Sustainable development and competition

A major and strategic concern

A major and strategic concern

Sustainable development is one of the main challenges of the world of tomorrow and competition can be instrumental in addressing environmental challenges. Mindful of the need to make a contribution, the Autorité de la concurrence has made the environment a priority in its work. There is significant mobilisation and cooperation on this issue, both at international and European levels. The Autorité has therefore decided to target the most harmful anticompetitive practices in this area and to provide guidance to companies that wish to benefit from it. The latest on the rise of a “green” competition policy.

A general mobilisation

Confronted with the climate emergency, but also in a post-crisis world that will require innovation while meeting the challenges of sustainability and resilience, profound transformations of economic activities must be anticipated, with wide-ranging social and societal ramifications. Regulators, including competition regulators, need to support the actors that are committed to sustainable development and in particular the fight against global warming. The Autorité is resolutely committed in this regard, and actively participates in discussions at international, European and national levels.

At European and international levels

The Green Deal for Europe “aims to transform the EU into a fair and prosperous society with a modern, resource-efficient and competitive economy” with the ambition to be the first climate-neutral continent by 2050. While competition policy is not the front line in the fight against climate change and environmental protection, it can still make a difference. By helping to obtain efficient and competitive results on the markets, competition policy makes it possible to encourage behaviour that is favourable to sustainable development, thereby supporting green policies (European Commission priorities 2019-2024).

At the European level, the Autorité is contributing to the debate on the Green Deal and the various discussions on the revision of the Vertical Block Exemption Regulation and on certain categories of research and development and specialisation agreements. It is also participating in the discussions of the International Competition Network (ICN). In these various bodies, the Autorité contributes to the work aimed at clarifying the legal framework applicable to virtuous behaviour in terms of sustainable development.

At the national level

In France, the various regulators have also launched a joint initiative and have mobilised themselves. Eight independent administrative or public authorities (the sector regulators for financial markets (AMF), telecoms (Arcep), broadcasting (CSA), ground transportation (ART), data privacy (CNIL), energy (CRE), copyright (Hadopi), and the Autorité de la concurrence,, kicked off the reflections at the end of 2019 to compare their approaches to the climate challenges. In a joint document published in May 2020 and entitled “The Paris Agreement and the climate emergency: regulatory challenges”, the regulators committed to taking the climate emergency into account in the definition and exercise of their remits, and identified the available levers for action (Press release, 5 May 2020).

This joint group intends to pursue their discussions on the avenues for collaboration identified, such as better understanding and analysis of climate data provided by stakeholders under the supervision of various authorities, the design of educational tools, and strengthening the expertise of their staff.

A major and strategic concern

A strong commitment from the Autorité

One of the Autorité’s priorities

A major concern for public opinion and consumers in particular, sustainable development is increasingly at the heart of corporate strategy. This growing prominence is reflected in the practice of competition law. Sustainable development is now one of the priorities of the Autorité, which is stepping up its efforts to detect the most harmful anticompetitive practices in this area, and has set up a specialised working group within the investigation services, responsible for conducting in-depth reflections on the subject.

Different practices under surveillance

Finally, sustainable development can sometimes be used by companies as a reason or pretext for anticompetitive behaviour. This includes behaviour which, under the guise of commitments to environmental or sustainable development objectives, serves to create and conceal a cartel or abuse by implementing banned practices, such as price fixing, limiting production, market sharing or the exclusion of existing or potential competitors. For example, companies may agree to raise their prices in the context of discussions on the environmental performance of the sector, possibly with the support of a government agency, or to stop manufacturing or importing products that do not meet certain environmental criteria. Companies may also, for example, agree not to compete on new “green” products.
For example, in the “Consumer Detergents” case of 13 April 2011, the European Commission sanctioned Henkel, Procter & Gamble and Unilever for anticompetitive practices in connection with a European environmental initiative on compacting washing powder. The dosages and weights of standard washing powder packages had been reduced and the packaging had been adapted. The companies had discussed weight (‘compaction’) and volume (‘size reduction’) reductions in detail and had jointly decided to keep prices unchanged.

Besides this kind of practice which conceals conventional anticompetitive behaviour behind a “green veneer”, the Autorité monitors the adoption of behaviour by actors which affects sustainable development insofar as it has become, in the markets in question, a competitive parameter in the same way as other considerations of quality or innovation.

These practices, which are detrimental to sustainable development, can lead to price or production restrictions, but can also affect innovation, product diversity through transparency on sustainable qualities, manipulation of the narrative vis-à-vis government agencies and the public, or the foreclosing of markets. The Autorité will remain particularly vigilant in this regard.
For example, in the floor coverings cartel decision, the Autorité considered that an agreement whereby companies agreed with each other not to communicate the individual environmental performance of their respective products had the purpose of preventing the communication policies of each of the undertakings from being freely decided and, what is more, of preventing any competition based on the environmental performance of these products. The Autorité found that such an agreement constituted, in itself, an anticompetitive restriction (Decision 17-D-20 of 18 October 2017).

A major and strategic concern

Élise Provost

Permanent rapporteur for the investigation services of the Autorité de la concurrence, Head of the working group in charge of sustainable development issues

How is the priority on sustainable development manifested in practice within the investigation services?

Since the end of 2019, there has been a network dedicated to sustainable development, bringing together around twenty agents from the investigation services of the Autorité who conduct investigations within different units. This cross-cutting network has a three-pronged remit:

  • discussing with the different interlocutors who can provide information to the Autorité on sustainable development issues and the difficulties encountered;
  • reflecting internally by exploring the legal and economic issues that may arise, in order to enhance expertise and harmonise the practices of the investigation services;
  • acting by accompanying the actors and by seeking out litigation cases that have sustainable development aspects. Various investigations have already been launched. Some have been completed or are close to completion, others are still in progress. The investigation and the litigation that may follow are at the heart of the work of the investigation services, and they mobilise the network to a significant extent. Highlighting examples, which may or may not be virtuous, is indeed the clearest way to allow companies to self-assess their behaviour and to remind them of the Autorité’s firm stance in the face of anticompetitive behaviour that impacts on sustainable development.

What are the reflections in progress on giving companies more predictability?

Competition authorities still need to gain expertise before they can adopt specific guidelines. However, it is not the case that companies have no legal certainty at all in this area. In many situations, they can adopt positive practices in terms of sustainable development that will not pose any problems in the area of competition. In this regard, they can refer to the Commission’s numerous so-called “soft law” texts, in particular the de minimis notice, the guidelines on horizontal cooperation agreements for standardisation agreements in particular, and the horizontal guidelines of 2001.
In situations where the analysis is not straightforward, companies can also contact the Autorité, which will assist them in identifying the boundaries of their project with regard to the competition rules.

“In order to succeed, everyone in Europe will have to play their part – every individual, every public authority. And that includes competition authorities.”

Margrethe Vestager
Executive Vice-President of the European Commission

Practices considered particularly serious

The Autorité has already had occasion to indicate that practices which have a negative impact in terms of sustainable development are of a particularly serious nature. In the floor coverings case, it sanctioned the companies that had curtailed competition on the environmental performance of these products, considering that they had consequently seriously harmed the interests of the consumer, at a time when the consumer was becoming increasingly aware of the environmental dimension of products and was looking to give preference to the most environmentally friendly products.
The seriousness of a given practice can also result from the exploitation of a given context, such as the current ecological crisis. This is a similar line of reasoning that the Autorité adopted in 2018, in a case regarding practices implemented in the distribution of veterinary medicinal products sector. It highlighted, with regard to the seriousness of the infringement, the fact that the wholesale distributors of medicines had (translated) “taken advantage of the health emergency due to the rapid spread of bluetongue disease and the absence of a call for tenders to knowingly mislead the public procurement agent about the true logistical costs of delivering the vaccines carried by each of them and had therefore compromised the proper use of public funds” (Decision 18-D-15 of 26 July 2018).
The seriousness of the practice may also result from applying sustainable development objectives as a pretext for anticompetitive behaviour. The Autorité is also conducting a reflection on whether the seriousness of an infringement can be nuanced when the behaviour adopted can have a positive impact in terms of sustainable development.

Supporting engaged stakeholders

While the remit of the Autorité is to fully embrace its enforcement role when faced with behaviour that is detrimental to sustainable development and qualifies as competition law infringement, it is also fully prepared to support virtuous behaviour.

Like the European Commission, the Autorité is aware that it is not always easy for companies to ensure that their agreements do not raise issues relating to competition law. That is why it accompanies the economic actors who wish to obtain guidance. At the European level, Executive Vice-President of the European Commission Margrethe Vestager has stated that the Commission was examining how to clarify this point in its directives on horizontal agreements between competitors (Interview, Journal Général de l’Europe, Green Deal and Competition Policy).