It’s a (Green) Deal: More legal certainty promised for green business collaborations

Today heralds another important step toward greater clarity for sustainability collaborations between competitors in the EU. The European Commission has confirmed that the current competition rules governing agreements between competitors “are not sufficiently adapted to the pursuit of sustainability goals”.

This comes as a result of its evaluation of the horizontal block exemption regulations relating to R&D and specialisation agreements and its separate horizontal guidelines, all of which were adopted over a decade ago.

While more guidance is still some way off, the message of encouragement for businesses wishing to collaborate in genuine pursuit of green goals is clear.

Results of the Commission’s evaluation: more clarity needed 

During its evaluation, the Commission collected evidence to understand how the rules have functioned over the last decade, including stakeholder contributions received as part of a public consultation launched last Autumn and the responses to its call for contributions on Competition Policy and the Green Deal (which culminated in 189 public contributions).

According to the evidence, the most important development in the last decade is the pursuit of sustainability goals. But, as we have written previously, the message from businesses has been unequivocal: the lack of clarity about how the rules will apply in scenarios where existing block exemptions are not available – and therefore self-assessment of the criteria for individual exemption is required – can discourage them from working together in pursuit of genuine green objectives.

The evaluation has confirmed this, concluding that cooperation is important for green initiatives to succeed, but that guidance – and therefore legal certainty – is lacking. What is the definition of a sustainability agreement? And which (if any) societal benefits and/or economic efficiencies can be weighed against any harm to competition? On this last point, the Commission has said that the evidence does not yet allow for a conclusion and further assessment is required.

Next steps and opportunities to help shape the rules 

In the coming weeks, the Commission will launch the impact assessment phase of its review to delve into the issues identified during the evaluation. It plans to have revised rules in place by 31 December 2022 when the current rules are due to expire.

Stakeholders have an opportunity to comment on the inception impact assessment, as well as to provide their views as part of a public consultation planned for mid this year.

Then, in early 2022, the Commission will publish a draft version of the revised rules and stakeholders should again take the opportunity to comment on these rules and to help shape them.

Following the lead of national competition authorities 

EU-wide plans to provide more guidance follow steps already taken at the national level, with the Dutch authority publishing its own guidelines to encourage green collaboration, and the Hellenic Competition Commission planning to do so.

Only last month, Austria decided to take a different, arguably more radical approach, publishing a draft amendment to its competition law (as opposed to guidance) which explicitly specifies that agreements can be exempted where they contribute to an “ecologically sustainable or climate-neutral economy” – potentially opening the door for relevant out-of-market efficiencies. The draft Act is open for comments until 18 May 2021.

Collaborating in the green zone while we wait 

Although the direction of travel is positive and very welcome, December 2022 seems like a long wait for clarity. But the Commission is sending out a clear message that it acknowledges the importance of genuine sustainability collaborations to support the Green Deal, and that it will be more supportive of them. The Commission (and some NCAs) has also suggested that it is open to discussions with companies to stress test their proposals.

This means that the lack of immediate clarification is not fatal to green collaborations, as long as these are legitimate and necessary, and are subject to careful risk management and monitoring. Take a look at our guidance on how to approach this risk assessment in practice.