EU Competition Policy and Green Deal

On 10 September 2021, senior officials of the European Commission published a Policy Brief. The document provides an overview on how and in what form the EU competition policy currently supports the European Green Deal and identifies future development potential. As is well known, the European Green Deal sets out the EU roadmap for implementing a carbon-neutral circular economy in which economic growth and resource use are decoupled. It essentially aims to convert the entire EU economy to CO2 neutrality by 2050 – and to cut emissions by at least 55% by 2030 (see our “Insights” on the Fit for 55 package). The new Policy Brief now addresses the role of competition policy, provides examples of concrete policy reforms in the areas of state aid control, antitrust regulation and merger control and underlines the Commission’s view that a “green revolution” is needed to tackle climate change.

Based on the current legal framework and the outcome of various consultations, the Policy Brief emphasizes the intention to ensure that competition rules and sustainability policies to mesh in the best possible way. Further, the Commission emphasizes that it is precisely through the application of competition law that markets can be kept open, competitive and innovative. Simultaneously, the Commission acknowledges the necessity of – further – changes to the legal framework and expresses the conviction that the challenges triggered by climate change will remain, so that further development of competition policy is to be expected.

With regard to current regulatory initiatives, the Policy Brief refers inter alia to the following current initiatives:

• In the area of state aid control, the Commission plans to adopt Guidelines for State aid for Climate, Environmental and Energy Protection (CEEAG) on short notice. These shall allow for more comprehensive, flexible and future-proof aid measures in support of the objectives of the European Green Deal than the current Guidelines for Environmental and Energy Aid. The CEEA Guidelines are to enter into force on 1 January 2022 (more information here).
• In addition, the Commission is currently revising, for example, the regulations on IPCEI (Import Projects of Common European Interest, more info here). 
• As further example, the paper refers to the General Block Exemption Regulation (GBER) - which has already been amended recently – that shall be further adapted, taking into account the objectives of the Green Deal (further information here).

The prohibition of cartels set out in Art. 101 TFEU and the prohibition of abuse of market power set out in Art. 102 TFEU shall continue to be strictly applied in future and indicates the adoption further guidelines in the area of horizontal and vertical agreements for the application of Art. 101 TFEU, which refer to sustainability agreements, both in the context of a revision of the general guidelines and in individual cases suitable for this purpose. Further, the Commission underlines its existing practice to assess sustainability benefits as qualitative efficiencies. The Commission also recognizes that agreements aiming at sustainability benefits are also capable of generating cost savings that can be passed on to consumers.

In terms of EU merger control, the Commission intends to remain vigilant to protect green innovation, for example by taking into account a company's long-term sustainability goals. Also so-called "killer" acquisitions are to be prevented wherever possible, namely those that are made in order to tale and innovative and sustainability-oriented – smaller – company out of the market by having it taken over by an established, possibly larger company.

On top of the above measures, the Commission is spending some thoughts on how to flank its “Green Deal” by trade law measures. Trade law instruments (such as the CBAM or, eventually, in the form of so-called “climate duties” on imports) will have to aim at avoiding competitive disadvantages of the European industry vis-à-vis its less environmentally oriented competitors in non-EU countries.

Together with the national governments, the competition authorities of the EU Member States have also long had the interaction of competition policy and the Green Deal on their agendas. For example, the working group on antitrust law at the German Federal Cartel Office dealt with the topic of "antitrust law and sustainability" in 2020. Further, in November 2020 the German government commented comprehensively on the consideration of sustainability objectives in antitrust law as part of the European Commission's consultation on the support of the Green Deal through competition policy.