This year, CUTS International Geneva, the WTO Secretariat, and UNCTAD’s Competition and Consumer Policies Branch invited the Geneva community to celebrate the World Competition Day (WCD) on 5th December by exploring the interaction between climate change action and competition policy.
Climate change is one of the key disruptors of economies, and most competition policies and laws are flexible enough to be part of the solution provided they are appropriately designed and effectively implemented. “We need a “whole of all governments” approach to deal with the present crisis of climate change with competition policy tools” said Pradeep S Mehta, Secretary General of CUTS International while opening the discussions. His stress was on the global community to act together
“On 5th of December 1980 the United Nations adopted the UN Set of Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices, which to date remains the only multilaterally agreed instrument on Competition Policy”, he recalled, as today’s event celebrated World Competition Day in commemoration of this date.
Synergies between competition and climate policies can play an important role in greening the economy, including by incentivising for green innovation, curbing entry barriers to flow of environmentally benign goods and services, and empowering consumers to make informed decisions. Competition policy is also key to ensure efficient allocation of capital needed to reach environmental goals.
Yet, competition authorities may face challenges when undertaking competition assessments, such as determining which and to what extent environmental effects may be taken into account; how environmental efficiencies can benefit consumers; which timeframe for environmental effects to adopt; and how to balance environmental effects with other types of effects. Therefore, sensitising and building capacities of competition authorities on the interface between competition policy and climate change should be a priority.
In this regard, international organisations such as UNCTAD, World Bank and WTO can assist developing countries to create, develop and improve competition law and policy, consumers’ lives, and achieving sustainable development goals.
Discussing how competition law and policy can support sustainability, experts on the panel noted that, in certain cases, some horizontal agreements or cooperation between competitors may lead to greater benefits for consumers and the society. In fact, firms through such cooperation can leverage complementarities and achieve greater scale and productivity in reaching environmental objectives. Taking this into account may sometimes require clarifying the objectives of competition law, its definition of consumer welfare, incorporating considerations of sustainability in their competition assessments, and adjusting legislation accordingly.
As a case in point, it was noted that in 2021 Austria adopted the Cartel and Competition Law Amendment Act to allow for the consideration of sustainability goals, which was followed by the Austrian Competition authority “Sustainability Guidelines”, providing guidance for competition law exemptions of some environmental sustainability agreements.
The Dutch Competition Authority also published in 2021 “Guidelines on Sustainability Agreements”, providing guidance on the application of competition law to sustainability initiatives and to considering the rationale for adopting exemptions in this context. This had been supported by a 2021 technical report commissioned by the Dutch and the Greek competition authorities.
Such paradigm shifts in competition enforcement have been observed in the past, and can contribute to ensure the continued relevance of regulators’ actions in a changing world. For instance, the “wait and see” approach of competition authorities towards digital markets changed towards legal amendments, use of data analysis, tighter law enforcement and “ex-ante” regulation in recent years due to the rise of digital platforms and the increased weight of data in market power.
Experts however cautioned that sustainability approaches in competition law and enforcement remain new, and being experimented by a few advanced competition regimes so far. Before time is ripe for their adoption by smaller or younger competition authorities in developing countries, experience of practice will need to be further acquired and lessons shared through exchange of knowledge and cooperation. In conclusion, CUTS’ Secretary General Pradeep S. Mehta emphasised the need for better governance and increased policy coherence with some key policy issues related to competition and climate change, including by taking into consideration the role of intellectual property rights.
He added that even the UN Guidelines for Consumer Protection has a full chapter on sustainable consumption which has direct relation to curbing adverse climate change actions. Even the SDGs Agenda at Goal 12 deals with Sustainable Consumption and Production. “We have so many international instruments to deal with the issue of climate change and economic governance and thus we need a forward looking narrative for a better tomorrow, through all appropriate means”, he said.
On the panel were Pradeep S Mehta, Secretary General, CUTS International; Teresa Moreira, Head, Competition and Consumer Policies Branch, UNCTAD; Antony Taubman; Director, IP, Government Procurement and Competition Division, World Trade Organization. The discussion was moderated by Rashid S Kaukab, Executive Director, CUTS International Geneva.