Antitrust and Sustainability: An Introduction to an Ongoing Debate

By: Julian Nowag (Pro Market)

Beyond Covid-19, the last few decades have been marred by numerous tragedies: freak weather events caused by climate change, biodiversity loss, and general environmental degradation. These problems can be seen as part of a broader sustainability challenge faced by humankind. As such, sustainability— defined as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs” by the UN in 1987—has been on the agenda of international organizations and countries for many years.

The concept of sustainability is also increasingly embraced by the business community, and we can observe a drive for more sustainable business activity. It is thus not surprising that competition authorities around the world are expecting more frequently faced with questions around sustainability and competition. Some agencies such as the Dutch, Greek, German, UK, and EU authorities have already become active. Similarly, the OECD’s Competition Division has discussed the issue and followed up with discussions about environmental protections and antitrust and the measurement of environmental benefits for antitrust.

But what is this debate about? The debate around antitrust and sustainability takes place on at least two levels: a normative level and a technical level. The normative debate focuses on the question of whether sustainability should play a role in antitrust. The technical debate, on the other hand, explores what role sustainability can play in antitrust. 

At the normative level, we often see a simplistic, reductionist—one may even say sensationalist—view that reduces the debate to competition vs sustainability. This simplistic either/or view is often the result of a very narrow price-centric view of consumer welfare. At its extreme, it looks merely at potential costs and ignores any benefits, presenting the debate as consumer welfare vs sustainability, or low prices vs sustainability. Such a view might be entertaining and great for lively debates, yet it doesn’t do justice to the subject. It is unhelpful, since it suggests a clear dividing line and binary choice between these concepts. This oversimplification trivializes the sustainability challenge humanity faces. It also does not do justice to the challenges of enforcement, business demand, and the demand from consumers and citizens for more sustainable products.

In my recent paper for the OECD, I tried to detail a more sober approach. Such an approach acknowledges on the one hand that, from a competition perspective, regulation to achieve sustainability is the preferred option. On the other hand, it acknowledges that the question whether sustainability should play a role in antitrust is a moral/political question that is shaped by the institutional and legal context in the relevant jurisdiction. The more technical question in the antitrust and sustainability debate is one of overlap. It is a kind of Venn-diagram question: 

Where do consumer welfare and sustainability overlap? Where are the boundaries, and where do we need to discuss the boundaries?