Livia Salleo Student ID: 12527297 liviasalleo@yahoo.it Master of Laws thesis Thesis supervisor: Zlatina Georgieva International and European law European Competition law and Regulation track July 24th 2020 Word count: 11 481
The borders of article 101 TFEU.
Table of Contents:
Abstract 4
Chapter I – Introduction 4
Chapter II - Competition case law featuring sustainability concerns historically 6
II. 1. Introduction art. 101 TFEU 6
II. 1. A. Art. 101(1) TFEU 6
II. 1. B. Art. 101(3) TFEU 7
II. 2. Contextualisation of sustainability law into competition law
how its relevant, its framework 10
II. 3. Relevant case law preceding CECED and Chicken of Tomorrow 12
Chapter III - Considering sustainability agreements under art. 101(1) TFEU 15 III. 1. Dutch legal framework preceding the Chicken of Tomorrow case 15 III. 2. Presentation of key facts in the Chicken of Tomorrow case 17 III. 3. Analysis of the ACM’s decision in the Chicken of Tomorrow case 18 III. 4. Consequences arising from the Chicken of Tomorrow case
in the Netherlands 19
III. 5. Presentation of ECJ case law excluding agreements from Art.
101(1) TFEU 20
III. 6. How sustainability agreements could be excluded from the
application of cartel law following the Wouters doctrine 21
Chapter IV - Considering sustainability agreements under art. 101(3) TFEU 22 IV. 1. Presentation of key facts in the CECED case 22 IV. 2. A. Analysis of the Commission’s decision in the CECED case 23 IV. 2. B. Analysis of the ACM’s Art. 101(3) TFEU assessment in the
Chicken of tomorrow case 24
and later case law 25 Chapter V - Have the logical limits of art. 101 TFEU been encroached upon in order to
justify sustainability agreements? 27
V. 1. Summary of the essay 27
V. 2. Answer to the question whether the logical limits of art. 101 TFEU been encroached upon in order to justify sustainability agreements 28 V. 2. A. What are the logical limits of Art. 101 TFEU? 28 V. 2. B. Have the logical limits of Art. 101 TFEU been encroached upon? 30
Chapter VI – Conclusion 31
Abstract
This essay investigates the relationship between sustainability agreements and Article 101 of the Treaty on the Functioning of the European Union. It seeks to determine how sustainability agreements have been justified pursuant to Art. 101 TFEU in European case law and jurisprudence and whether the logical limits of Art. 101 TFEU have been encroached upon in order to justify sustainability agreements. The methodology used is that of legal doctrinal analysis. Multiple European cases have been examined in order to study this very current issue. In order to answer the research question, this essay is divided in six Chapters that delve into the contextualization of sustainability law in the framework of European competition law, the study of sustainability agreements under Art. 101(1) TFEU followed by the study of sustainability agreements under Art. 101(3) TFEU and the analysis of this article’s logical limits and whether they have been encroached upon in the field of sustainability agreements. The conclusion states that the limits of Art. 101 TFEU have not yet been pushed too far.
Chapter I Introduction
Sustainability agreements are agreements between two or more undertakings or associations of undertakings that share the common goal of creating products or providing services that present some sustainable qualities. For example, a product may be environmentally friendly or animal friendly. Sustainability agreements can increase welfare for customers who prefer sustainable products and they can also increase general societal welfare, for example by using global resources more efficiently.1
European competition law ensures the efficiency of the competitive process. More precisely, Art. 101 of the Treaty on the Functioning of the European Union (hereinafter TFEU) prohibits agreements between two or more undertakings which restrict competition. Art. 101(3) TFEU sets out the conditions under which these agreements may be exempted from this rule.
There have been many cases featuring sustainability agreements that posed the question of whether such agreements could be compatible with Art. 101 TFEU. This essay investigates
whether such agreements stretch Art. 101 TFEU too far. More accurately, this essay asks how sustainability agreements have been justified pursuant to Art. 101 TFEU in European case law and jurisprudence and whether the logical limits of art. 101 TFEU have been encroached upon in order to justify sustainability agreements. These are crucial issues, as this paper will explain, because they can have far-reaching consequences.
As the issue tackled is still an on-going one, the first research sub-question on how sustainability agreements have been justified pursuant to art. 101 TFEU will allow the author to study it directly from the source, by analysing how the cases revolving around Art. 101 TFEU and sustainability agreements have evolved.
The second research sub-question goes one step further and tackles the implications of the answer to the first research sub-question. The implications considered will involve the interpretation of the application of Art. 101. Has Art. 101 TFEU been stretched too far? What does this mean? This sub-question will be tackled in Chapter V.
Art. 101(1) TFEU aims at maintaining effective competition by prohibiting anti-competitive practices, and Art. 101(3) TFEU allows certain exceptions to escape Art. 101(1) TFEU. The following chapter will expand on this notion. It is paramount to keep in mind that generally two main categories of agreements can be exempted: agreements featuring a restriction of competition but presenting strong economic advantages for the consumer, and agreements featuring public policy objectives that are not strictly related to the promotion of consumer welfare.2 The latter is interesting for the purposes of this essay. Indeed, this essay aims at exploring the logical limits of the application of Art. 101 TFEU regarding such agreements. More specifically, sustainability agreements will be taken into account. The logic of Art. 101 TFEU is that competition must be preserved, and only a few overriding exceptions may jeopardize the competitive process (as will be further discussed in Chapter V.2.A.). This paper will explore what features sustainability agreements must present in order to fall within the logical limits of Art. 101 TFEU.
This essay is of societal and scientific relevance because sustainability is a paramount and current topic that affects every individual. It has historically not been particularly taken into account in Art. 101 TFEU, hence the importance of gradually integrating sustainability in cases featuring horizontal or vertical agreements.
The methodology used in this essay will consist of legal doctrinal analysis. It will be mainly based on primary sources such as case law. The secondary sources will be legal books and journal articles. Case law will be found through legal databases such as EurLex and HeinOnline. Moreover, cases will also be found through the European Commission, Directorate General Competition website. The relevant cases will be found by using key words such as ‘Art. 101 TFEU’ and ‘sustainability’. After reading the resulting cases, the author will assess which ones are relevant for this essay. The main focus will be on the CECED and Chicken of tomorrow cases,3 along with the subsequent cases stemming from and referring to them. Further relevant cases identified through primary as well as secondary sources and the abovementioned keywords search will also be included.
The second chapter of this essay presents the historical perspective of competition case law featuring sustainability concerns. The chapter thereafter is more analytical and studies sustainability agreements under Art. 101(1) TFEU. The fourth chapter is also of an analytical nature and deals with sustainability agreements under art. 101(3) TFEU. The fifth chapter answers the question of whether the logical limits of art. 101 TFEU have been encroached upon in order to justify sustainability agreements and is followed by a concluding chapter.
Chapter II
Competition case law featuring sustainability concerns historically
II. 1. Introduction art. 101 TFEU:
II. 1. A. Art. 101(1) TFEU:
Article 101(1) TFEU prohibits agreements between undertakings, decisions by associations of undertakings and concerted practices which affect trade between Member States and have as their object the prevention, restriction or distortion of competition in the internal market. Art. 101(2) TFEU prescribes that such agreements or decisions are automatically void.
An undertaking is essentially any legal entity engaged in an economic activity, regardless of its legal status.4
Art. 101(1) TFEU applies to any agreement. An agreement consists of a concurrence of wills, the form of which is unimportant.5 A concerted practice is a form of coordination between undertakings which, without having reached the stage of an agreement, knowingly substitutes competition for practical cooperation.6
Agreements having the object or effect of distortion of competition are prohibited. If an agreement has the object of distorting competition it means that the undertaking’s conduct reveals in itself a sufficient degree of harm to competition. If an agreement has the effect of distorting competition it means that it is liable to have an appreciable adverse impact on competition.7
Moreover, the de minimis doctrine implies that an agreement is caught by art. 101(1) TFEU only if it has an appreciable impact on inter-state trade or on competition.8
Art. 101(1) TFEU applies to agreements, decisions or concerted practices which may affect trade between Member States.9
II. 1. B. Art. 101(3) TFEU:
Art. 101(3) TFEU lists the conditions under which art. 101(1) TFEU is inapplicable. There are four cumulative conditions, two are positively formulated and two are negatively formulated. The former conditions are that the agreement must contribute to improving the production or distribution of goods or to promoting technical or economic progress and it must do so while allowing consumers a fair share of the resulting benefit. The negative conditions are that the agreement must not impose on the undertaking concerned restrictions which are not indispensable to the attainment of these objectives and that it must not afford such undertakings the possibility of eliminating competition in a substantial part of the products in question.10
4 Case C-41/90 Klaus Höfner and Fritz Elser v Macrotron GmbH [1991] ECR I-1979. 5 Case T-41/96 Bayer AG v Commission of the European Communities [2000] ECR II-3387.
6 Case 48-69 Imperial Chemical Industries Ltd. v Commission of the European Communities [1972]. 7 Case C-382/12 MasterCard and Others v Commission [2014] ECLI:EU:C:2014:2201.
8 Case C-5/69 Franz Völk v S.P.R.L. Ets J. Vervaecke [1969] ECLI:EU:C:1969:35. 9 R Whish and D Bailey, Competition Law (OUP 2018) ch. 3 p. 82-157.
Decisions under art. 101(3) TFEU are made by the European Commission. The European Commission also issued useful guidelines on the application of art. 101(3) TFEU.11
Condition 1: improvement in the production or distribution of goods or in technical or economic progress
The first condition is that the agreement must ‘display appreciable objective advantages of such a character as to compensate for the disadvantages which that agreement entails for competition’.12 If a narrow view of art. 101(3) TFEU is adopted it would entail that only agreements that bring about economic efficiencies satisfy this condition. On the other hand, if a broader view is adopted, it would enable taking into consideration policies other than efficiency. For example, in Metro v Commission employment was a factor considered under 101(3) TFEU.13 In CECED, ‘collective environmental benefits’ were taken into account.14 In the European Commission’s art. 101(3) TFEU Guidelines it seems that the Commission grants preference to the narrow approach.15
Condition 2: fair share for consumers
The second condition is a pass on requirement. To satisfy this condition, there must be a pass on to the consumers. Consumers are all indirect or direct users of the product covered by the agreement.16 The benefits that the consumers gain from the agreement must be greater than the anti-competitive disadvantages that it brings about. According to the Commission’s Guidelines, the pass on condition must be assessed in relation to cost efficiencies (such as increased output and lower prices) and to qualitative efficiencies (such as for example the emergence of a new and improved product).17
11 Guidelines on the application of Article 81(3) of the Treaty [2004] OJ C 101.
12 Joined cases 56/64 and 58/64 Établissements Consten S.à.R.L. and Grundig-Verkaufs-GmbH v
Commission of the European Economic Community [1966] EU:C:1966:41.
13 Case C-26/76 Metro v Commission [1977] ECLI:EU:C:1977:167. 14 Case IV.F.1/36.718 CECED [1999].
15 R Whish and D Bailey, Competition Law (OUP 2018) ch. 4 p. 157-180.
16 Guidelines on the application of Article 81(3) of the Treaty [2004] OJ C 101 para. 84. 17 Ibid.101 paras 95-104.
Condition 3: indispensability of the restrictions
The third condition brings about a twofold test.18 Firstly, it must be assessed whether the agreement is reasonably necessary to achieve the efficiencies and secondly it must be assessed whether the individual restrictions of competition stemming from the agreement are reasonably necessary for the attainment of the efficiencies. Essentially, a balancing of pro and anti-competitive effects must be carried out.19
Condition 4: no elimination of competition in a substantial part of the market
The last condition gives priority to the protection of the competitive process over pro-competitive efficiency gains. In order to check whether competition will be eliminated, actual and potential competitors are taken into account.20
Under regulation 1/2003 undertakings can make a self-assessment of whether they are infringing art. 101 TFEU. They have Commission’s best practices and case law to guide them. Therefore, regulation 1/2003 rendered art. 101(3) TFEU directly applicable.21
Albeit very rarely, Art. 101(3) TFEU can even be satisfied by agreements that have as their object the restriction of competition.22 This article can also be satisfied by agreements that have as their effect the restriction of competition.23
Alternatively, an agreement can satisfy art. 101(3) TFEU if it satisfies a Block Exemption. If an agreement satisfies a Block Exemption Regulation (BER), there is no need to assess it under art. 101(1) TFEU. When a BER applies, 101(1) TFEU becomes inapplicable. BERs apply to categories of agreements.24
18 Ibid. para. 73. 19 Ibid. para 30.
20 Ibid. paras. 108 and 114.
21 R Whish and D Bailey, Competition Law (OUP 2018) ch. 4 p. 157-180.
22 Commission Decision relating to a proceeding concerning case COMP/A.38284/D2 — Société Air
France/Alitalia Linee Aeree Italiane SpA (notified under document number C(2004) 1307) [2004]
2004/841/EC.
23 Case No IV/36.748 REIMS II [1999] 1999/695/EC.
This section of the second chapter has briefly presented Art. 101 TFEU. Art. 101(1) TFEU does not explicitly state that sustainability agreements do not fall within this article, and Art. 101(3) TFEU does not explicitly list sustainability as an exemption from applying antitrust law. This essay then seeks to understand what place sustainability holds when applying Art. 101 TFEU.
II. 2. Contextualisation of sustainability law into competition law: how its relevant, its framework:
The European Union was initially conceived as an economic union, as can be observed through the Rome Treaty (1957). However, sustainability has played a role in EU legislation for a long time. Indeed, the Single European Act (1986) included in its Title VII provisions aiming at the protection of the environment. Only a few years later, the Maastricht Treaty (1992) also included non-economic objectives. Further, the Lisbon Treaties even place the environment as a shared competence between the EU and Member States (art. 4(2)(e) TFEU).
Art. 114 TFEU establishes the internal market, and art. 114(3) TFEU links the internal market with a high level of protection of the environment. Further, art. 3 TEU includes sustainable development and protection of the environment in the EU’s goals. This is further elaborated on in art. 191 TFEU.
The emphasis that sustainability law has had in EU law proves that environmental issues have been the legislator’s concern for many years and indicate that sustainability should play a role in all fields of EU law, including EU competition law and Art. 101 TFEU.
EU environmental policy is also governed by general principles such as the precautionary principle, the preventive principle and the polluter pays principle.
The precautionary principle is already enshrined in art. 192 TFEU. Its legal basis is a combination of this Treaty article and case law. This principle entails that health and environmental protection goals take priority over economic goals.25 The consequence of this principle is that it grants discretion to risk managers to determine on the basis of the results of the scientific risk assessment whether the evidence threshold is reach and whether the PP
25 Cases T-429/13 and T-451/13 Bayer CropScience AG and Syngenta Crop Protection AG v European
should be applied. However, such risk management measures must be provisional and proportionate.
The preventive principle allows action to be taken to protect the environment at an early stage. It is now not only a question of repairing damages after they have occurred, but to prevent those damages occurring at all.26
The polluter pays principle was already enshrined in the 1992 Rio Declarations and entails that those who produce pollution should carry the costs of managing it to prevent damage to human health or to the environment.27
Article 11 TFEU also forms part of EU sustainability law’s framework as it is a policy linking clause: it links environmental protection to Union policies. This goes to show the importance of sustainable development within EU law’s framework.
Art. 192(1) TFEU states that the European Parliament and the Council ‘shall decide what action is to be taken by the Union in order to achieve the objectives referred to in art. 191’. This confers the UE specific harmonization powers related to the environment.
This entails that harmonization on environmental issues has two legal bases: specific harmonization through art. 192 TFEU and internal market legal basis through art. 114 TFEU.
Furthermore, EU sustainability law is also developed through secondary law such as directives and regulations such as Directive 2008/50/EC28 and Regulation (EC) 1013/200629 for example.
26 European Environment Agency, Glossary ‘prevention principle’,
https://www.eea.europa.eu/help/glossary/eea-glossary/prevention-principle, last accessed June 19th 2020.
27 London School of Economics and Political Science and Grantham Research Institute on Climate Change and the Environment, ‘What is the polluter pays principle?’(2018) http://www.lse.ac.uk/GranthamInstitute/faqs/what-is-the-polluter-pays-principle/, last accessed June 19th 2020.
28 Directive 2008/50/EC on ambient air quality and cleaner air for Europe [2008]. 29 Regulation (EC) No 1013/2006 on shipments of waste [2006] OJ L 190.
II. 3. Relevant case law preceding CECED and Chicken of Tomorrow:
The following cases are competition law cases with a European dimension that also present an aspect featuring sustainability. They are placed at the intersection of these two fields and bring about interesting questions and are an excellent example of how sustainability plays a role in EU competition law.
CECED is an EU case from 1999 that deals with Art. 101(3) TFEU. CECED is the acronym for the European Council for the Manufacturing of Domestic Appliances (Conseil Européen de la Construction d'Appareils Domestiques). This Council had made an EU-wide agreement between producers of domestic appliances agreeing to cease production of their least efficient model of washing machine. The EU Commission analyzed the proposed agreement and decided that it fulfilled the conditions in Art. 101(3) TFEU. This case is paramount because the Commission took into account greater environmental benefits, as will be seen later on in the essay.
Chicken of Tomorrow is a more recent Dutch case from 2015 in which an industry-wide arrangement aiming to improve the living standards of chicken destined to Dutch supermarkets was submitted to the Dutch NCA for approval. The NCA first considered whether the proposed agreement fell under the scope of Art. 101(1) TFEU at all, and when it decided that this article was infringed it assessed the agreement under Art. 101(3) TFEU.
These two cases are interesting because they both present the assessment of a sustainability agreement and these cases deal with two aspects of the same article. Further, one is a European and older case whilst the other is a national and more recent case that still applies European Competition law.
Relevant case law preceding CECED :
The relevant case law preceding CECED30 is not abundant. Cases worth mentioning are Gottrup-Klim and the Commission decision EPI. The case Gottrup-Klim concerned the
interpretation of a regulation applying certain rules of competition to production of and trade in agricultural products with regards to local cooperative associations. The Court ruled that a provision in the statute of such cooperative forbidding its members from participating in other forms of organized cooperation did not infringe Art. 101(1) TFEU. The case EPI code of conduct dealt with the modification of an organization’s code of conduct and whether this modification infringed EU Competition law. This case is of relevance because the Commission took into account social and cultural benefits in its Art. 101(3) TFEU assessment. This showed the Commission’s willingness to consider other broader factors under Art. 101(3) TFEU.31
In these cases, it was decided that some restrictions to competition which are necessary and appropriate for the functioning of an organization may fall outside Art. 101(1) TFEU. This principle was further developed in CECED and Wouters32, as will be seen later in this essay.33
Relevant case law preceding Chicken of Tomorrow:
A first relevant case preceding the Chicken of Tomorrow case is Philips Osram (1994). This case concerned an agreement to produce lead glass (for lamp bulbs) and it led to cleaner air for consumers and lower prices.34 In Philips Osram the court studied the four conditions of art. 101(3) TFEU. It considered that production was improved, that there was a benefit pass-on to consumers, that the agreement in question was indispensable even after considering alternative scenarios and that there was no restriction of competition because there were sufficient competitors. Hence, in this case the art. 101(3) TFEU exemption was granted.35
A case that took place two years after Philips Osram is the Métropole Télévision judgement (1996). In this case, the court ruled that in order for the Commission to grant an exemption under art. 101(3) TFEU, the Commission may base itself on considerations connected with the pursuit of public interest.36 In Métropole Télévision it was established that such considerations
31 OFT, Article 101(3) – a discussion of narrow versus broad definition of benefits, (London, office of fair trading, 2010), p. 9.
32 Case C-309/99 J.C.J. Wouters and Others v Algemene Raad van de Nederlandse Orde van Advocaten [2002] ECR I-1577.
33 S van Hees, ‘A sustainable Competition Policy for Europe’, [2011], Section 3.4.1.
34 Commission Decision, Philips – Osram, December 21, 1994, IV/34.252, L378/37 para 27. 35 Commission Decision, Philips – Osram, December 21, 1994, IV/34.252, L378/37 para 31. 36 Case T-112/99, Métropole [2001] ECR II-02459, para 118.
can be made during the assessment of the first condition of Art. 101 (3) TFEU.37 This case showed that there is room for non-economic considerations under art. 101(3) TFEU.38
Further, there are four Dutch cases39 that took place before Chicken of Tomorrow and that tackle the topic of the environment. However, in these cases, environmental benefits were taken under consideration only in conjunction with economic efficiencies.40 Indeed, in these cases the more environmentally friendly decision was taken, but this was in big part due to the fact that it was also the cheaper alternative. For example, in the case concerning recycling41 the ACM reasoned that recycling batteries in the present avoids the high expense of recovering the environmental damage that the lack of their recycling would have in the future.42
This chapter has shown that Art. 101(1) TFEU prohibits agreements between undertakings that affect trade between Member States and have as their object the restriction of competition. Art. 101(3) TFEU sets forth two positive and two negative cumulative conditions in order to grant exemptions from Art. 101(1) TFEU’s application. The broader issue tackled by this essay is whether sustainability arguments are or can be taken into account when assessing an agreement under Art. 101 TFEU. This points out the relevance of understanding Art. 101 TFEU’s basic functioning. By contextualizing sustainability law into competition law, the second part of this chapter has displayed that sustainability has always been part of EU law and that old European competition law cases such as Gottrup-Klim and Philips Osram have taken sustainability into account to some extent in their decision.
The situation regarding European competition law and sustainability before the landmark CECED and Chicken of Tomorrow cases was that certain restrictions to competition which are necessary and appropriate for the functioning of an organization may fall outside Art. 101(1)
37 E. Buttigieg, ‘Competition Law: A Comparative Analysis of US Antitrust Law and EC Competition Law’, Kluwer Law (2009), p. 132.
38 S van Hees, ‘A sustainable Competition Policy for Europe’, [2011], Section 3.4.2.
39 NMa, Besluit Stichting Papier Recycling Nederland, zaak 3007 / 33.O316, 10 december 2003; NMa,
Besluit Vereniging van Bloemenveilingen in NederlandZaaknummer 492, 9 july 1999; NMa, Besluit Stichting Wit- en Bruingoed; NMa, Stibat, 18 december 1998.
40 Working paper SEO economic research, ‘How does article 101(3) TFEU case law relate to EC guidelines and the welfare perspective?’ [2013].
41 NMa, Besluit Stichting Papier Recycling Nederland, zaak 3007 / 33.O316, 10 december 2003. 42 Working paper SEO economic research, ‘How does article 101(3) TFEU case law relate to EC guidelines and the welfare perspective?’ [2013] p. 18.
TFEU, considerations connected with the pursuit of public interest may be taken into account in an Art. 101(3) TFEU assessment and environmental benefits may be taken into account in conjunction with economic efficiencies.
After having introduced Art. 101 TFEU this chapter contextualized sustainability law into competition law and presented case law preceding the CECED and Chicken of Tomorrow cases. This essay will now analyze the cases in which sustainability agreements were considered under art. 101(1) TFEU.
Chapter III
Considering sustainability agreements under art. 101(1) TFEU
III. 1. Dutch legal framework preceding the Chicken of Tomorrow case:
The Dutch competition law regime was introduced in 1998. As a result of this late introduction, Dutch competition law is largely based on EU competition law. Further, a peculiarity of the Dutch competition law system is that the the Dutch National Competition Authority, the Authority for Consumers and Markets (hereinafter ACM) can be overruled and its decisions steered by the Dutch minister of economic affairs.Further, the Dutch Competition Act states that other interests besides economic interests can be considered for purposes of Art. 6(30 of the Dutch Competition Act (which corresponds to Art. 101(3) TFEU).43
In 2014 the ACM released a Vision Document on Competition and Sustainability. This document explains the way the ACM assesses sustainability agreements in light of the policy rule on competition and sustainability issued by the minister of economic affairs.44
In its vision document, the ACM points out that in some cases art. 101(1) TFEU simply does not apply, and the agreement escapes European competition law’s application. This happens if the agreement does not significantly affect competition. However, even if competition is
43 Dutch Competition Act [1997] art.5.
44 ACM, ‘ACM’s analysis of the sustainability arrangements concerning the ‘Chicken of Tomorrow’’, ACM/DM/2014/206028.
affected, the ACM leaves room for a justification under art. 101(3) TFEU through an assessment of benefits that sustainability agreements may bring about for consumers. In this document, the ACM goes even further and states that even if sustainability benefits are not wide there is still a margin to allow the agreements if a negative external effect is cancelled. This is assessed on a case by case basis. Indeed, an example of a negative external effect is if during the production of a good a negative external effect for the consumer is created, such as pollution. In this case, if an agreement between undertakings eliminates or diminishes the pollution, the agreement may be allowed because it will have a positive effect on the welfare of other consumers.45
The ACM ruled already in 2008 that if a sustainability agreement brings about a benefit that is valuable for consumers and society, and at the same time competition is not hindered, the agreement does not infringe cartel law.46 The 2008 case involved the castration of boars with the use of anaesthesia and only raised competition concerns marginally. The ACM decided that a parameter of minor importance in the competitive process may, even if it is a market-wide arrangement, escape Art. 101(1) TFEU.47 Moreover, the ACM insists that certain categories of sustainability agreements also do not infringe cartel law. Indeed, if undertakings agree to use common sustainability logos this will not infringe competition law. The decision to jointly use a logo indicating that a product is produced in an environmentally friendly way is an agreement, but the ACM encourages it.48 Of course, as with any case, if sustainability agreements are used as a disguise to form cartels then they will not be allowed by the ACM. This situation happened in the laundry detergent cartel, fined by the EU Commission. In the laundry detergent cartel, undertakings made an agreement to improve the environmental performance of their detergent products. However, they also coordinated their prices and performed anti-competitive practices.49 This case illustrated that sustainability agreements may be allowed but the EU Commission and the ACM punish their abuse if they truly hide secret cartels.
45 ACM vision document, ‘Competition & Sustainability’, 2014.
46 NMa, short-form opinion on anaesthetized castration of piglets, case 6456, 2008.
47 ACM, ‘The assessment of anticompetitive practices as a result of sustainability initiatives in practice’, (2014) p. 4-5.
48 ACM vision document, ‘Competition & Sustainability’, 2014, p.9. 49 Press Release IP/11/473, Brussels, 13 April 2011,
In the vision document, the ACM further states that if one undertaking alone decides to take on a sustainability initiative it might bring about an increase in costs of production and overall higher prices. The ACM calls this a ‘first mover disadvantage’. In these situations, the undertaking may be driven out of the market and the sustainability initiative would not be successful. In such cases, the ACM believes that a joint approach such as an agreement between undertakings operating in the same market may instead be successful and therefore the authority may allow it.50
The first section of this chapter has contextualized the situation in which the Chicken of Tomorrow emerged, and presented the ACM’s vision document, which constitutes the framework within which this case was assessed. The next session will present a deeper analysis of the Chicken of Tomorrow case, along with the impact it brought about.
III. 2. Presentation of key facts in the Chicken of Tomorrow case:
The Dutch Chicken of Tomorrow case deals with an industry-wide arrangement between suppliers and retailers of chicken in the Netherlands with the aim of improving the living standards of chicken destined to the Dutch supermarkets. This agreement entailed prolonging the life of chickens by five days (from 40 to 45 day lives), giving chickens more space (measured in sqm2), allowing chickens to have better sleep cycles (by giving them an increased amount of dark hours) and other environmental measures. This agreement also entailed a complete substitution of chicken in Dutch supermarkets with this new, more sustainability-friendly chicken. However, this chicken would also be more expensive. When confronted with the decision of whether to approve of this agreement, the ACM decided that it infringed Art. 101(1) TFEU and, after analyzing the conditions of art. 101(3) TFEU, that it did not satisfy Art. 101(3) TFEU.51
50 ACM vision document, ‘Competition & Sustainability’, 2014.
51 JP van der Veer, ‘Valuing sustainability? The ACM’s analysis of “Chicken of Tomorrow” under Art. 101(3)’ (2015) http://competitionlawblog.kluwercompetitionlaw.com/2015/02/18/valuing-
III. 3. Analysis of the ACM’s decision in the Chicken of Tomorrow case:
In its assessment of the proposal for Chicken of Tomorrow, the ACM reiterated its willingness to allow, and even promote, sustainability agreements, as long as they do not infringe competition law. The ACM already proved this willingness in 2008 by establishing that an agreement between farmers to interrupt the practice of pig castration without anesthesia did not infringe art. 101(1) TFEU.52
In Chicken of Tomorrow, the ACM reached the conclusion that the proposed industry-wide arrangement restricted competition. It concluded this because the agreement entailed that ‘normally’ grown chicken would not reach Dutch consumers anymore. This would lead to a reduction in choice for consumers, which is always frowned upon in competition law. This conclusion was reached through a willingness to pay analysis conducted under the framework of Art. 101(3) TFEU, as will be seen in the next chapter.
When analyzing the ACM’s decision, two main considerations arise, one concerning the Art. 101(1) TFEU assessment and one regarding the Art. 101(3) TFEU assessment. The former will be presented at this point while the latter will be introduced later on in the essay.
The ACM’s proposal to use labels to distinguish the more sustainable chicken has been proved not to be effective. One of the ways in which eco-labels are not effective is that they tend to be too simplistic, which undermines the efficacy of environmental claims. Other factors that make eco-labels less effective include slow national and trans-national bureaucracy which may discourage industry support and poor execution of eco-labels which may result in their bad reputation among consumers.53
Although the ACM concluded that the Chicken of Tomorrow initiative infringed art. 101(1) TFEU, the fact that it conducted a willingness to pay analysis and that it recommended a different measure (the use of labels) shows nonetheless the NCA’s willingness to allow sustainability agreements.
52 NMa, short-form opinion on anaesthetized castration of piglets, case 6456, 2008.
53 R. Horne, “Limits to Labels: The Role of Eco-labels in the Assessment of Product Sustainability and Routes to Sustainable Consumption” (2009) 33 International Journal of Consumer Studies 175.
III. 4. Consequences arising from the Chicken of Tomorrow case in the Netherlands:
The Chicken of Tomorrow case led to a draft legislation in the Netherlands in 2016 that envisaged the option to take into consideration long-term effects of sustainability agreements and to take these effects into consideration not only with regards to consumers but regarding society as a whole.54 This shows that according to the new proposed legislation the ACM’s willingness to pay assessment in Chicken of Tomorrow is too narrow because it doesn’t take into account society as a whole.55 This proposed legislation seemed to indicate a brighter future for sustainability agreements in the Netherlands because long-term consequences of sustainability agreements for society constitute the largest benefits of sustainability agreements.
However, when the European Commission gave its opinion on this draft legislation, it harshly criticized it by stating that the ACM’s original approach to the Chicken of Tomorrow case was correct and in line with EU competition law. The Commission further considered that benefits for society as a whole should not be taken into account when leading such assessments, in light of the fact that art. 101(3) TFEU clearly states that only benefits for the consumers are relevant (not for society). The Commission also established that the criteria of considering society as a whole would lead to confusion.56
As a reaction to the Commission’s criticism of the draft legislation arising from the Chicken of Tomorrow case, the Netherlands discarded the draft legislation in favor of a new draft legislative document.57 This new, more recent proposal allows for the possibility to include a declaration of general effect when dealing with sustainability agreements. Concretely, this means that private initiatives may be turned into legislation if they meet a certain set of criteria. This shows, once again, the ACM’s and more generally the Dutch desire to allow sustainability agreements under competition rules.58
54 Policy Instruction of 5 October 2016 (Official documents Stcrt. 2016, 52945). 55 Monti and Mulder, ‘Escaping the clutches of EU competition law’ [2017] E.L Rev.
56 Kamerbrief Minister van Economische Zaken aan de Tweede Kamer inzake Mededinging en Duurzaamheid d.d. 23 juni 2016 (Kamerstukken II 2015/16, 30196, 463).
57 Kamerbrief Minister van Economische Zaken aan de Tweede Kamer inzake Mededinging en Duurzaamheid d.d. 24 oktober 2016 (Kamerstukken II 2016/17, 30196, 480, pp.1–6).
The Dutch Chicken of Tomorrow case illustrates the difference between Art. 101(1) TFEU and Art. 101(3) TFEU. When assessing the proposal under Art. 101(1) TFEU, the ACM showed a strong willingness to exclude the application of Art. 101(1) TFEU altogether in order to pursue a broad public objective such as chicken welfare. However, once it decided that the case fell within Art. 101 TFEU, the ACM had to acknowledge that the conditions set forth in EU competition law under Art. 101(3) TFEU are rather narrow and although it tried, the ACM could not stretch them further. An even more important result of this case is that it led to Dutch draft legislation aiming at including broader objectives into Art. 101 TFEU assessments.
This section of the chapter has analyzed the ACM’s decision in Chicken of Tomorrow and showed the general Dutch proclivity towards allowing sustainability agreements. This case was eventually assessed also under the conditions of Art. 101(3) TFEU, and the next chapter will delve deeper into this assessment. The following session will illustrate case law dealing with art. 101(1) TFEU and determine whether there is a European willingness to exclude sustainability agreements from art. 101(1) TFEU’s application.
III. 5. Presentation of ECJ case law excluding agreements from art. 101(1) TFEU:
The European Court of Justice’s (ECJ) case law proves that EU competition law has already had conflicts with social structures of overriding importance.59 Previous case law such as the Albany BV60 case and the Poucet61 case has shown that collective labor agreements and social
security mechanisms are excluded from art. 101(1)TFEU’s application. This gives us the understanding that the ECJ is willing to set aside art. 101(1) TFEU to pursue other goals.
Moreover, the ECJ has rightly highlighted its unwillingness to balance harms and benefits of an agreement under art. 101(1) TFEU, since this assessment is more appropriately carried out under art. 101(3) TFEU. However, in the past the ECJ has carried out such assessments under art. 101(1) TFEU, such as in the Métropole case for example.62
59 Ibid.
60 Case C-67/96 Albany International BV v Stichting Bedrijfspensioenfonds Textielindustrie [2000] EU:C:1999:430.
61 Case C-159/91 Poucet v Assurances Generales de France (AGF) et Caisse Mutuelle Regionale du
Languedoc-Roussillon [1993] EU:C:1993:63.
III. 6. How sustainability agreements could be excluded from the application of cartel law following the Wouters doctrine:
One way that sustainability agreements could be allowed is if art. 101(1) TFEU does not apply at all. In this regard, the case Wouters is relevant.63 In the Wouters case, the ECJ concluded that art. 101(1) TFEU was not applicable to a decision of an association of undertakings when the restriction of competition was necessary for the proper practice of the legal profession. The ECJ did not even consider this case under art. 101(3) TFEU. Case law after Wouters has established that agreements do not infringe art. 101(1) TFEU if they ensure the proper practice of the legal or pharmaceutical profession64, safeguard the integrity of sports65, ensure the quality of accountancy services66 or provide guarantees to consumers about the services they receive67.68 In all these cases, in order to exclude the application of art. 101(1) TFEU the court assesses whether there is a legitimate objective that is being pursued. However, it also gives little information on how to assess the legitimacy of the objective. In light of all the foregoing, it seems plausible that sustainability agreement that increase animal welfare such as Chicken of Tomorrow can fall under the Wouters doctrine and be excluded from the application of art. 101(1) TFEU.
When carried under Art. 101(1) TFEU, the assessment of Chicken of Tomorrow can take into account whether a legitimate objective is being pursued, as per the Wouters doctrine, albeit sustainability goals have not yet been explicitly recognized as legitimate objectives under competition law by a European court. When the assessment of the Chicken of Tomorrow proposal is carried under Art. 101(3) TFEU, all four conditions of this article must be taken into account and reaching the conclusion that the proposal can be exempted from the application of antitrust law becomes more difficult.
63 Case C-309/99 J.C.J. Wouters and Others v Algemene Raad van de Nederlandse Orde van Advocaten [2002] ECR I-1577.
64 Case T-23/09 Conseil National de l’Ordre national des pharmaciens v Commission (CNOP) [2013] EU:T:2014:1049.
65 Case C-519/04 P Meca-Medina v Commission [2006] EU:C:2006:492.
66 Case C-1/12 Ordem dos Técnicos Oficiais de Contas (OTOC) v Autoridade da Concorrencia [2013] EU:C:2013:127.
67 Case C-136/12 Consiglio nazionale dei geologi v Autorita Garante della Concorrenza e del Mercato [2013] EU:C:2013:489.
At this point, it must be highlighted that the main benefit arising from including a case in the Wouters doctrine and not assessing it under Art. 101(3) TFEU is that under Wouters there is not a need for consumers to receive a fair share of the benefits arising from the agreement, nor to take into consideration the other conditions of Art. 101(3) TFEU. Indeed, excluding the application of Art. 101 TFEU altogether by not applying Art. 101(1) TFEU allows the Courts to bypass Art. 101(3) TFEU. Agreements that eliminate competition can be allowed.
This chapter has presented the context in which the Chicken of Tomorrow case arose, it continued with an analysis of the aforementioned case, it has then illustrated European case law concerning art. 101(1) TFEU and has explained how an agreement may escape art. 101(1)TFEU’s applicability and the benefits. This chapter has shown that ECJ’s case law has not yet applied this reasoning to sustainability agreements. In the author’s opinion, since the ECJ has already excluded agreements pursuing different social objectives from the application of art. 101(1) TFEU, it has opened the door to doing the same also with sustainability agreements. Hence, it is possible that in the future a sustainability agreement may not infringe cartel law because of the simple inapplicability of art. 101(1) TFEU. The Chicken of Tomorrow case has also helped in opening this door.
The next chapter will further analyze the Chicken of Tomorrow case under Art. 101(3) TFEU and conduct an analysis of the CECED case and delve into the issue of whether sustainability agreements have, can and should be justified under art. 101(3) TFEU.
Chapter IV
Considering sustainability agreements under art. 101(3) TFEU
IV. 1. Presentation of key facts in the CECED case:
The case CECED took place in 1999. This case dealt with an agreement between all the producers of domestic washing machines to cease production of their least energy efficient model of washing machine.
Thus the sustainability objective pursued through this case was saving energy and reducing CO2 emissions. The Commission decided that the benefits emerging from such an agreement
are financial for the consumer, who spends less money on energy, and environmental for society, as less CO2 is emitted. The EU Commission decision in this case takes into account both types of benefits. This was rather revolutionary, as until then in European sustainability cases only direct benefits to consumers were taken into account under art. 101(3) TFEU. The Commission justified its analysis of the benefits drawn from a reduction of CO2 emissions by stating that ‘such environmental results for society would adequately allow consumers a fair share of the benefits even if no benefits accrued to individual purchasers of machines’69.70
The next section of this chapter will analyze and draw conclusions from the EU Commission’s decision in CECED.
IV. 2. A. Analysis of the Commission’s decision in the CECED case:
The Commission assessed the proposal from the association of washing machines manufacturers (called CECED) under each of the four conditions of art. 101(3) TFEU.
The Commission assessed the first two conditions of art. 101(3) TFEU together and as mentioned beforehand, it analyzed individual economic benefits and collective environmental benefits arising from the CECED agreement under art. 101(3) TFEU and established that these benefits justified the proposed measure.71
As for the third condition of art. 101(3) TFEU (indispensability of the restriction), the Commission studied alternatives to the proposal such as setting an industry-wide target, leading information campaigns or setting up an eco-label but established that the proposal was the best way to achieve the goal.72
When assessing the agreement in light of the fourth condition of art. 101(3) TFEU (no elimination of competition) the Commission established that manufacturers can still compete on other factors such as price and brand image and that the agreement affects only 10% of the market and thus leaves enough room for competition.73
69 Case IV.F.1/36.718 CECED [1999] para. 56.
70 JP van der Veer, ‘Valuing sustainability? The ACM’s analysis of “Chicken of Tomorrow” under Art. 101(3)’ (2015) http://competitionlawblog.kluwercompetitionlaw.com/2015/02/18/valuing-
sustainability-the-acms-analysis-of-chicken-for-tomorrow-under-art-1013/?doing_wp_cron=1590565355.4836521148681640625000, last accessed June 19th 2020. 71 Case IV.F.1/36.718 CECED [1999] paras. 52-57.
72 Ibid. paras. 58-63. 73 Ibid. paras. 64-67.
It appears that in CECED the Commission did not only consider direct economic benefits to the consumer and left space to take into account environmental benefits for society as a whole. This is a landmark case because it established the compatibility of certain sustainability agreements with European competition law.
IV. 2. B. Analysis of the ACM’s Art. 101(3) TFEU assessment in the Chicken of tomorrow case:
As the previous chapter illustrated, the case Chicken of Tomorrow tackled Art. 101(1) TFEU and Art. 101(3) TFEU. Indeed, once the ACM decided that the proposal fell within Art. 101(1) TFEU, it proceeded to perform an Art. 101(3) TFEU assessment.
The ACM did a study on consumers’ willingness to pay for the more sustainable chicken.74 This analysis was conducted within the framework of the first condition of art. 101(3) TFEU, because the ACM thought that if the agreement led to higher consumer surplus then it could be allowed. The ACM found that the consumer’s willingness to pay for more sustainable chicken did not justify the industry-wide agreement because there would be a negative effect on consumer surplus of €0.64 per kilogram of chicken breast.75 The ACM stated that the Chicken of Tomorrow goal could be pursued by less disruptive means, such as introducing a label common to all sustainably grown chicken indicating their welfare.
Therefore, the ACM decided that Art. 101(3) TFEU was infringed by virtue of the fact that its first condition was not fulfilled.
As was mentioned in the previous chapter, a consideration arises from the ACM’s assessment of the proposal under Art. 101(3) TFEU. The analysis of the consumer’s willingness to pay is flawed. Indeed, the consumers who do not buy chicken at all have been included in the category of consumers who are not willing to pay for a more sustainably grown chicken, whilst this may be untrue.76
74 Monti and Mulder, ‘Escaping the clutches of EU competition law’ [2017] E.L Rev. 75 Mulder et al., “Effects of the Chicken of Tomorrow” (October 2014), p.26.
The last section of this chapter will study how CECED and Chicken of Tomorrow have influenced later European case law and whether a true change has occurred.
IV. 3. Consequences arising from the CECED case in the European Union and later case law:
Before CECED, scholars were certain that Art. 101(3) TFEU was to be applied only if the consumer benefitted directly from the measure adopted. The fact that the Commission considers environmental benefits in CECED created many doubts as to whether non-economic gains could be taken into account when applying art. 101(3) TFEU.77
Indeed, following CECED some believe that non-economic gains to society can fulfill the conditions of art. 101(3) TFEU whilst others claim that environmental gains can be taken into account in the analysis only if they can be translated into economic benefits, thus following a stricter approach.78
In the author’s opinion, both parties have a valid point, as CECED almost created more uncertainty than clarity. Both views are legitimate because on one hand it is true that Art. 101(3) TFEU emphasizes economic gains in its first condition and if it is not interpreted narrowly then it could lead to an excessive amount of exceptions that may eventually hinder competition. On the other hand if sustainability agreements are granted exemptions there may be a gain for consumers at large in the shape of a better environment, and granting such exemptions may not necessarily infringe Art. 101(3) TFEU if the European Courts were to issue such a decision by broadening the application of the four conditions of Art. 101(3) TFEU.
The case CECED approached art. 101(3) TFEU from a welfare perspective. European case law had already established that the protection of employment79, cultural diversity and media
77 K. Talus, ‘Vertical Natural Gas Transportation Capacity, Upstream Commodity Contracts and EU Competition Law’, (2011), Wolters Kluwers, p. 257.
78 C. Semmelmann, ‘the future role of the non-competition goals in the interpretation of article 81 EC’, (2008) Global antitrust review, 31.
pluralism80, regional development81 and professional ethics82 can be taken into account in art. 101(3) TFEU assessments.83 It is therefore not surprising that with CECED the list got extended to environmental benefits.
The consequences of CECED can be observed in the Dutch Besluit Stichting Papier Recycling Nederland84 case from 2003 in which the Dutch paper recycling foundation wanted to levy a fee for waste management in order to have a stable collection rate of paper destined to be recycled. In its decision, the ACM stated that this fee and the establishment of a closed production cycle of new paper would lead to environmental benefits, and thus satisfy the first two conditions of art. 101(3) TFEU.85 The ACM allowed such a measure because it considered the environmental benefits for the users to be significant. In this case the influence of CECED is clear: the ACM takes into account environmental benefits in its art. 101(3) TFEU assessment.
It appears that since CECED the Commission has taken into account environmental benefits in its Art. 101(3) TFEU analysis. However, there has not yet been any subsequent case law that has granted the exemption from Art. 101(3) TFEU exclusively taking into account environmental benefits. CECED is the case that got the closest, and even CECED included consumer benefits through decreased energy consumption. This indicates that the Court insisted on proving a pass on to the consumer. The economic benefit was not clearly estimated but an element thereof was present. This leads us to understand that at the time of CECED some extent of economic benefit had to be demonstrated, albeit loosely. Indeed, in the decision in CECED there is a section regarding the economic benefit for the consumer, but it remains vague. Subsequent case law that has considered environmental benefits has done so only in conjunction with more tangible economic benefits, such as in the case DSD86, where cost savings were also taken into consideration next to environmental benefits. Hence it remains unclear whether environmental benefits alone can justify an Art. 101(3) TFEU exemption. For
80 Commission Decision, VBVB/VBBB, 25 November 1981, IV/428, OJ [1982] L54/36.
81 Commission Decision 93/49/EE of 23 December 1992, IV/33.814 Ford Volkswagen, OJ [1993] L20/14/.
82 Commission Decision, 15 April 2002, Laurent Piau vs. FIFA, paras 60-61.
83 Working paper SEO economic research, ‘How does article 101(3) TFEU case law relate to EC guidelines and the welfare perspective?’ [2013] p. 17.
84 NMa, Besluit Stichting Papier Recycling Nederland, zaak 3007 / 33.O316, 10 december 2003. 85 Working paper SEO economic research, ‘How does article 101(3) TFEU case law relate to EC guidelines and the welfare perspective?’ [2013] p. 18.
the time being it is clear that if the result of an agreement presents economic advantages for the consumers and at the same time it brings about environmental benefits then it may be exempted under Art. 101(3) TFEU.
The next chapter will present a summary of this essay and offer a balancing of arguments in favor and against art. 101 TFEU being pushed too far in the name of sustainability. It will establish whether in light of all the above analysis the logical limits of art. 101 TFEU have been encroached upon in order to justify sustainability agreements.
Chapter V
Have the logical limits of art. 101 TFEU been encroached upon in order to justify sustainability agreements?
V. 1. Summary of the essay:
This essay’s introduction has explained why the topic tackled is currently relevant.
The second chapter of this essay has introduced and explained Art. 101 TFEU in a nutshell. It also clarified that both sustainability and competition are enshrined in EU law and thus relevant to each other. The second chapter ended with the presentation of the status quo ante the CECED and Chicken of Tomorrow cases.
The third chapter delved deeper into the issue at hand and studied sustainability agreements under art. 101(1) TFEU. It presented the Chicken of Tomorrow case and explained that it was a pivotal case because it led to new legislative initiatives to circumvent competition law in sustainability agreement cases. It also presented the option to circumvent cartel law all together by making sustainability agreements fall under the Wouters doctrine.
The fourth chapter further studied the case Chicken of Tomorrow together with CECED and sustainability agreements under Art. 101(3) TFEU. It analysed CECED and the Art. 101(3) TFEU assessment present in Chicken of Tomorrow and reached the conclusion that subsequent case law has allowed to take into consideration environmental benefits under the first two conditions of Art. 101(3) TFEU but only in conjunction with other more consumer related benefits.
V. 2. Answer to the question whether the logical limits of art. 101 TFEU been encroached upon in order to justify sustainability agreements:
V. 2. A. What are the logical limits of Art. 101 TFEU?
In order to establish what the logical limits of Art. 101 TFEU are and whether they have been pushed too far it is necessary to determine what the objectives of this article are.
The TFEU does not deal directly with the goals pursued by Art. 101 TFEU, thus leaving some space for the EU Commission and Courts to interpret the logic of this article.87
As was mentioned at the onset of this essay, one of the objectives of Art. 101 TFEU is consumer welfare. However, the meaning of this term remains unclear.88 Indeed, in the case Post Danmark, the CJEU mentioned for the first time the term ‘consumer welfare’. However, it did not define it. Further, the Court89 and the European Commission90 also referenced the importance of ‘price, choice quality or innovation’. This fits well in the Commission’s logic to encourage innovation. One of the European Commission’s interpretations of consumer welfare is to further the interest of the consumer by ensuring low prices.91 In this regard, the term ‘consumers’ includes intermediate and final consumers.92
However, a working paper from the Commission dating back to 2011 states that EU competition policy has three main objectives. These objectives are protecting competition on the market as a means of enhancing consumer welfare, supporting growth, jobs and the competitiveness of the EU economy and fostering a competition culture.93 The relevant part about this statement is that consumer welfare is portrayed as “just” another goal of competition policy, and no longer the main objective. This is an indicator that EU competition law is not
87 L Parret, ‘Do we (still) know what we are protecting?’ (2009), p. 8.
88 E Daskalova, ‘Consumer Welfare in EU Competition Law: what is it (not) about?’ (2015), p. 1. 89 Case C-209/10 Post Danmark A/S v Konkurrencerådet [2012] [42].
90 E Daskalova, ‘Consumer Welfare in EU Competition Law: what is it (not) about?’ (2015), p. 13. 91 Commission (EC), ‘Green Paper on Vertical Restraints in EC Competition Policy’ (Green Paper on Vertical Restraints) COM (96) 721 final, 22 January 1997.
92 Commission Notice: Guidelines on the application of Article 81(3) of the Treaty [2004] OJ C101/97, [84].
93 Commission Staff Working Paper Accompanying the Report From The Commission on Competition Policy 2011, p.3.
fully independent but places itself within a broader European context, that of the European regulatory agenda.94 Indeed, competition law is influenced by political goals.95
As for the European Court’s perspective, at first it placed consumer welfare as the primary goal of EU competition law.96 However, later in the same case the ECJ stopped emphasizing the importance of consumer welfare and stated that the objective of competition policy is the protection of competition as such.97 Further, the ECJ also asserted that the protection of the internal market is one of the goals of competition law.98
Moreover, some experts have stated that economic efficiency and market integration are the main objectives of EU competition law, whilst social and political aims also play a role, albeit smaller.99 Others have defined the aims of competition policy as the protection of economic freedom, market integration and efficiency.100
We can state that consumer welfare and the protection of competition are two goals of EU competition law. The former can be seen as the ultimate goal of competition policy whilst the latter may be an intermediate objective.101
Competition policy also comprises policies that protect the competitive process and ensure that competition does not reduce economic welfare.102
At present, a definition of consumer welfare is still lacking and it is difficult to fully understand the interplay between consumer welfare and other goals of EU competition policy.103
94 E Daskalova, ‘Consumer Welfare in EU Competition Law: what is it (not) about?’ (2015), p. 14. 95 L Parret, ‘Do we (still) know what we are protecting?’ (2009), p. 7.
96 Case T-168/01 GlaxoSmithKline Services Unlimited v Commission of the European Communities [2006] ECR II-02969 [118].
97 Joined cases C-501/06 P, C-513/06 P, C-515/06 P and C-519/06 P GlaxoSmithKline Services
Unlimited v Commission of the European Communities [2009] I-09291
98 Ibid.
99 M. Motta, Competition policy, theory and practice, Cambridge University Press, 2004, p. 15. 100 G. Monti, Article 81 and public policy, CMLR (2002), p. 1057.
101 L Parret, ‘Do we (still) know what we are protecting?’ (2009), p. 5.
102 M. Motta, Competition policy, Theory and practice, Cambridge University Press, 2004, p. 30. 103 E Daskalova, ‘Consumer Welfare in EU Competition Law: what is it (not) about?’ (2015), p. 22-24.
To sum up, different actors are divided on what the objectives of competition law are and thus its logic and priorities. The EU Commission places a lot of emphasis on consumer welfare, whilst the European Courts take into account other objectives as well.104
Therefore, it appears that as the objectives of EU competition policy are blurry, so is the competition policy logic. We can nonetheless state that EU competition policy and its logic is to promote consumer welfare and to protect and promote the competitive process as well as the internal market.
V. 2. B. Have the logical limits of Art. 101 TFEU been encroached upon?
It has been seen that both the Chicken of Tomorrow and CECED cases were landmark cases that opened the door to a more sustainability-friendly approach to competition law. However, it is also true that the Chicken of Tomorrow proposal was refused by the ACM in the end and that CECED also took into account other factors than the environmental benefits. This means that the situation is more nuanced than how it may appear at a first glance.
On the one hand, it is certain that the cases studied have pushed the limits Art. 101 TFEU a little. This is normal in the author’s view, in light of our society’s growing awareness regarding the environmental challenges that we are facing.
On the other hand, as it has been previously stated, there have not yet been any cases that grossly encroached upon Art. 101 TFEU and obviously discarded competition law in favor of sustainability goals.
In the author’s opinion, the case Chicken of Tomorrow may present a danger in the future to circumvent cartel law and following the case CECED Art. 101(3) TFEU may be misinterpreted in the future. It is the author’s belief that Art. 101(3) TFEU was drawn up by the legislators with the view to conferring direct benefits to the consumers, and until the ECJ further elaborates on how to apply the CECED decision, Art. 101(3) TFEU should be interpreted narrowly.
Balancing all the foregoing, we can establish that the logical limits of Art. 101 TFEU have not yet been encroached upon because of the many safeguards present in the cases studied.
Lastly, it is possible that the current EU Commission, under Ursula von der Leyen’s guidance and her Green Deal proposal may push the limits of Art. 101 TFEU further. If this will happen, it is important that the Commission clarifies the modalities of how to include sustainability in the application of Art. 101 TFEU, because the risk is to create further confusion.
This chapter has briefly summarized the previous chapters of this essay and has established that the logical limits of Art. 101 TFEU have not yet been encroached upon, and that if Art. 101 TFEU will be pushed further in the future it should be done so in a clear manner. The next and last chapter is a brief conclusion.
Chapter VI Conclusion
In conclusion, the European Courts have opened the door to considering sustainability issues under European competition law. They have done so in two ways. Firstly, by creating the option of not considering sustainability agreements under Art. 101 TFEU altogether. This can be achieved through a Wouters approach and it is what the Dutch National Competition Authority attempted to do in the Chicken of Tomorrow case. Secondly, sustainability agreements may be justified under the first two conditions of Art. 101(3) TFEU by considering environmental benefits to also be consumer benefits. Such greater environmental benefits were taken into consideration by the European Commission in the CECED case. However, no obvious cartel has been allowed under competition law based only on sustainability arguments thus far. In the author’s opinion, it would be a misinterpretation of Art. 101 TFEU to allow it, and in any case there are many safeguards to prevent a misapplication of this article.
When faced with similar cases in the future, European courts will have to balance sustainability objectives against European competition law. This paper has shown that such an exercise is nuanced, as both environmental objectives and the preservation of the competitive process are always growing in importance in our society.
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