[Avis d’expert] Cooperation between companies on environmental performance, variable geometry regulations

Few of the companies of significant size do not display their commitment to sustainable and responsible development. This shows the extent to which environmental performance has become in a few years a key factor in the competitiveness of companies, which calls for their capacity to innovate and reinvent themselves.

The recent positions taken by the European Commission demonstrate a desire to severely sanction concerted practices between competing companies that affect their individual environmental performance, while ensuring that the door is not closed to the cooperation necessary for the emergence of technologies. or more durable products.

Environmental performance agreements in the sights of competition authorities

We cannot repeat it enough, the rules for the protection of competition prohibit agreeing on all the factors of competition. The environmental performance of companies is no exception to this rule. On the contrary, recent cases show that the competition authorities are particularly severe when it comes to sanctioning concertations that go against the objectives of the Green Deal European.

In July 2021, an agreement between German car manufacturers (Daimler, BMW, Volkswagen, Audi and Porsche) concerning SCR (or AdBlue) technology to reduce harmful emissions from diesel cars beyond what was required by the standards of the European Union, was sanctioned by the European Commission to the tune of 875 million euros (case AT.40178).

The Commission found that the manufacturers had the technology necessary to reduce harmful emissions beyond European Union standards, but that they chose to avoid competing with each other by not using the full potential of this technology. During “technical” meetings, they agreed on certain characteristics of the use of AdBlue technology and exchanged commercially sensitive information. The Commission accuses them of having deliberately eliminated the competition which should have prevailed between them for the placing on the market of less polluting diesel vehicles. The level of penalties is particularly high, although the five manufacturers have recognized their participation in the cartel and all have thus benefited from reductions. Daimler, which disclosed the cartel to the Commission, even benefited from full immunity from the fine.

The decision itself is not yet available, but the Commission said in its Press release that an additional reduction of 20% was applied to all manufacturers in order to take into account the fact that this was the first decision sanctioning a cartel relating only to a restriction of technical development and not to the fixing of prices, market sharing or customer allocation.

At the end of 2017, the French Competition Authority had already sanctioned an agreement relating to the environmental characteristics of products, although they were an essential parameter of competition (ADLC, decision 17-D-20 of October 18, 2017 – Floor coverings sector). In this case, the market players, through an agreement signed under the aegis of their professional association, had given up freely competing with each other on the respective environmental performance of their products, by agreeing on a communication on average emission values ​​of volatile compounds and refraining from disseminating their individual environmental performance to the market. The Competition Authority noted that this agreement came at a time when the environmental performance of floor coverings was becoming one of the main criteria for choosing general contractors and distributors, and when the sensitivity of customers, intermediaries and of end users to the environmental performance of products was increasingly greater. It concluded that by prohibiting the parties from communicating on individual securities, the agreement affected one of the essential parameters of competition.

Assessment of the cooperation necessary for the emergence of more sustainable technologies or products

It is about encouraging what can only be achieved in cooperation, but to allow as much as possible competition between companies to emerge innovative solutions to achieve the higher objective of a truly sustainable economy.

For the European Commission and the national competition authorities, a balance must be struck between the need to keep each company its incentive to innovate in order to gain a competitive advantage over its competitors and the promotion of collaborative projects, where the game of the market would not favor the emergence of individual solutions or to enable European industry to position itself in international competition. It is about encouraging what can only be achieved in cooperation, but to allow as much as possible competition between companies to emerge innovative solutions to achieve the higher objective of a truly sustainable economy.

This reflection emerged within the framework of the integration of the objectives of the Green Deal into the public policies for which the European Commission is responsible, including in the field of competition. It gave rise to a wide consultation on how to take into account the objectives of the Green Deal in the various fields of competition law, launched by Commissioner Margrethe Vestager in September 2020 with stakeholders (industry, consumer protection groups and environment, competition experts).

A year later, the Commission has just published its first guidelines in its Competition Policy Bulletin 1/2021 (Competition Policy Brief 1/2021 of September 10, 2021 – A policy in favor of Europe’s green ambition). It reminds us that competition between companies must remain the rule and that it favors free competition on the market to encourage operators to offer innovative solutions at the best price for consumers. However, it takes into account the feedback from its consultation to consider equipping itself with tools to encourage (or not to discourage) cooperation between economic operators which are necessary for the emergence of products, technologies or standards ” green ”.

The guidelines identified by the Commission, on the other hand, aim to clarify the application of existing rules and to make it possible for companies to consult it on their cooperation projects. The Commission indicates that it will:

  • Clarifier under what conditions a cooperation agreement could be set up with an environmental objective, without even the prohibition of anti-competitive agreements being applicable. This should particularly concern the types of agreements that European companies have, in the context of the consultation, flagged as essential to the pursuit of sustainability objectives. These include sectoral agreements aimed at gradually eliminating unsustainable and / or unethical production methods; group purchasing agreements for sustainable inputs; joint R&D and investment or production agreements requiring the exchange of information; or the establishment of industrial standards promoting the use of sustainable products and green technologies.
  • Clarifier, in cases where the prohibition of cartels could not be ruled out at first glance, the conditions under which the long-term benefits of cooperation on sustainable development or the benefits for society in general are likely to offset the restriction of competition and to “buy back” the agreement (“exemption” mechanism). In this regard, the Commission settles a point in the debate by considering that these benefits do not have to be direct or have an immediate impact on the quality of the products or their cost price. It is also open to taking into account the acceptance of a higher price by the consumer with regard to the environmental characteristics of a product (the example given is that of fair trade coffee).
  • To book exemption from agreements which are essential to achieve the environmental goal pursued. For this, the Commission intends to assess the extent to which the absence of an individual solution is linked to a real market failure and justifies a common approach by companies. She indicated that she would be open to arguments on the need to unite in order to overcome the “first mover disadvantage” and to encourage consumers to use more expensive but more durable products. Conversely, it warns against the artificial greening of certain cooperations (“greenwashing”).
  • Assess the existing regulatory incentives for companies to produce individually in a sustainable manner and the possibility of going collectively beyond the regulatory standards in certain sectors (agriculture in particular).

Although self-analysis of cooperation agreements by companies wishing to enter into them remains the rule, the Commission says it is ready to welcome requests for individual guidance letters for projects which raise new questions.

Although self-analysis of cooperation agreements by companies wishing to enter into them remains the rule, the Commission says it is ready to welcome requests for individual guidance letters for projects which raise new questions. When there is a public interest in publicizing these guidelines, the Commission could consider adopting formal decisions finding that the competition rules are not applicable to a particular project.

The promised clarifications will be made in the European guidelines on horizontal cooperation agreements and, to a lesser extent, in those on vertical agreements (distribution and supply agreements for products and services), both currently under revision.

To note : in his Competition Policy Bulletin 1/2021, the European Commission also sets out how it intends to take into account the objectives of the Green Deal, both in the context of the implementation of the control of concentration operations and in the assessment of the compatibility of State aid with the common market rules.

By Virginie Coursière-Pluntz, associate lawyer at the business law firm PDGB

Expert opinions are published under the full responsibility of their authors and in no way commit the editorial staff of L’Usine Nouvelle..

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