Green Competition law
The European Commission (Commission) has emphasised that climate change and environmental degradation are an existential threat. In response, the European Green Deal (Green Deal) is designed to transform the EU into a modern, resource-efficient and competitive economy, ensuring, among other things:
- no net emissions of greenhouse gases by 2050
- economic growth decoupled from resource use
One third of the €1.8tr investments from the "Next Generation EU Recovery Plan", and the EU’s seven-year budget will go to financing the Green Deal. What part does competition law play in the Green Deal? Green competition policy is now a key competition policy in the EU aimed at keeping markets open and competitive. The Commission sees competition helping to make the EU economy greener.
The need to compete pushes companies to meet consumers’ needs, and use less costly resources with possible investment in green innovation.
Following a consultation begun in 2020 consultation, one message to the Commission was the need to support the green transition by enforcing the EU competition rules more vigorously. Various features of the Commission's response to that consultation is set-out in a September 2021 Policy Brief.
Green competition law finds expression in three main areas, outlined below:
In the EU Merger Control system, the Commission only reviews mergers that are notified to the Commission. In circumstances where businesses may seek to acquire green innovators but such mergers are too small to be notified to the Commission, there is a renewed focus on such transactions which can still be referred to the Commission by local merger control authorities even if they don’t have the power to review those mergers themselves (i.e. under Article 22 of the EU Merger Regulation).
Enforcement of the antitrust rules also supports green transition by protecting the competition that enables companies to innovate and operate sustainably. For example, the Commission fined carmakers €875m for agreeing not to compete to produce cleaner cars. Companies may still legally set joint standards for green products or pool resources to accelerate green innovation. The Commission has recently mentioned that this could mean companies agreeing to cut polluting products out of their supply chains. Sustainability agreements between companies don’t necessarily harm competition (e.g. agreements on open standards for green products). Others can be legal, even though if they restrict competition, provided the benefits they bring for consumers outweigh those restrictions.
The Commission is now encouraging companies to engage with the Commission to assess specific agreements and sometimes the Commission may give individual guidance or take a formal decision that an agreement is legal – this is a departure from the normal self-assessment system under EU competition law.
The Commission is reviewing its antitrust guidelines and rules on agreements between companies – both agreements between competitors and between companies at different levels of the supply chain – to give more general guidance. In July 2021, the Commission launched a public consultation on revising the rules on agreements between competitors. The Commission plans to have new rules in place by the end of next year (e.g. when an agreement to produce more sustainable products can count as one that delivers benefits for consumers and justifies some restrictions of competition.
These rules apply across all sectors but some industries, like agriculture, will have their own specific rules in the context of the Green Deal.
European governments will need to invest heavily in the context of the Green Deal.
In January 2022, the Commission adopted guidelines on state aid for climate, energy and the environment.
Those new rules expand the scope for using state aid for the Green Deal. The scope of the General Block Exemption Regulation has already expanded to allow EU governments to invest in green infrastructure (e.g. charging stations and energy efficiency), without needing Commission approval in advance – further expansion is likely.
The new rules will guide governments away from investments that use fossil fuels such as coal, lignite or oil with rules to discourage support for gas that’s more than strictly temporary.
Competitive tenders for renewable energy subsidies will continue to be encouraged to help industry decarbonise.
The Commission is also reviewing its portfolio of state aid rules to ensure they’re in line with the Commission's green goals. For instance, state aid rules on projects of common European interest will help EU governments combine with industry to fund infrastructure and innovation – including in new green technologies.
The EU's Just Transition Mechanism will make €75bn available to support European regions that face the biggest obstacles in adapting to the green transition (e.g. coal mining or industries that produce a lot of emissions).
Current Irish Policy in relation to competition law and green issues
The competition law system in Ireland is inextricably linked to the application of EU competition law so the principles (specifically in merger control and general antitrust) can be expected to be reflected in the application of competition law in Ireland.
The CCPC has looked at arrange of, in particular, energy renewables issues in the context of the application of the Irish merger control rules.
The Competition and Consumer Protection Commission (CCPC) is the statutory body responsible for promoting compliance with, and enforcing, competition and consumer protection law in Ireland.
The CCPC seeks to improve consumer welfare in Ireland by enforcing applicable legislative instruments, including product safety legislation. The CCPC aims to make markets work better for consumers. The CCPC works to influence public debate and policy development, grow public understanding of the importance of open and competitive markets, promote competition and highlight the interests of consumers.
Over time, we can expect the CCPC to have regard to green and sustainability issues in relation to its investigation and enforcement work (which will increase with the future implementation in Ireland of the ECN+ Directive).
Our expert team of competition law specialists regularly advise on all aspects of EU and Irish competition law, providing businesses with practical solutions to their competition queries at both an Irish and European level. Our team has a range of experience in assisting clients with green competition law issues, including State aid issues, merger control and the application of EU competition law in the context of agreements between competitors as well as parties at different levels of the supply chain.
Electricity Supply Board (ESB)
Advising ESB on the Irish merger control and competition law implications of the creation of a joint venture with Coillte as part of ESB's renewable energy objectives.
Advising Greencoat on the Irish merger control implications of its acquisition of a windfarm in Ireland.
Advising HG Capital on its EU Merger Regulation notification regarding a windfarm joint venture with Sojitz, Kepco, Mitsubishi and Craydel.
An Irish utility
Advising an Irish utility on the EU and Irish competition law implications of a joint venture to promote battery-energy and solar-energy in Ireland.
Bord Gais Eireann (now Ervia)
Successfully defending Bord Gais Eireann (now Ervia) in the High Court and Supreme court regarding an EU law challenge (2009 Gas Directive (2009/73/EC) interpretation, Article 102 of the Treaty on the Functioning of the European Union and State aid).