(1) provides an exhaustive list of these restrictions which includes price fixing89 and limiting production90. It is especially worrisome for undertakings involved in sustainability initiatives that if a competition authority establishes there is an object restriction, it need not examine the actual effects of the agreement on the market but it can immediately impose fines.91 An example of a sustainability initiative which is liable to qualify as an object restriction would be an agreement to prevent the depletion of fish stock. Such an agreement limits current production in order to ensure long-term production.

However, it must be noted that where a competition authority determines whether or not an agreement restricts competition by object, it must take into account the content of the provisions, the objectives and the economic and legal context.92_{Returning to the Chicken of}

Tomorrow example, essentially this agreement limited supply as well. This would constitute an

object restriction, because it prohibited supermarkets from selling chicken meat which did not meet the standards that were agreed upon.93 However, the agreement was aimed at improving animal welfare and the content of the provisions only related to chicken welfare and other environmental measures.94 Even though supply was limited, the ACM did not conclude there was an object restriction but rather opted for examining its effects.95 Therefore, in light of the purpose of sustainability initiatives, it is highly unlikely they will be classified as object restrictions and much more plausible that their effects will be examined.

A restriction of competition following from the effects of an agreement occurs when agreements are ‘liable to have an appreciable adverse impact on the parameters of competition,

88_{Case C-209/07 BIDS ECLI:EU:C:2008:643, para 17. See Whish & Bailey (n 12), 122-132, for a more in-depth} discussion of object restrictions.

89_{Article 101(1)(a)} 90_{Article 101(1)(b)}

91_{T-Mobile (n 33), para 29 and BIDS (n 88), para 16. Object restrictions have such a high risk of having a} negative effect on competition that it is not deemed necessary to prove that effect, see Guidelines Article 101(3) (n 22), para 21

92_{Cartes Bancaires (n 88), para 53} 93_{Chicken of Tomorrow (n 84), 4} 94_{Chicken of Tomorrow (n 84), 2-3} 95_{Chicken of Tomorrow (n 84), 4}

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such as the price, the quantity and quality of the goods’.96_{An assessment of this impact is made}

by establishing a ‘counterfactual’, which means the competition authority will examine what the situation in the market would have been in absence of the agreement.97 Contrary to the object restriction, it is highly likely a sustainability initiative will constitute an effect restriction of competition because increasing sustainable production is hardly ever cost-efficient. If it were, the agreement would not be essential since profit provides a sufficient incentive for undertakings to choose the most cost-efficient production.

Sustainability initiatives are therefore likely to lead to either a price increase and/or the elimination of certain products from the market. This constitutes an adverse impact on the parameters of competition. As an example, in the Chicken of Tomorrow case, the ACM concluded that the competition parameters were negatively affected because the consumer’s choices were limited by the agreement.98_{Therefore, removing the unsustainable option from}

the consumer’s choice pallet, admirable as the intention may be, does have a restrictive effect on competition.

4.4 Escaping the infringement

An infringement of Article 101(1) occurs when the three aforementioned conditions are fulfilled. The foregoing sections showed why sustainability initiatives are extremely likely to fulfil these conditions and hence fall within the ambit of the cartel prohibition. Infringing Article 101(1) has serious consequences. The Commission can impose fines up to 10 percent of an undertaking’s total turnover in the preceding business year.99_{In light of this risk, it is}

comprehensible that businesses are hesitant to enter into sustainability initiatives.

However, it is important to note there are situations where sustainability initiatives can also be regarded to fall outside the scope of Article 101(1). Given that this automatically excludes an assessment of their anti-competitive effects, in my view this option is quite undesirable.100 As it does not allow for a proper examination of agreements, but rather unconditionally exempts them, following these exemption possibilities will lead to a high risk of greenwashing of cartels, a problem which is discussed further in section 6.1. Due to this risk

96_{Case C‑382/12 P Mastercard v. Commission ECLI:EU:C:2014:2201} 97_{Horizontal Guidelines (n 80), para 29}

99_{Council Regulation (EC) 1/2003 on the implementation of the rules on competition laid down in Articles [101]} and [102] of the Treaty [2002] OJ L 1/1 (hereinafter: “Regulation 1/2003”), art 23(2)(a). Note that this

competence is also granted to NCAs pursuant to art. 5 Regulation 1/2003.

100_{Note that although it is an undesirable option, it is likely to occur quite often in practice given the NCAs} priority setting, to that effect see Brook (n 31). Most importantly it is undesirable due to the risk regarding greenwashing of cartels, see section 6.1.

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these options would not provide an effective solution for reconciling sustainability initiatives with Article 101 and will not be examined in depth. Nevertheless, the fact that they are a possible route for sustainability initiatives to escape the ambit of Article 101(1) merits a short discussion.

The first option might seem like an open door, but not all sustainability agreements are necessarily anti-competitive. If there is no restriction of competition, the agreement will automatically fall outside the scope of Article 101(1).101 The second option is the so-called ‘Albany route’.102_{The CJEU held that Article 101(1) did not apply to collective bargaining}

because the application of the provision would undermine the social policy objectives that were pursued by the agreements. This interpretation by the CJEU follows from the view that other policy objectives must be taken into account when applying competition law, as discussed in section 2.3.2. A similar line of reasoning could be applied to sustainability agreements. One could say that the application of Article 101(1) to such agreements undermines their environmental policy objectives. The third option is known as the objective necessity doctrine. This doctrine entails that some agreements fall completely outside the scope of Article 101(1) due to the fact that their proportionate restrictions of competition are inherent in the agreement103, or they are necessary to carry out a regulatory task.104 Sustainability agreements could be suitable for either category.

101_{Note that the Guidelines on the applicability of Article [101] of the EC Treaty to horizontal cooperation}

agreements [2001] OJ C 3/02 provided 3 situations in which an environmental agreement would be unlikely to

restrict competition.

102_{Case C-67/96 Albany International BV v Stichting Bedrijfspensioenfonds Textielindustrie} ECLI:EU:C:1999:430

103_Ibid

104_{Case C-309/99 Wouters v. Algemene Raad van de Nederlandse Orde van Advocaten ECLI:EU:C:2001:390} and Case C-519/04 Meca-Medina and Majcen v. Commission ECLI:EU:C:2006:492

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5 Article 101(3) TFEU

This chapter will discuss the four conditions of Article 101(3) and the limitations they pose to sustainability initiatives. Given their importance in that regard, the first two conditions of Article 101(3) will be examined more closely than the latter two. Furthermore, to provide an illustration of how they are applied in practice a case study of the ACM’s policy and practice is added as the final part of this chapter.

5.1 Efficiency gains

The first condition stated in Article 101(3) is that the agreement must ‘contribute to

improving the production or distribution of goods or to promoting technical or economic progress’.105_{Before addressing the possible ways of interpreting this condition, it is worth}

considering the wording in light of sustainability initiatives. The condition requires the agreement to produce efficiency gains and provides four opportunities: (i) contributing to improving the production of goods; (ii) contributing to improving the distribution of goods; (iii) promoting technical progress, and; (iv) promoting economic progress. For sustainable development, the option of improving the production of goods and promoting technical progress are especially relevant.

5.1.1 What constitutes an efficiency?

The first condition aims to qualify the type of benefits that can be taken into account for the application of the exemption.106 The main academic discussion around the interpretation of this condition is whether it only allows for economic efficiencies to be taken into account, or also non-economic efficiencies.107 If only economic efficiencies are taken into account, the benefits would be limited to the promotion of economic progress. Pursuing the of the objective of consumer welfare can lead to such a narrow interpretation of this condition.

However, Article 101(3) provides other opportunities as well, namely contributing to the improvement of the production and distribution of goods and promoting technical progress. Considering these opportunities, a wider variety of benefits should certainly be taken into account, opening the door for other policy considerations to enter the realm of competition law. This occurred before the decentralization of competition law, when the Commission also pursued other policy objectives within competition law. The Commission’s CECED case

105_{Article 101(3)}

106_{Guidelines Article 101(3) (n 22), para 50. Note that the terms benefits and efficiencies are used} interchangeably.

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discussed before provides a good illustration of this difference. In that case, in which manufacturers intended to remove energy inefficient washing machines from the market, two types of benefits occurred. On the one hand, there were cost savings on energy consumption for the individual consumers purchasing the washing machines; the economic benefit. On the other hand, there were environmental benefits for society as a whole due to a decrease in total energy consumption; the non-economic benefit.108 Based on both these efficiencies the agreement was exempted. The Commission therefore seems to allow non-economic benefits to be considered. The Court has also provided guidance on which benefits ought to be taken into account. It first stated in Consten and Grundig that the first condition in Article 101(3) requires objective advantages which compensate for the disadvantages for competition following from the agreement.109 However, note that no statement is made as to what type of advantages they must constitute. The Court only holds that the advantages must be objective. In later case law, the CJEU accepted a wide variety of benefits to fulfil the first condition of Article 101(3), specifically non-economic benefits.110_{Moreover, as discussed in section 2.2.3, the General}

Court even stated that such benefits must be taken into consideration in light of the Treaty’s cross-sectional clauses.111 The constitutional approach to Article 101(3), which entails that competition law objectives are linked to the Treaty’s primary objectives, therefore results in taking into account non-economic benefits for this condition.

5.1.2 On which market may it occur?

Another important matter for the benefits is on which market they may occur. Does the condition only cover benefits occurring on the relevant market, or can the benefits occur on any unrelated market? The former of these options narrows the interpretation of the condition, whereas the latter broadens it. Note that this discussion is also of importance for the second condition, because defining the market on which efficiencies occur is essential for determining which consumer must be compensated.

The CJEU’s case law in this regard has not been entirely consistent. The first relevant judgment here is that in GlaxoSmithKline.112 In this judgement the Court held that dynamic efficiencies can be taken into account under Article 101(3), which means the efficiencies may

108_{CECED (n 16), paras 52-57}

109_{Consten and Grundig (n 81), para 348} 110_{Brook (n 30), table 3 and figure 3} 111_{Stim (n 47), para 103}

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occur on a ‘future market’ rather than the current one.113_{This would suggest efficiencies need}

not occur on the market where the consumer is harmed. However, the Court adopted a different approach in the Mastercard judgment.114 In the first place it held that the efficiencies produced by the agreement need not be limited to the relevant market that was defined.115 It stated that this is possible where there is interaction between the markets.116 However, it then continued to state that at least some efficiencies must occur on the market where the consumer is harmed.117

The Court has therefore not adopted a clear stance on this topic. It is however extremely relevant for the matter of sustainability initiatives. Such initiatives often produce benefits for society as a whole, for all consumers and not merely for those on the market of the specific product they consume. Having regard to the constitutional approach the Court has adopted before, and the necessity in light of the Treaty objectives to consider sustainable development, a broad interpretation of these markets seems logical. In any case, a clarification from the Court on this topic is required.

5.2 Consumers are allowed a fair share of the benefit

The academic debate concerning the second condition of Article 101(3) centres around the question of which consumer is allowed a fair share of the benefit.118 The previous section already discussed the different interpretations of the consumer on which market may be taken into account, which is the most relevant for the compensation of the consumer. Regarding the concept of consumer itself, this can be seen as static or dynamic.

5.2.1 Static vs Dynamic

The static consumer concept only encompasses the current consumer, or maybe one in the near future after the conclusion of the agreement. Conversely, the dynamic consumer concept includes the future consumer. Fortunately, the CJEU has been quite clear on the approach that ought to be taken. For example regarding innovation, it held that this should be taken into account as a benefit to such an extent that it may also be enjoyed by future

113_{Ibid, para 93-95} 114_{Mastercard (n 96)} 115_{Ibid, para 228}

116_{Ibid, para 237. Note that this concerned a case with two-sided markets.} 117_{Ibid, paras 242-243}

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consumers.119 Even the Commission opts for a broad approach in this regard and allows for future consumers to be taken into account when applying the second condition.120

5.2.2 Compensation

Once it has been decided which consumer to compensate, the question that follows for the interpretation of the second condition is what exactly is a ‘fair share of the benefit’? How can the consumer be compensated? And to what extent must the consumer that was harmed by the anti-competitive aspect of the agreement be compensated? For this part of the second condition, the market that is taken into account is once again relevant. Is it only the consumer on the relevant market that can be compensated, or can benefits to consumers on other markets outweigh the disadvantages to the former consumer? As the case study of the ACM in the next section will show, this part of the Article 101(3) assessment is a significant hurdle for sustainability initiatives.

A narrow economic approach in this condition, following the objective of consumer welfare, would constitute that consumers on the relevant market may not be worse off on competition parameters. These consumers must then be compensated for negative effects on price, output, quality or innovation. This is often measured by quantifying the drawbacks and benefits of the agreement, which can result in sustainability initiatives not being able to provide sufficient compensation to the consumer on the relevant market. However, quantification is a very effective means of measuring benefits and need not be an obstacle if benefits on other markets can be taken into account. Having regard to the CJEU’s judgment in Metro I,121 the Commission’s decision in CECED and the integration principle in article 11 TFEU these benefits should be taken into account when assessing sustainability initiatives in the future. Therefore, pursuant to the view that the Treaty’s primary objectives play a part in competition law objectives, a wider view of the benefits can be accepted.

Furthermore, leaving quantification aside, it follows from case law that the CJEU has accepted compensation for the consumer of certain factors without reducing this benefit to a calculation.122 The Commission itself has also expressed consumers can be compensated for a price increase with qualitative efficiencies and it would be difficult to assign values to such

119_{GlaxoSmithKline (n 112)}

120_{Guidelines Article 101(3) (n 22), paras 87-88}

121_{Metro I (n 39), where the Court held that the degree of competition that ought to be protected is ‘workable} competition’. Therefore perfect competition is not the goal, but competition to such an extent that the other Treaty objectives can be achieved as well.

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dynamic efficiencies.123 One can therefore conclude consumers may be compensated in different ways, not just within the competition parameters.

5.3 Indispensability & no elimination of competition

The third and fourth conditions of Article 101(3) are not likely to pose any major problems for sustainability initiatives and will therefore not be discussed in depth. However, since they do constitute important checks, they may not go unnoticed.

The third condition states that the agreement is not allowed to: ‘impose on the undertaking

concerned restrictions which are not indispensable to the attainment of those objectives’. It is

also known as the indispensability criterion and is essentially an expression of the well-known proportionality principle established in EU law. It entails that the restrictions following from the agreement may not be more restrictive than necessary. Although this condition is rarely examined in depth, it is an important check for sustainability initiatives. This is increasingly important where undertakings would use sustainability initiatives in order to gain more profits rather than achieve sustainability goals, a topic which is further explored in chapter 6.

The fourth condition sets out that the agreement is not allowed to: ‘afford such

undertaking the possibility of eliminating competition in respect of a substantial part of the products in question’. Similar to the third condition, this is not likely to form an obstacle to

sustainability agreements and therefore does not warrant any further attention.124 5.4 BER & Standardisation

Aside from performing a detailed examination of all four conditions of Article 101(3), there are two other possibilities to fulfil the conditions and exempt an agreement that falls within the scope of Article 101(1). The first exemption possibility is constituted by the Block Exemption Regulations (“BER”). There is no specific BER for sustainability agreements, although that might be an option worth considering, but they can fall within the scope of the other BERs. There are however BERs for Vertical Agreements125, Research and Development Agreements126 and Specialisation Agreements.127 If an agreement is covered by a BER, there

123_{Guidelines Article 101(3) (n 22), paras 102-103}

124_{To that effect see Holmes (n 7), 29 and Kingston (n 44), 287-292}

125_{Commission Regulation (EU) 330/2010 on the application of Article 101(3) to categories of vertical} agreements and concerted practices [2010] OJ L 102/1

126_{Commission Regulation (EU) 1217/2010 on the application of Article 101(3) of the Treaty on the Functioning} of the European Union to certain categories of research and development agreements [2010] OJ L 335/36 127_{Commission Regulation (EU) 1218/2010 on the application of Article 101(3) of the Treaty on the Functioning} of the European Union to certain categories of specialisation agreements [2010] OJ L 335/43

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is a presumption that all four conditions set out in Article 101(3) are fulfilled and it is therefore exempted.128

The second exemption possibility concerns a possible qualification as a standardisation agreement. They are defined as follows: “Standardisation agreements have as their primary

objective the definition of technical or quality requirements with which current or future products, production processes, services or methods may comply”.129 Framing a sustainability agreement as a standardization agreement provides more opportunities for compatibility with Article 101 since the Commission has generally taken a lenient approach towards sustainable standardisation agreements.130

5.5 Case Study ACM

The final part of this chapter will discuss the ACM’s general approach to sustainability initiatives and two famous cases it analysed in the past. It will start with a discussion of the ACM’s point of view on the first two conditions of Article 101(3). Afterwards, it will show that although the ACM takes into account a wide variety of efficiencies under the first condition, its narrow interpretation of the second condition of Article 101(3) is an obstacle to Dutch sustainability initiatives. The third and fourth conditions are not discussed in detail because they were not significant for the cases.

5.5.1 ACM Vision Document

Concerning the first condition, the ACM first states the agreement in question must lead to efficiency gains that have a positive effect on welfare.131 With regard to welfare, the ACM stresses a broad welfare concept must be used, which includes the value consumers attach to product characteristics related to sustainability.132 It states there are two ways in which sustainable products can increase welfare. First of all because direct consumers are willing to pay more for such products, due to higher quality.133 Secondly, because future consumers can benefit from a sustainable use of resources that are scarce today.134 The latter benefit is most

128_{Guidelines Article 101(3) (n 22), para 35} 129_{Horizontal Guidelines (n 80), para 258}

130_{Ibid, e.g. paras 258, 277, 290, 300, and Margrethe Vestager ‘Competition and sustainability’ (Speech at} GCLC Conference on Sustainability and Competition Policy, Brussels, 24 October 2019)

< https://wayback.archive-it.org/12090/20191129200524/https://ec.europa.eu/commission/commissioners/2014-2019/vestager/announcements/competition-and-sustainability_en>

131_{Autoriteit Consument & Markt, ‘Vision Document Competition & Sustainability’ [2014] (hereinafter: “ACM}

Vision Document”), 13

132_{Ibid, 10}

133_{Ibid, 13. Note that this can offset the decrease in welfare caused by the limitation of range of products that is} supplied.

The European Green Deal and EU competition law: a sustainable interpretation of Article 101(3) TFEU