POMFR: Greening EU Competition Law and Policy

Is EU competition law ‘special’? Should it be insulated from other EU policies? Should we Europeans follow the neoliberal teachings of Chicago scholars like Bork who claim that American antitrust policy ‘cannot properly be guided any goal other than consumer welfare’ and that ‘distribution of (…) wealth or the accomplishment of noneconomic goals are the proper subjects of other laws’?   These questions are particularly relevant to EU environmental policy, where we have seen an increase in reliance on market based instruments (the emissions trading scheme for instance). The central argument of Suzanne Kingston’s new book ‘Greening EU Competition Law and Policy’ is that EU competition law is not special and that it should take greater account of EU environmental policy and goals.

I just finished reading the book and thoroughly enjoyed it. It’s well written, convincing, and a valuable addition to the literature on the subject. In this post, I will briefly discuss Kingston’s main argument and try to put the work in the context of the more general discussion on the role of noneconomic (or if you will non-efficiency) concerns in EU competition law and policy.

‘Greening EU Competition Law and Policy’ is a revised version of her PhD thesis  (defended at Leiden University) and the outline of her argument has also been published in a nice article ‘Why competition law isn’t special’ in the European Law Journal back in 2010. The continuing debate on the role of noneconomic factors in competition law analysis has been triggered by the Commission’s move towards a more ‘economic’ approach to competition law together with Giorgio Monti’s seminal article ‘Article 81 EC and Public Policy’ in the Common Market Law Review. The debate that followed has produced a wealth of literature including my personal favourites: ‘Competition law and Environmental Protection in Europe’ by Hans Vedder and ‘Article 81 EC and Public Policy’ by Chris Townley.

To summarise (at the risk of oversimplifying), there are two main positions in this debate: Those who believe that public policy goals can only be taken into account within EU competition law to the extent that those goals can be measured in economic terms and contribute to maximizing consumer welfare (Amato, Odudu). And those who believe in a more prominent role for public policy concerns within competition law and who acknowledge that public policy goals may trump the goal of maximizing consumer welfare (Townley, Kingston).

Kingston falls squarely into the latter camp:

Where it is possible to interpret the Treaty competition provisions in a way that favours environmental protection, and there is a conflict with the goals of competition policy, then the proportionality principle applies. This means that, where a (private or State) measure is suitable to achieve the EU’s environmental policy objectives, and there is no way of achieving these objectives that is less restrictive of competition, the measure should be allowed under EU competition law.

Kingston uses three main arguments to support her proposition: a legal systematic argument, a governance argument, and an economic argument. All arguments are convincing and should really provide some food for thought for competition law academics and practitioners operating in a field that is increasingly trying to detach itself from other EU policies. The negligence of EU environmental policy in the Commission’s  2004 Guidelines on Application of Article 81 (3) of the Treaty  and the 2010 Guidelines on Horizontal Co-Operation Agreements is seriously worrying in that respect, particularly since EU environmental policy is based increasingly on market based instruments (e.g. emissions trading, tax instruments, voluntary environmental agreements) to achieve EU environmental goals.

The legal systematic argument  refers to the place of the EU competition rules within the wider aims of the EU and the nature of the EU’s economic constitution. As is well known, the environmental integration provision of article 11 TFEU, explicitly requires the integration of environmental policy in the activities and policies of the Union.  Here, Kingston takes a particularly strong position on this duty to integrate, requiring officials to prioritise environmental protection at all stages of policy making, including competition policy.

Her governance argument is based on governance theory and holds that the principles of good governance and coherence require officials and courts to enforce competition laws in line with environmental policy. Kingston criticizes the Commission for not living up to its own promises on good governance (in its White Paper on European Governance) which seek to achieve coherence between the different EU policies which was central to the EU’s views on good governance. Nonetheless, she envisages less governance problems in the case of EU competition law enforcement by the CJEU and national courts, since ‘theories of integrity in judicial reasoning suggest deeply embedded tendencies to prefer solutions that are coherent with the legal system at issue, and (…) its underlying constitutional and moral values.’

The third argument, based on economic reasoning, holds that environmental considerations can and should play a role within the neoclassical economic model of welfare analysis. Environmental economics can take environmental considerations into account by placing a value on environmental goods and services. Environmental valuation is of course challenging, both ethically and methodologically: evaluating environmental property rights (can one own the environment?) and the long-term environmental effects of certain actions is inherently difficult. But environmental economics does demonstrate that environmental considerations cannot always be assumed to be a ‘noneconomic’ concern.

For me, the most valuable addition made by Kingston to the ongoing debate is the very sound theoretical framework she provides, which treats environmental policy and competition law as equals (usually the environment is seen from a competition law perspective or vice versa).

I also found her discussion of the Wouters and Albany cases quite thought provoking. Many have attempted to reduce the relevance of these cases to their facts, despite increasing reliance by the CJEU on these cases. Kingston, by contrast, extrapolates a general rule from those cases which is relevant to environmental agreements. Hence, she suggests that

proportionate restrictions inherent in an environmental agreement, without which that agreement would not have been concluded ( Albany), and restrictions necessary to carry out an environmental regulatory task (Wouters) fall outside the scope of Article 101 (1) TFEU.

This position and her explanation make sense, and would make environmental agreements which contribute to EU environmental goals but are restrictive of competition much more viable. More importantly, it would give public authorities and undertakings much needed guidance on the subject, something DG Competition has failed to do. All in all highly recommended reading for those interested in EU environmental policy and/or EU competition policy.

2 comments

  1. Sébastien Thomas

    Isn’t the quote rather: “proportionate restrictions inherent in an environmental agreement, without which that agreement would NOT have been concluded ( Albany), and restrictions necessary to carry out an environmental regulatory task (Wouters) fall outside the scope of Article 101 (1) TFEU.” ?

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