Promoting the Environmental Gap in
European Competition Law
Unforeseen Tension with the Paris Agreement?
Name: Dionne Annink
E-mail: dionneannink@gmail.com Studentnumber: 12080233
Master track: European Competition Law and Regulation Supervisor: L. Ankersmit
Abstract
There exists a theoretical tension between the two external objectives of the EU with regard to promoting competition on a global level and the European combat global against climate change. On the one hand, the EU pursues external policy to attain the goals of Paris Agreement to lower greenhouse gas emissions in the global fight against climate change. On the other hand, DG Competition seeks convergence with its narrow economic approach towards Article 101(3) TFEU that limits corporate sustainability initiatives. If corporate sustainability initiatives are increasingly limited in third countries as a result of convergence, this might obstruct the external objective of the EU to achieve a rapid attainment of the Paris Agreement objectives. Convergence can take place in the form of soft and dominant convergence. In this research, convergence is established in the cases of bilateral cooperation agreements, cooperation with China, and in multilateral cooperation within the ICN and the OECD. The research is conducted on the basis of policy documents, agreements, speeches, legislation and institutional frameworks. This thesis uses an evaluative methodology through a normative lens to evaluate the effectiveness of European external policy with regard to competition and environmental objectives. It is concluded that convergence in these cases has not led to an exact copy in other jurisdictions and recommendations of the European competition rules and their interpretation of environmental objectives under Article 101(3) TFEU. DG Competition’s external objectives therefore do not lead to an increased limitation of corporate sustainability initiatives in third country jurisdictions. Its activities therefore do not frustrate the objectives that the EU has set out to attain the Paris Agreement goals. This does not mean that DG Competition should not adopt a more integrated approach on the basis of Article 11 TFEU towards environmental benefits in competition assessments under Article 101(3) TFEU.
Content
List of Abbreviations 3
1. Introduction 4
2. Competition law and the Paris Agreement on climate change 8
2.1 External environmental objectives 8
2.2 Internal environmental objectives 10
3. DG Competition and environmental factors in EU competition law 12
4. Convergence 17
5. Bilateral cooperation 22
5.1 Bilateral competition cooperation agreements 22
5.2 Memoranda of Understanding on competition 24
5.3 Competition Dialogue with China 24
6. Multilateral cooperation 29
6.1 The role of DG Competition in the ICN 30
6.2 The role of DG Competition in the OECD 32
7. Analysis 35
8. Conclusion 38
List of abbreviations
Anti-Monopoly Law AML
Association of Southeast Asian Nations ASEAN
Carbon dioxide CO2
Corporate sustainability initiative CSI
Directorate General DG
European Commission Commission
European Free Trade Area EFTA
European Union EU
Greenhouse gases GHG
International Competition Network ICN
Memoranda of Understanding MoU
National Development and Reform Committee NDRC Organisation for Economic Cooperation and Development OECD State Administration of Industry and Commerce SAIC
Treaty on the European Union TEU
Treaty on the Functioning of the European Union TFEU United Nations Conference on Trade and Development UNCTAD
1. Introduction
At first glance, European competition law and the fight against climate change do not seem to have a lot in common. At a closer look, however, they are linked closer than one expects. The Paris Agreement on climate change of 2015 expressed the global recognition that significant global cooperation and coordination is required in order to combat climate change.1
The European Union (‘EU’) and its Member States have signed the Paris Agreement and actively pursue the combat of climate change through public policies at national, European and global level. A significant amount of companies has also expressed serious intention to commit to the Paris Agreement objectives.2 They can contribute on their own account through a
corporate sustainability initiative (‘CSI’). CSI’s can support the EU’s external goal of a rapid reduction of greenhouse gases in order to combat climate change in light of the Paris Agreement.3
CSI’s can be introduced in the form of an agreement between undertakings. This can raise problems under European competition law, and more specifically under Article 101(1) of the Treaty on the Functioning of the European Union (‘TFEU’).4 As will be shown, the current
application of Article 101 TFEU by DG Competition results in significantly limited scope in which environmental factors can be considered in the competition assessment. When a CSI is
prima facie caught under Article 101(1) TFEU, it can rarely mitigate the anti-competitive
factors of the agreement, meaning the agreement is prohibited. This leads to a limitation of possibilities to introduce CSI’s. As department of the European Commission, the Directorate General (‘DG’) for Competition addresses these issues as main enforcer of EU competition law. DG Competition is deemed a powerful competition authority around the world.5 DG
Competition cooperates with competition authorities globally and has made a policy of
1 Paris Agreement (Paris, 12 Dec. 2015) entered into force 4 Nov. 2016
https://unfccc.int/sites/default/files/english_paris_agreement.pdf.
2 C2ES Centre for Climate and Energy Solutions
https://www.c2es.org/content/business-support-for-the-paris-agreement/ (accessed 11 June 2019); Business Statement Welcoming Progress on the Paris Rulebook’
https://www.c2es.org/site/assets/uploads/2019/01/business-statement-on-paris-rulebook.pdf (accessed 11 June 2019); Caring for Climate Change, ‘Carbon Pricing’ http://caringforclimate.org/workstreams/carbon-pricing/
(accessed 12 June 2019); We Mean Business https://www.wemeanbusinesscoalition.org/commitment/put-a-price-on-carbon/ (accessed 12 June 2019).
3 European Commission ‘Paris Agreement’
https://ec.europa.eu/clima/policies/international/negotiations/paris_en (accessed 19 July 2019). 4 Consolidated Version of the Treaty on the Functioning of the European Union [2012] OJ C326/01. 5 Umut Aydin, ‘Promoting Competition: European Union and the Global Competition Order’ (2012) 34(6)
Journal of European integration 665; Lehmkuhl D. ‘On Government, Governance and Judicial Review: The
Case of European Competition Policy’ (2008) 28(1) Journal of Public Policy 140; UNCTAD Report
‘Experiences gained so far on international cooperation on competition policy issues and the mechanisms used’
promoting competition rules in third countries to seek convergence of these rules. 6
Convergence is ‘a process in which the shared characteristics of two or more systems or areas of law (…) increase and the non-shared characteristics are reduced.’7 The external objective is
to align competition rules around the world so that, in light of the internationalization of anti-competitive activity, the international enforcement of competition rules is facilitated. As leading competition authority, the promotional activities of DG Competition can have significant ideational influence.8 These activities might therefore lead to an adoption of the
European approach towards competition law with similar limitations on CSI’s. Thus, there is a theoretical tension between the two external objectives of the EU with regard to promoting competition on a global level and the EU combat against global climate change. On the one hand, the EU pursues external policy to attain the goals of Paris Agreement to lower greenhouse gas (‘GHG’) emissions in the global fight against climate change. On the other hand, DG Competition’s competition enforcement leads to a limitation of CSI’s and the DG might subsequently be exporting this approach, which can lead to a limitation of CSI’s abroad.
The present contribution will shed a light on the extent to which this tension exists in practice. This depends on how successfully DG Competition promotes the European competition rules and the narrow economic approach to their application. This thesis will answer the following research question: to what extent does competition promotion by DG Competition lead to convergence with the European approach to competition enforcement and does that frustrate the attainment of the Paris Agreement climate goals by limiting corporate sustainability initiatives? Convergence will be researched in DG Competition’s bilateral and multilateral activities through bilateral cooperation agreements, Memoranda of Understanding (‘MoU’), and its activities in the International Competition Network (‘ICN’) and the Organisation for Economic Cooperation and Development (‘OECD’).
In order to answer this research question, several elements will be outlined. This thesis uses an evaluative methodology through a normative lens to evaluate the effectiveness of European external policy with regard to competition and environmental objectives. First, Chapter 2 will describe goals of the Paris Agreement and the role of corporations and their CSI’s in its attainment. It will also go into European law provisions that can serve as a basis to
6 DG Competition, ‘Facing the challenges of globalisation’
http://ec.europa.eu/competition/international/overview/index_en.html (accessed 19 July 2019).
7 David Gerber, ‘Convergence in the Treatment of Dominant Firm Conduct: The United States, the European Union, and the Institutional Embeddedness of Economics’ (2010) 76(3) Antitrust Law Journal, 954.
8 Ian Manners, ‘Normative Power Europe: A Contradiction in Terms?’ (2012) 40(2) Journal of Common Market
integrate environmental objectives into competition policy to a higher extent. Chapter 3 will set out DG Competition’s functions and approach, the role of environmental factors in European competition enforcement and how this affects CSI’s. Chapter 4 will describe the process of convergence of competition rules on the international stage. It will introduce the criteria that are used to establish four forms of convergence: soft substantive convergence, soft procedural convergence, dominant substantive convergence and dominant procedural convergence. Chapter 5 and 6 will evaluate whether convergence occurs and in what forms in the context of bilateral and multilateral external relations of DG Competition. This is done through an analysis of policy documents, agreements, speeches, legislation and institutional frameworks. Chapter 7 will evaluate the extent to which convergence of competition rules around the world with the European rules has taken place in practice. The Chapter will establish to what extent this affects the effectiveness of external climate change objectives in light of the Paris Agreement by looking into whether convergence has led to an increased limitation of CSI’s. Through a law in action perspective, the effectiveness of both external competition policy and external climate change policy will be evaluated. This entails a process-based analysis in which not all information is available with regard to discussions and intentions when adopting a certain set of rules. Thus, determinative conclusions cannot always be drawn, however some case-studies lead to strong indications that allow for preliminary conclusions.
With regard to external competition policy, DG Competition and DG Trade are the main actors within the EU. However, throughout the thesis, the focus will be on activities where DG Competition is the main actor. DG Competition is active in the enforcement and implementation of EU competition law, as well as promotion and cooperation with competition authorities outside the EU.9 It is the DG’s goal to protect the competitive process on the internal
market. 10 It is concerned with the technicalities and interpretation of European competition law
through its enforcement activities. DG Competition therefore has a view on how environmental objectives should be treated in the competition assessment, which will color the way that DG Competition promotes competition law in third country jurisdictions. DG Trade is concerned with competition law in relation to international trade agreements that it concludes on behalf of the EU, in which provisions on competition rules are sometimes included. 11 DG Trade seeks to
9 DG Competition Management Plan 2019, 3.
10 DG Comp Management Plan 2018, 3. See also the Mission Statement of DG COMP in Strategic Plan 2016-2020 for DG Competition, 3.
11 Chad Damro, ‘The new trade politics and EU competition policy: Shopping for convergence and co-operation’ [2006] Journal of European Public Policy, 873.
include competition provisions in trade agreements to ensure the liberalization of trade.12 DG
Trade is not concerned with the technicalities of competition rules. It will therefore be assumed that DG Trade is not concerned with the role environmental objectives in competition assessments and that it does not express views on this when concluding trade agreements that include competition provisions. The thesis is therefore limited to relations in which DG Competition is the main actor.
12 DG Trade Strategic Plan 2016-2020, 11.
2. Competition law and the Paris Agreement on climate change
This chapter will set out the link between the Paris Agreement climate goals and the promotion of European competition law by DG Competition in third countries. It will discuss the role of CSI’s in the achievement of the Paris Agreement goals and Treaty provisions which can serve as a basis for the integration of environmental objectives into competition policy.
2.1 External environmental objectives
The EU and its Member States have signed the Paris Agreement of 2015 and committed themselves to the goals set out therein. The agreement is legally binding on its signatories so the EU and its Member States are bound to contribute to the ultimate aim to combat climate change through an effective global response.13 In order to combat climate change, it is
recognized that the emission of GHG’s will have to be lowered significantly as soon as possible.14 Following the objectives of the agreement, the EU has set out to: 1) make sure that
the global temperature will not increase by 2°C, and potentially will not increase more than 1.5 °C, 2) have a global emissions peak as soon as possible taking into account that developing countries might take longer, and 3) have rapid reductions after that peak.15 To achieve the Paris
Agreement climate goals, the EU has introduced both internal and external environmental policies. In this contribution, the focus will be on the external environmental policies to see what the effects of external competition policies are on the effectiveness of the policies towards the Paris Agreement objectives. Externally, the EU aims to decrease greenhouse gas emissions, and more specifically carbon emissions; increase the use of renewable energy; increase energy efficiency; invest in developing countries to support them in a transition to greenhouse-gas neutral economies.16 The EU has acknowledged that all existing and new policies need to
consider environmental concerns, amongst others.17 The Commission also noted that it is
necessary to integrate the sustainable development ‘into EU policies and initiatives across the
13 Paris Agreement (n 1).
14 Ibid Article 4(1).
15 European Commission ‘Paris Agreement’ (n 3).
16 European Commission ‘EU Policies and Actions, Goal 13. Take urgent action to combat climate change and its impacts’ https://ec.europa.eu/sustainable-development/goal13_en (accessed 24 May 2019).
17 Communication on Next steps for a sustainable European future, European action for sustainability COM (2016) 390 final, 18.
board, with sustainable development as an essential guiding principle for all European Commission policies,’18 showing EU’s integrated approach to the combat of climate change.
Alongside the ambitious initiatives by the EU, support for the Paris Agreement objectives does not only stem from the public sector. Large, well-known businesses have shown to be willing to contribute to the attainment of the Paris Agreement climate goals through a variety of initiatives.19 Globally, there are 2483 companies who have taken action in this
regard.20 They actively pursue the Paris Agreement goals by committing to internal carbon
prices, which means that the carbon emitted during production of a good is priced so as to account for damage to the environment by those carbon emissions.21 79 companies have
committed to such action around the world, amongst which multinationals such as Coca Cola, Nestlé, DSM and Unilever.22 Others have created partnerships to reduce emissions.23 CSI’s that
aim for internal carbon pricing or emission reductions can contribute to combatting climate change by more rapidly lowering emissions of GHG and can therefore contribute to the goals the EU has set.24 The Paris Agreement also notes that private participation to achieve the Paris
Agreement climate objectives should be aimed for and encouraged,25 acknowledging the
importance of private sector support for the fight against climate change.
However, firms will not be inclined to produce more sustainably unilaterally if it deteriorates their competitive position.26 CSI’s will often raise costs as it requires investments
in research and material. These costs will either cut into profits or are passed on to the consumer. Thus, when conducted unilaterally, CSI’s can worsen the competitive position of the business. An agreement takes away this disincentive to produce in a more environmentally friendly manner. To circumvent the competitive position problem and to give effect to CSI’s, it can be
18 European Commission ‘EU approach to sustainable development’
https://ec.europa.eu/info/strategy/international-strategies/sustainable-development-goals/eu-approach-sustainable-development_en (accessed 6 may 2019).
19 C2ES Centre for Climate and Energy Solutions (n 4); Business Statement Welcoming Progress on the Paris Rulebook (n 2) .
20 Global Climate Action, NAZCA https://climateaction.unfccc.int/ (accessed 12 June 2019). 21 We Mean Business (n 4) ; Caring for Climate Change (n 4).
22 Ibid.
23 ‘Alcoa, Rio Tinto and Apple work with Canada to erase aluminum smelting emissions’
https://www.c2es.org/content/alcoa-rio-tinto-and-apple-work-with-canada-to-erase-aluminum-smelting-emissions/ (accessed 16 July 2019); World Business Council for Sustainable Development, ‘Transforming Heavy Transport’ https://www.wbcsd.org/Programs/Climate-and-Energy/Climate/Transforming-Heavy-Transport/below50 (accessed 16 July 2019); Business Alliance for Water and Climate https://bafwac.org/
(accessed 16 July 2019).
24 Paris Agreement (n 1) Article 4(1).
25 Paris Agreement (n 1) Article 6(4)(b) and 6(8)(b).
26 Hans Vedder, Competition Law and Environmental Protection in Europe: Towards Sustainability? Doctoral
necessary for firms to agree to all simultaneously invest in new, cleaner production methods.27
That way, the prices of goods can be raised simultaneously and with similar rates, and the competitive positions remain the same.
From a competition law perspective, such agreements, or other initiatives like internal carbon pricing, raise serious problems. Under the current competition rules, these agreements would be seen as price fixing under Article 101(1)(a) TFEU since competition is limited and prices of for the consumer are increased. Moreover, the positive environmental impact of such an agreement can rarely serve as a basis for an exemption of the prohibition. This way, European competition rules are limiting the possibilities for CSI’s. In addition, one of DG Competition’s policy objectives is to promote competition rules abroad and to seek convergence.28 When convergence takes place in the form that third country jurisdictions adopt
the rules and rationale of application similar to the European system, this limitation of CSI’s through the competition rules is effectively exported. In light of the Paris Agreement’s objective to lower GHG emissions as soon as possible in order to combat climate change, such a development could negatively impact the effectiveness of contributions to the reduction of GHG emissions. This shows a tension between two external policies of the EU. On the one hand, the EU has committed itself to the Paris Agreement and its aims to achieve emission reductions on a global scale in order to combat climate change as fast as possible. On the other hand, it will be seen that DG Competition is actively promoting competition rules and their application that significantly limit the possibilities to conclude initiatives that can contribute to a rapid reduction of GHG’s. The external objectives of DG Competition are thereby potentially undermining external environmental objectives of the EU as a whole.
2.2 Internal environmental objectives
Next to the Paris Agreement, there exist Treaty provisions that serve as a basis for an approach where DG Competition takes account of environmental factors in competition assessments under Article 101 TFEU. Article 11 TFEU provides that ‘Environmental protection requirements must be integrated into the definition and implementation of the Union's policies and activities, in particular with a view to promoting sustainable development. This is supported by Article 3(3) TEU, which describes that one of tasks of the Union is to ‘work for the
27 Laurens Ankersmit, Green Trade and Fair Trade in and with the EU: Process-Based Measures within the EU
Legal Order (Cambridge University Press 2017), 198.
sustainable development of Europe based on (…) a highly competitive social market economy, (…) and a high level of protection and improvement of the quality of the environment.’ This supports an interpretation of the Treaties where competition and environmental policy should be balanced. Furthermore, Article 21(2) of the Treaty on the European Union (‘TEU’) provides that international cooperation should also aim for sustainable development and maintaining environmental quality. Article 21(3) TFEU stipulates that consistency between the different policy areas will be maintained in external action. Thus, when forging foreign relations and promoting European competition rules in third countries, DG Competition should consider the principles of sustainable development, environmental protection, and consistency between foreign policy objectives.
DG Competition takes the view that such climate related considerations are not the responsibility of DG Competition and that the pursuit of public interests, other than protecting the competitive process and consumers, is not the function of competition rules.29
Commissioner for Competition Margrethe Vestager and Director General for Competition Johannes Laitenberger share the opinion that competition could work towards public interest goals but should never be set aside because of them.30 Thus, the view is that any other public
interests that might be served by competition enforcement are of secondary and incidental importance. Competition should remain independent and not pursue public interests other than maintaining the competitive process and protecting consumers. However, as several scholars have noted, the Treaties are an integrated framework and the environmental objectives of Article 11 TFEU cannot be seen separately from the competition provisions.31 These objectives
need to be integrated into all Union activities, including in competition enforcement activities and policies. An approach would be welcomed where obstacles to the implementation of CSI’s are reduced in order to attain the goals as set out by the Paris Agreement, by which the EU is bound. The following chapter will discuss the technical problems for CSI’s under the current European competition rules.
29 Commissioner for Competition M. Vestager Speech ‘Competition policy in context’ 2016
https://ec.europa.eu/commission/commissioners/2014-2019/vestager/announcements/competition-policy-context_en (accessed 25 May 2019); Director General for Competition J. Laitenberger ‘Enforcing EU
Competition Law in a Time of Change’ 2017 http://ec.europa.eu/competition/speeches/text/sp2018_03_en.pdf
(accessed 25 May 2019). 30 Ibid.
31 Vedder (26) 161, 169; Kingston, S. The Role of Environmental Protection in EC Competition Law and Policy Doctoral thesis, (Leiden University 2009); Anna Gerbrandy, ‘Rethinking Competition Law within the European Economic Constitution’ (2019) 57(1) Journal of Common Market Studies 136-137; G. Monti, ‘Article 81 EC and Public Policy’ (2002) 39(5) Common Market Law Review.
3. DG Competition and environmental factors in EU competition law
This chapter will set out what role environmental considerations can play in the competition assessment under Article 101 TFEU according to the current approach of DG Competition. It will also discuss alternative approaches.
CSI’s do not always take the form of (restrictive) agreements, however there are reasons why an agreement between undertakings is the preferred or even the only option to effectuate a CSI.32 A CSI will be caught by the prohibition of Article 101(1) TFEU when it reduces
competition and it raises costs or limits choice for consumers, amongst others. As noted, for CSI’s in the form of an agreement this will often be the case. Unless an agreement escapes the prohibition on the basis of Article 101(3) TFEU, the agreement will be null and void on the basis of Article 101(2) TFEU. When an economic activity is caught by Article 101(1) TFEU it can still escape the prohibition since all prima facie anti-competitive agreements can escape the prohibition on the basis of Article 101(3) TFEU.33 CSI’s caught by the prohibition will want to
make use of this exception. Article 101(3) TFEU provides that the prohibition can be declared inapplicable when the agreement fulfils four cumulative conditions. To enjoy the exception, the agreement should 1) lead to a positive development in the chain of production or distribution, 2) of which a fair share can be enjoyed by the consumer, 3) without restrictions that are unnecessary to achieve the development, 4) and without substantially eliminating competition.34 In the treaties, European competition law does not refer to environmental factors
and the role they play in the competition assessment under Article 101(3) TFEU. The role that these factors play in the assessment is therefore determined through interpretation.
For DG Competition, the interpretation finds its basis in the neoclassical economic theory.35 In light of this theory, the major goal of competition law is to maintain the competitive
process which should in turn lead to efficiencies for consumers.36 On that basis, DG
Competition follows an economic approach in the interpretation and application of Article 101(3) TFEU.37 As interpreted by the Commission, the more economic approach serves Article
32 For a discussion on these reasons, see Ankersmit (n 27) 198-201.
33 Case T-111/08 Mastercard and others v Commission [2012] ECLI:EU:T:2012:260, para 199. 34 Article 101(3) TFEU.
35 Ankersmit (n 27) 208.
36 Kingston (31) 88; DG Comp Management plan 2018, 3; Mission Statement of DG COMP in Strategic Plan 2016-2020 for DG Competition, 3.
101 TFEU’s goal of protecting competition ‘as a means of enhancing consumer welfare and of ensuring an efficient allocation of resources.’38
This has several consequences for the way that environmental factors are weighed under the exception. To illustrate the role that environmental factors play in DG Competition’s methodology in competition assessments, the example of a CSI in the form of a carbon pricing agreement will be taken in light of Article 101 TFEU. There are anti-competitive elements to such carbon pricing agreements due to the increase in price for the consumer that was agreed upon between competitors, and due to the fact that competition is limited as a result of a loss of independent decision-making. This is seen as a price fixing agreement.
When the carbon pricing agreement is caught by the prohibition of Article 101(1) TFEU, the exception on the basis of Article 101(3) TFEU can be claimed before DG Competition. This will be done on the basis of the benefits that the agreement has for the environment as a result of lower GHG emission. Due to the economic approach, DG Competition applies Article 101(3) TFEU narrowly in the sense that public interests such as environmental protection and sustainable development are only considered in economic terms.39 Environmental factors, such
as in the carbon pricing agreement, are not inherently incapable of being considered in the competition assessment, but these factors can only be considered if they fulfil all four criteria of Article 101(3) TFEU.40 However, due to its price fixing character, the carbon pricing
agreement is unlikely to fulfill the criteria.41 Furthermore, as a consequence of the narrow
interpretation of important elements of these criteria, it is difficult for the environmental benefits to fulfil the conditions. In the application of Article 101(3) TFEU, DG Competition uses a narrow interpretation of the concepts of the consumer, consumer benefits, and the pro-competitive effects of the agreement.42 This has consequences for the way that environmental
factors such as GHG reductions can be weighed in the assessment under Article 101(3) TFEU. First, the second criterium of the exception requires that an agreement with anti-competitive effects transfers a fair share of the benefits of this agreement to the consumer of the product subject to the agreement.43 DG Competition interprets this narrowly in the sense
that the economic disadvantage for the consumer should at least be outweighed by an economic advantage for the same consumer.44 This means that benefits need to be quantified in terms of
38 Guidelines 81(3) (n 37) para 13. 39 Ibid para 5. 40 Ibid para 42, 46. 41 Ibid para 46. 42 Ankersmit (n 27) 208-209. 43 Guidelines 81(3) (n 37) para 84. 44 Ibid para 86.
economic benefits. Second, the consumer is interpreted strictly in terms of direct and indirect consumers of the product subject to the anti-competitive agreement.45 Any benefits that accrue
for consumers in different markets or society as a whole cannot be weighed as an advantage against the disadvantage of the anti-competitive agreement.46 Third, the benefits should be
linked directly to the agreement so that indirect or uncertain benefits will not be weighed.47
As a consequence, the only way that the benefits to the environment in a prima facie anti-competitive agreement will lead to an exemption under Article 101(3) TFEU is if the benefits can be quantified in economic terms and are in favour of the direct or indirect consumer buying that product. Environmental benefits can often not fulfil these requirements due to their nature. In the case of carbon pricing agreements, the benefit of reduced carbon emissions to a slowing down of global temperature is both extremely difficult to quantify and will take time to accrue; there is no immediate effect. In principle benefits are allowed to become apparent in the future, however in that case the DG Competition must ascertain that they are sufficiently likely to materialize.48 It will be hard to establish to what extent a certain amount of GHG
reductions has contributed to a reduction of global warming. Furthermore, the benefits that will materialize in the form of reduced carbon emissions contributing to the climate objectives will be a benefit for society as a whole and not just for the consumer buying that one particular product. The benefits will be spread over society as a whole in the future, as opposed to accruing directly for the individual consumer. The future benefit for the specific consumer is difficult to quantify and the direct link between the agreement and the benefit will be hard to establish. Under the current approach, the advantages of the carbon pricing agreement are therefore unlikely to outweigh any economic disadvantage that the direct or indirect consumer suffers because of the price increases. Once caught by Article 101(1) TFEU, a carbon pricing agreement is therefore unlikely to fulfil the requirements of Article 101(3) TFEU in order to escape the prohibition. Hence, the current interpretation of the competition rules by DG Competition limits the possibilities for such carbon pricing agreements.
There are several alternatives to the current narrow economic approach of DG Competition that would allow for the integration of environmental objectives in the competition assessment under Article 101 TFEU. The Court of Justice of the European Union (‘CJEU’) has issued several rulings in this regard. The Court of Justice (‘CoJ’) used a rule-of-reason based
45 Ankersmit (n 27) 208.
46 Guidelines 81(3) (n 37) para 43; Ankersmit (n 27) 209. 47 Guidelines 81(3) (n 37) para 54; Ankersmit (n 27) 209.
48 Case C-501/06 P GlaxoSmithKline [2009] ECR I-9291ECLI:EU:C:2009:610 para 93; Guidelines Article 81(3) (n 37) para 88.
approach in the Albany case in regard to a prima facie anti-competitive agreement because it pursued a social policy as laid down in the treaties, thereby falling outside of the scope of the prohibition of Article 101(1) TFEU. 49 It is argued by some that Article 11 TFEU, the
environmental integration provision, can serve as a basis to extend that approach to agreements such as carbon pricing agreement, pursuing environmental objectives.50 However, the General
Court has ruled that there is no rule of reason in competition law.51 Currently, DG Competition
also rejects a rule-of-reason based approach in competition enforcement.52
Nevertheless, the General Court has also ruled that the Commission may consider the objective of an agreement and public interest objectives in its assessment under Article 101(3) TFEU.53 In the Meca-Medina and OTOC cases, the CoJ concluded that inherent restrictions of
certain agreements pursuing public interests can be considered as long as the restriction is proportionate to the aim.54 Such an approach could readily be applied to the restrictions of
carbon pricing agreements, for example, and would serve the obligation of Article 11 TFEU to integrate environmental objectives in all activities of the Union, including competition policy. Interestingly, in the past DG Competition has itself adhered to an assessment method where it left more room to consider the environmental impact of an agreement. An example is the well-known CECED decision.55 In the case of this CECED agreement, benefits accrued for
both the individual user and society as a whole and DG Competition was permissive of incorporating the benefits to society in the competition assessment.56 Account was taken of the
costs of pollution to society.57 This led to a decision where no anti-competitive conduct was
found. However, DG Competition does not follow this approach anymore.
Thus, the narrow economic approach leads DG Competition to take an approach to competition enforcement that follows a stricter approach than the case-law of the CJEU and does not take account of the obligations under the Paris Agreement and Articles 3 TEU and 11
49 Case C-67/96 Albany [1999] ECR I-5751 ECLI:EU:C:1999:430, para 61-64. 53 Ankersmit (n 27) 213; Gerbrandy (n 31) 138.
51 Case T-112/99 M6 [2001] ECR II-02459 ECLI:EU:T:2001:215 paras 76, 107.
52 European Commission, ‘White Paper on Modernisation of the Rules Implementing Articles 85 and 86 of the EC Treaty’ [1999] OJ C132/1, para 57.
53 Joined Cases T-528, 543 and 546/93 Metropole [1996] ECR II-649, ECLI:EU:T:1996:99, para 118; Case C-26/76 Metro I [1977] ECR 1875 ECLI:EU:C:1977:167 para 43; Ankersmit (n 27) 212.
54 Case C-519/04 P Meca-Medina [2006] ECR I-6991, ECLI:EU:C:2006:492 para 42; Case C-1/12 OTOC [2013] ECLI:EU:C:2013:127 para 93.
55 CECED (Case IV.F.1/36.718) Commission Decision 2000/475/EC [2000] OJ L187/47; Vedder (26) 140; Monti, (n 31) 1075.
56 Ankersmit (n 27) 211; CECED Decision (n 55) para 56. 57 CECED Decision (n 55) para 55.
TFEU. The research in the following chapter will shed a light on the effects of promotion of this approach and to what extent this might lead in practice to a limitation of CSI’s.
4. Convergence
This chapter will explain what convergence of competition rules entails, how it is established and why DG Competition pursues convergence. This will give an insight into how DG Competition seeks convergence of competition rules, which influences the extent to which convergence occurs in practice. Convergence is mainly sought through cooperation. Cooperation with other competition authorities is a venue for the promotion of convergence with the European competition rules.
One of the four functions of DG Competition is ‘Promoting competition culture and international cooperation in the area of competition policy; maintaining and strengthening the Commission's reputation world-wide.’58 This function stems from the fact that, although the
world has seen a major increase in the number of jurisdictions that apply competition law, – 20 in 1990, 120 in 2014 -59 there is no harmonized international competition law at this moment.
This poses problems due to the internationalization of anti-competitive behavior.60 In order to
protect the internal market against internationalized anti-competitive behavior, DG Competition cooperates with other competition authorities around the world.61 In principle, the
DG is bound by Article 21(2) TEU in enacting these external activities. This means that it should work towards preserving the environment and fostering sustainable development. DG Competition finds it relevant to pursue cooperation to achieve convergence and uniform application of competition rules for legal certainty for businesses, effective enforcement of competition rules and effective protection of consumers and minimise risk of conflicting outcomes.62 Convergence in turn facilitates cooperation by avoiding conflicting outcomes. 63
Cooperation and convergence therefore reinforce each other: cooperation facilitates convergence by providing a venue, and convergence in turn aides cooperation by aligning the rules and their purpose.
58 Mission Letter by President Juncker of 1 November 2014,
http://ec.europa.eu/commission/sites/cwt/files/commissioner_mission_letters/vestager_en.pdf; Strategic Plan 2016-2020 for DG Competition, 5.
59 OECD ‘Challenges of international cooperation in competition law enforcement’
http://www.oecd.org/daf/competition/challenges-international-coop-competition-2014.htm (accessed 8 may 2019).
60 DG Competition (n 6). 61 Ibid.
62 Speech by M. Vestager, Commissioner for Competition ‘Hitting the Sweet Spot in Antitrust Enforcement’ 2018;Speech by J Laitenberger Director-General for Competition ‘Joining forces for a global level playing field ICN’ 2017.
As noted in the introduction, convergence is the alignment of different rule systems so that their applications do not conflict with each other. Convergence can occur with regard to procedural and substantive rules.64 The focus here will be on substantive convergence because
the choice of interpretation through the economic approach and the effects thereof on the possibility to consider environmental impact of economic conduct is a substantive issue.
Convergence takes place in different forms. In order to distinguish convergence, this contribution introduces a qualification of convergence in two forms: soft and dominant convergence. Soft convergence means meeting in the middle, where conflicting provisions are smoothed out – i.e. conduct which is illegal in one jurisdiction is also illegal in another or making sure that rules of evidence do not conflict. The rules are still adapted to the national legal system, so other than their goals, they are not similar. Dominant convergence takes place through the transfer of rules and their rationale of application from one jurisdiction to another. When one jurisdiction is more dominant than the other in cooperation, that can result in a one-way transfer of rules and rationale from the dominant jurisdiction to the non-dominant jurisdiction so that the latter jurisdiction will mirror the rules of the former. The dividing line between soft and dominant will be explained below. As noted, it is also possible to distinguish convergence with regard to substantive and procedural rules. This means in theory that there are four possible categories of convergence: soft substantive, soft procedural, dominant substantive, and dominant procedural. In the present contribution, the concept of dominant substantive convergence with the EU as dominant jurisdiction will be most relevant because this could lead to the exportation of the narrow economic approach and the subsequent interpretation of environmental concerns in competition assessments. The four qualifications of convergence will be used to facilitate an analysis of European convergence behavior and its effects.
DG Competition promotes its competition rules through bilateral and multilateral action in order to achieve convergence.65 To establish convergence, a broad approach will be taken.
In order to consider DG Competition’s possible influence that might have an effect on the way that third country jurisdictions interpret environmental factors in the competition assessment, convergence will be researched with regard to the entire cooperation. This means that an analysis will be made of the official documents establishing cooperation, the attitude and input of DG Competition in this cooperation, and whether this leads to an adoption of European rules and approaches to competition rules. If convergence is established, it will be researched whether
64 C. Damro (n 11), 870.
this also means a transfer of the narrow economic approach as established in Chapter 2 and of the stance towards environmental factors in the competition assessment.
This contribution introduces several criteria to establish convergence that differentiate between soft and dominant convergence. Soft convergence has taken place when the following criterium is fulfilled: 1) Similar competition objective. Trough a mutually or collectively concluded agreement or recommendation, DG Competition and one or several other competition authorities express the same view with regard to the objectives of certain competition rules. This means that for example, on a basic level, the rules agreed upon pursue the regulation of the same economic activities in a similar way, such as for example the prohibition of cartels or abuse of a dominant position. Convergence is established in the agreement or in a recommendation, while these rules can nationally still be subject to variations. For dominant convergence to have occurred, two more cumulative criteria need to be fulfilled: 2) Similar rules and application and 3) Attributability. The focus will be on situations where DG Competition is the (potential) dominant actor to see whether it is successful in its promotional activities. To fulfil the second requirement for convergence in a bilateral cooperation, the cooperation must have led to an adoption of rules in the third country jurisdiction that are similar in their reading and application to the European competition rules and the narrow economic rationale towards them, as established in Chapter 3. This can be established where the rules show similarities with the European rules in key concepts, main approaches and language. Differences can still exist, conclusions as to dominant convergence can be taken on a case-by-case basis. The same applies for convergence in multilateral cooperation, however convergence can then be established in the documents that are published on behalf of the organization; expressing the views of that organization. To establish full dominant convergence, the adoption of such rules must be attributable to the influence of DG Competition. Attributability means that this adopted approach can be attributed to the influence by DG Competition during the process of creating the agreement, recommendation or substantive law. Attributability is depends on the circumstances of the entire cooperation. Indications of attributability are that there are active contributions by DG Competition to the agreement, recommendation or law in the form of assistance and training. Due to a lack of access to minutes and decision-making processes, it is not possible to say with full certainty that the adoption of rules similar to those of the EU is indeed attributable to DG Competition’s promotional activities. However, it is recognized that the EU can have a strong ideational
influence on third countries. 66 As will be seen in the following chapters, there are situations in
which DG Competition is highly involved in the forms of technical assistance and educating foreign competition officials. Such circumstances, where also the second criterium is fulfilled, taken together with the notion that the EU can have significant ideational influence, are strong indications towards an influence of DG Competition that can lead to the adoption of competition rules resembling those of the EU. It is the strong combination of the second and third criteria that can build up to the conclusion that dominant convergence has taken place.
The following chapter will go into different types of cooperation that serve as a venue for seeking promotion and convergence. The choice of case studies is based on the international activities of DG Competition, where DG Competition is the main European actor. In the case-studies, cooperation has been formalized through an agreement, MoU or official position for DG Competition in an organization. Official documentation of the cooperation is necessary in order to research the cooperation. This has resulted in case-studies of EU bilateral agreements on competition with Brazil, Canada, China, India, Japan, Korea, Mexico, Russia, South Africa, Switzerland and the United States (‘U.S.’).67 DG Competition is also active in several
multilateral organizations: the European Economic Area (‘EEA’), the United Nations Conference on Trade and Development (‘UNCTAD’), the World Trade Organization (‘WTO’), the ICN, and the OECD.68 Only the ICN and OECD will be researched. The EEA is excluded
because the EEA agreement was concluded on all subject matters covering the European Union. This means DG Competition was not the main actor in the conclusion of that agreement.69 Since
an agreement on competition on WTO level was rejected and since there are currently no negotiations on this issue, the WTO will not be discussed.70 Within the UNCTAD, the role of
DG Competition does not become entirely clear. There is also a lack of submitted documents available by DG Competition to the organization that can be compared with the expressed view of the UNCTAD as a whole. This means the activities of DG Competition at the UNCTAD will not be discussed here. In light of its externalization activities, DG Competition has also started the EU-Asia Competition Cooperation Project in 2018, which includes a dialogue with China,
66 Manners (n 11) 244-245.
67 ‘Bilateral Relations on competition issues’http://ec.europa.eu/competition/international/bilateral/index.html (accessed 19 July 2019).
68 DG Competition, ‘Multilateral cooperation on competition policy’
http://ec.europa.eu/competition/international/multilateral/ (accessed 19 July 2019). 69 Agreement on the European Economic Area OJ [1994] L1/3.
70 WTO ‘Interaction between Trade and Competition Policy’
https://www.wto.org/english/tratop_e/comp_e/comp_e.htm (accessed 19 July 2019). For more information on a WTO competition agreement, see Qianlan Wu, ‘EU–China Competition Dialogue: A New Step in the
India, Japan, South Korea and the countries of the Association of Southeast Asian Nations (‘ASEAN’).71 This project only exists for one year and no official agreements have been
concluded as a consequence of this cooperation. So due to spatial restraints and a lack of official framework to research, DG Competition’s role in the EU-Asia Competition Cooperation Project with regard to promotion and convergence will not be researched here. Bilateral relations, with for example China and Japan, will still be discussed.
71 Management Plan DG Comp 2019 31-32; Competition Cooperation EU-Asia Partnership, ‘About the competition cooperation project’ https://competitioncooperation.eu/about-the-project/ (accessed 21 July 2019); EEAS, ‘EU Competition Collaboration Project’ https://eeas.europa.eu/delegations/association-southeast-asian-nations-asean/64692/eu-competition-collaboration-project_en (accessed 19 July 2019); ASEAN Competition Summer School on EU competition law https://asean.org/asean-officials-took-part-competition-summer-school-eu-competition-law-enforcement-practices/ (accessed 18 July 2019); ASEAN is the association of Singapore, Indonesia, Thailand, Laos, Myanmar, Cambodia, Brunei, Vietnam, Malaysia and the Philippines.
5 Bilateral cooperation
This chapter will set out how the Commission seeks convergence in bilateral relations. It will see to what extent its promotional activities are successful with regard to European competition law and its economic approach, and more specifically the approach towards environmental concerns. This will give insights into whether convergence affects the way that environmental factors can be weighed in competition assessments in third countries and the subsequent effects for CSI’s.
Bilateral agreements dedicated to competition rules come in several forms. The following section will first set out the cooperation agreements and MoU’s that DG Competition has concluded. Subsequently, the role of DG Competition in the forming of China’s Anti-Monopoly Law (‘AML’) through the bilateral Competition Dialogue will be highlighted.
The Commission or DG Competition do not have the competence to conclude agreements on its own behalf that are binding on the Union. 72 Binding international agreements
with regard to competition cannot be concluded by the Commission or DG Competition alone, as this would upset the internal balance of powers of the EU.73 Cooperation agreements on
competition produce legal effects and are therefore concluded following the procedure of Article 218 TFEU.74 This means that the procedure of that article is followed, which includes
the Council and European Parliament in concluding the agreement. DG Competition, as competition authority on the EU level, will still be seen as the main actor because the agreements apply to the competition authorities of the parties to the agreement. Due to their non-binding nature, MoU’s fall outside the scope of Article 218 TFEU so that DG Competition can conclude MoU’s on its own.75
5.1. Bilateral competition cooperation agreements
DG Competition has concluded several bilateral cooperation agreements on competition enforcement with some of its larger trading partners. These cooperation agreements cover procedural aspects of cooperation on cross-border competition cases, such as information-sharing and notification of the start of a case. The agreements lay down a framework for
72 Article 218 TFEU; Case C–327/91 France v. Commission [1994] ECR I–3641 ECLI:EU:C:1994:305 paras. 19-42.
73 Ibid. 74 Ibid.
cooperation on enforcement between competition authorities in the form as proposed by the OECD.76 DG Competition has concluded cooperation agreements with Japan, Korea, Canada,
Switzerland and the U.S. 77
Only the agreement with Japan will be discussed to give an illustration of these cooperation agreements since they all largely follow the same structure and purpose. The purpose of the EU-Japan Agreement on anti-competitive activities is to ensure effective competition enforcement by ‘promoting cooperation and coordination’ between their respective competition authorities and ‘to avoid or lessen the possibility of conflicts’ when these authorities apply their competition laws.78 The cooperation agreement is concerned with
cooperation procedures such as the notification of cases that might be of interest to the trading partner; 79 assistance during enforcement activities by providing information on
anti-competitive activities on respective territories when necessary;80 coordination of enforcement
activities;81 consideration of the interests of the other party during enforcement activities;82
consultation;83 and disclosure of information.84 Substantively, the parties to the agreement will
apply their own respective competition laws.85
The agreement between the EU and Japan lays down that the Parties will pursue a similar application of procedural rules. This is not true for substantive rules since the agreement explicitly mentions the application of the two respective competition law regimes of the Parties. It is an expression of the reciprocal acceptance of the Parties’ competition laws. This means that the first condition for convergence on similar goals of competition rules is only fulfilled with regard to procedural and not substantive competition rules. Thus, there is at least soft, procedural convergence. Procedural convergence through cooperation agreements does not lead to convergence with the economic approach and does not have a potential effect on the way that environmental factors are considered in competition assessments. This is why the
76 OECD Revised recommendation of the Council Concerning Cooperation between Member countries on Anticompetitive Practices affecting International Trade (1995) C130 final; Leigh M. Davison and Debra Johnson, ‘An Exploration of the Evolution of the EU’s TwinTrack Approach to the Achievement of Its International Competition Policy Goals,’ (2015) 36 Liverpool Law Review 82.
77 EC-Japan Competition Cooperation Agreement [2003] OJ L183/12; EC-Canada Competition Cooperation Agreement [1999] OJ L175/50; EC-Korea Competition Cooperation Agreement [2009] OJ L202/35; EU-Swiss Competition Cooperation Agreement [2014] OJ L347/3; U.S.-EC Competition Cooperation Agreement [1995] OJ L95/47.
78 EC-Japan Cooperation Agreement (n 77) Article 1. 79 Ibid Article 2. 80 Ibid Article 3. 81 Ibid Article 4-5. 82 Ibid Article 6. 83 Ibid Article 7-8. 84 Ibid Article 9. 85 Ibid Article 1(2)(d).
second and third criteria to establish dominant procedural convergence will not be researched in this contribution.
5.2. Memoranda of Understanding on competition
Another form of bilateral cooperation on competition is achieved through MoU’s. The DG has concluded MoU’s on enforcement cooperation with Brazil, India, Russia, South-Africa and an Administrative Agreement on Cooperation with Mexico which largely resembles the MoU’s mentioned. 86 This form of cooperation does not set out the framework that cooperation
agreements provide. They are not legally enforceable, which means they mainly serve as the opening of a dialogue and as expression of intent towards cooperation. This can also be derived from the language used: ‘the Sides will ‘endeavour to coordinate’ and ‘nothing in this MoU limits the discretion’. The MoU can function as the first step in a collaboration process. The MoU also provides for the possibility of giving technical assistance on competition enforcement by one competition authority to another.87 This might be of interest for DG Competition when
it comes to the promotion of its own competition law regime and practices. The dialogue is started by sharing experiences and perspectives, and even the provision of staff and seminars. There is some room under the MoU to pursue promotion that could possibly lead to convergence, however the MoU itself does not provide for convergence. No actual common rules or goals of competition law are agreed upon. The first criterium for convergence on similar competition objectives is therefore not fulfilled so that MoU’s do not lead to soft or dominant, or procedural or substantive convergence. Hence, MoU’s cannot lead to the convergence of other jurisdictions with the narrow economic approach applied by DG Competition and will therefore not lead to an increased limitation of CSI’s in third country jurisdictions.
5.3. Competition Dialogue with China
This section will discuss the Competition Dialogue between the EU and China that started in 2003 and still takes place. 88 Although China already enacted some laws related to
86 For the MoU’s between the EU and individual countries, see the table on the page ‘Bilateral relations on competition issues’ on http://ec.europa.eu/competition/international/bilateral/ (accessed 21 May 2019). 87 See for example the MoU between DG Competition and Brazilian competition authorities Article II (5) http://ec.europa.eu/competition/international/bilateral/brazil_mou_en.pdf (accessed 13 June 2019). 88 Declaration on the start of a dialogue on competition by the EU and China, 24 November 2003
competition regulation, there was no comprehensive national competition law framework so that, for example, cartels or abuse of dominance were not expressly prohibited. 89
This Dialogue is not based on one specific bilateral cooperation agreement or MoU but on several documents. It is a form of cooperation where the EU was highly involved in the creation of China’s first comprehensive competition law regime from the start.90 The Terms of
Reference of 2004 ‘established a permanent forum for consultation and transparency to increase the understanding and awareness of policy approaches as well as to promote exchanges and cooperation in the area of competition policy and legislation,’91 which shows the active stance
towards convergence between EU and Chinese competition law. Later, several Memoranda of Understanding were concluded.92
The Competition Dialogue is characterized by its institutionalised, permanent nature, where Chinese and EU officials have equal footing.93 It takes place solely between DG
Competition and the Chinese competition Authorities (the National Development and Reform Committee (‘NDRC’), the State Administration of Industry and Commerce (‘SAIC’) and the Ministry of Commerce). These authorities are equal in this Dialogue and ideas and views are exchanged from both sides.94 The EU has offered technical support in the form of seminars,
trainings for officials, and secondments to generate the necessary institutions and practical competences that have supported the implementation of the AML in China.95
Because there was no comprehensive competition law in China when the Dialogue started, it is reasonable to assume that DG Competition mainly provided the Chinese authorities with assistance and knowledge, and not the other way around. Thus, although the approach of the Dialogue focusses on consultation and equality between the competition authorities, it is probable that knowledge primarily flows from DG Competition towards the Chinese competition authorities.
89 OECD report, ‘China in the World Economy – The Domestic Policy Challenges’ 48-49
https://www.oecd-
ilibrary.org/docserver/9789264196285-en.pdf?expires=1563875516&id=id&accname=ocid56024160&checksum=2A63BD478F3C0589A90A0F0BC6 4778DE
90 Qianlan Wu (n 70), 462.
91 Terms of Reference of the EU-China Competition Policy Dialogue 2019
http://ec.europa.eu/competition/international/bilateral/agreement_tor_china_2019.pdf (accessed 21 May 2019). 92 Memorandum of Understanding on cooperation in the area of Anti-Monopoly Law (2012, between DG Competition and NDRC & SAIC); Memorandum of Understanding on a dialogue in the area of the State aid control regime and the Fair Competition Review System (2019, between DG Competition and NDRC); 93 Qianlan Wu (n 70), 466.
94 Terms of Reference of the EU-China Competition Dialogue
http://ec.europa.eu/competition/international/bilateral/china_tor_en.pdf (accessed 23 May 2019).
95 Ibid; Qianlan Wu (n 70), 467; For a definition of technical assistance, see UNCTAD (n 8); S Speech by Mario Monti, Commissioner for Competition ‘International cooperation and technical assistance: a view from the EU’ 2001; Competition Cooperation EU-Asia Partnership (n 71).
Following the implementation of the Chinese AML, several similarities can be observed between the Chinese AML and the EU competition laws. In light of technical assistance provided by DG Competition, the similarities serve as an illustration of the influence of the Dialogue. It should be mentioned that some similarities with the U.S. antitrust rules are also present. However, the largest influence seems to be coming from the EU.96 With regard to
substantive law, China has adopted a civil liability system like the European system and unlike the U.S. system where personal criminal liability is the norm.97 The ‘antimonopoly authorities’
can impose fines between 1% and 10% of the turnover of the undertakings in violation, mirroring the approach of the EU where fines of up to 10% of the turnover can be issued.98
Articles 13 and 14 AML prohibit horizontal and vertical anti-competitive agreements, just as Article 101 TFEU does. Article 17 AML lays down the prohibition of abuse of a dominant position, mirroring Article 102 TFEU. Articles 20-21 AML explain when a concentration of undertakings should notify the concentration to the State Council, and if it needs to be notified, it cannot be implemented before approval, mirroring the Merger Regulation.99 The Chinese rules are not an exact copy of the European rules but the language
and approach are unmistakeably similar.The terms used in the AML ‘undertaking’, ‘abuse of a dominant market position’, ‘concentration’, ‘eliminating or restricting competition’, are also specific to the European system.100 In the U.S. the terms ‘person engaged in commerce’,
‘discriminate in price’, ‘monopolizing trade’ are used.101 In language, all aforementioned
provisions largely resemble European rules and not the U.S. antitrust rules. Another similarity between Chinese and European rules can be seen in goals that are set for competition rules. The language as well as the goals resemble those used in EU law and guidelines: ‘protecting fair competition in the market, enhancing economic efficiency, safeguarding the interests of consumers and the public interest.’102 However, these goals are not specific to the EU.103
96 Guangjie Li Revisiting China’s Competition Law and its Interaction with Intellectual Property Rights (Nomos Verlagsgesellschaft MbH, 2018) 36 ; Qianlan Wu (n 70) 462.
97 Article 50 AML, see https://www.wipo.int/edocs/lexdocs/laws/en/cn/cn099en.pdf (accessed 23 May 2019); Sherman Act § 1, 15. U.S.C. § 1; Sherman Act § 2, 15 U.S. Code § 2; Article 23 Council Regulation No 1/2003 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty [2003] OJ L1/1. 98 Article 46 AML (97); Article 23(4) Regulation 1/2003 (n 97).
99 Articles Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings [2004] OJ L24/1.
100 Article 3, 13-21 AML (n 97).
101 Sherman Act § 1, 15. U.S.C. § 1; Sherman Act § 2, 15 U.S. Code § 2 ; Sherman Act § 8, 15 U.S.C. § 7. 102 Article 1 AML; Guangjie Li (n 96) 40. The language resembles language used setting out the goals for competition law in Guidelines on 81(3) (n 37) paras 33, 59.
103 Article 1 AML (n 97); Guangjie Li (n 96) 40. The language resembles language used in the Guidelines on 81(3) (n 37) paras 33, 59; UNCTAD report on the Application of Competition Law: Exemptions and Exceptions, 8 https://unctad.org/en/Docs/ditcclpmisc25_en.pdf.
Nevertheless, the mentioning of public interest in the goals of competition law stands out. This is a clear difference with the European system. More specifically, under Chinese competition law, the environment as a public interest can influence the competition assessment. Article 15(iv) of the AML, the equivalent of Article 101(3) TFEU, explicitly states that in light of ‘public interest such as energy conservation, environmental protection, disaster relief’, agreements that are caught by Articles 13 and 14 of the AML can be exempted.104 Furthermore,
Article 28 AML notes that mergers with anti-competitive effect might be approved if the merging parties show that it is ‘in harmony with public interests.’ This is a major difference with the European system since this is not laid down in European law and the European competition system does not award inherent value to the pursuit of public interests such as the environment. Under the AML, public interests do not need to be quantified in order to lead to an exemption for an anti-competitive agreement. This is therefore a rejection of the narrow economic approach. Invoking the exemptions of Article 15 AML are limited by conditions similar to those of Article 101(3) TFEU. However, they are not mirrored exactly, as there is no indispensability requirement and the consumer benefit requirement is broader as it refers to a share of the benefits for consumers.105
Now, the extent to which actual convergence has taken place will be discussed. First, Chinese and European competition rules pursue the same objectives with regard to competition law as expressed in the Declaration on the start of a dialogue.106 This means the first condition
for convergence on pursuing the same objective is fulfilled so that at least soft convergence is established. With regard to the second requirement, although the AML is no exact copy of the European rules, the language used is similar with regard to key terms. Furthermore, the AML lays down an amount of basic competition principles that are the same as in the EU. Nevertheless, differences lie in the approach to the role of public interests in the competition assessment. This does not only relate to a specific provision but is an illustration of how the European approach has not entirely found its way into Chinese competition law. It shows a fundamental difference in the rationale of what the role of competition law is. The second criterium is therefore not fulfilled. Due to the significant amount of similarities, it is still interesting to discuss the third criterium. The AML materialized in light of the cooperation between the EU and China. Together with the conclusion that there are now many similarities, this serves as a sign of successful promotion by the DG Competition. In light of the intense
104 Articles 13-15 AML (n 97); Guangjie Li (n 96) 45. 105 Ibid; Guangjie Li (n 96) 45.
cooperation between China and the EU where the EU can be presumed to have offered extensive assistance and knowledge in combination with the similarities of the law, there are strong indications that the adoption of those rules can be attributed to the EU. The third condition is therefore fulfilled. However, since the second criteria is not fulfilled, this leads to the conclusion that dominant convergence of Chinese competition law with European competition law has not taken place. Only soft convergence can be discerned. DG Competition was dominant in the Dialogue, but not enough to effectuate dominant convergence with its approach. Still, the dialogue can be seen as a clear promotion of the EU competition law regime leading to some convergence of Chinese competition laws with those of the EU.
