Same, same but green? The Commission’s competition policy for the green transition has a familiar feel

How should competition policy support the EU’s green transition? Last week, the European Commission had its say. It published a ‘Communication’ outlining its views - which is particularly significant as it feeds into the ongoing debate about how competition policy should support sustainability goals. It is perhaps surprising, therefore, that the Commission’s focus remains largely on the role of State aid (which has long been its competition golden child for achieving green objectives). On mergers and antitrust policy, it appears significant policy changes will have to wait for progress in the Commission’s ongoing review “of unprecedented scope and ambition” of its competition tools (covering over 20 sets of competition rules and guidelines).

By and large, the Commission largely affirms its traditional views: it is strong and robust enforcement of competition rules that best ensures consumer welfare and competitive businesses across the single market. However, it also set out several key areas where it wants competition policy to facilitate the green transition.

Kick-starting green private investments 

In the short-term, the Commission is amending the State aid Temporary Framework (i.e., the framework underpinning the Covid-19 crisis measures). As part of progressively phasing out the Framework by June 2022, it is introducing new tools to kick-start and crowd-in private investment for recovery initiatives. Although Member States will set the priorities and design schemes, the Commission considers that investments that do “significant harm to environmental objectives” are unlikely to be permissible. Appropriate schemes, it suggests, might include replacing old machinery with less polluting equipment, investments boosting the circular economy or recycling, or improving buildings’ energy efficiency.

State aid – still the golden child of greenery

The Commission stresses that its overhaul of State aid rules will be a strong boost for the Green Deal – particularly by ‘crowding-in’ private investment. In particular, it expects that the revised Climate, Environmental Protection and Energy Aid Guidelines (CEEAG) will provide the framework for Member States to achieve the Green Deal. In particular, it expects that CEEAG would support:

• decarbonisation efforts by businesses based on tech that can deliver the green transition (e.g., Carbon Contracts for Difference to supply low-carbon hydrogen);
• measures to make zero/low-carbon production processes economically viable;
• consistency with key Green Deal regulatory principles (e.g., ‘polluter pays’); and
• the phasing out of fossil fuels (as State support for projects involving such fuels are unlikely to be compatible with State aid rules).

The Commission also sees State aid having an important role in the transport sector’s green transition, enabling breakthrough green innovation, and supporting regions that face transition or structural challenges.

Antitrust and mergers – unloved siblings needing attention?

Beyond State aid, the Commission is rather less loquacious. Despite the ongoing debate over whether the Commission should give more guidance for sustainability collaborations between firms and give more credit for sustainability benefits arising from mergers, it reiterates that the Green Deal is best furthered through “vigorous enforcement of antitrust and merger rules”.

However, that said, the Commission does “stand ready to respond to companies’ requests for guidance to provide legal certainty, including where companies contemplate agreements to pursue sustainability objectives”. This is an important and helpful statement. But businesses will still need to wait until early next year (when the draft revised Horizontal Block Exemption Regulations and Guidelines are expected) for more guidance and examples to be made widely available.