J U R I D I C U M
EU Competition Law and Environmental Protection
Are environmental benefits considered in the assessment of Article
101 TFEU?
Tanya Krause
VT 2020
RV600G Rättsvetenskaplig kandidatkurs med examensarbete, 15 högskolepoäng Examinator: Adam Croon
Abstract
One of the main goals in EU is to ensure that competition is not distorted within the internal market. Following the goals of the EU competition law that aims for economic efficiency, it can be seen that it takes a rather economic approach. However, as environmental policy developed into one of EU’s most important areas of law during the latter half of the 20th-century, the Union’s focus has shifted from a purely economic view to give way and recognize other objectives and values in the context of its policies. Furthermore, it has become increasingly common for companies to try to design their business in a way that minimizes their environmental impact. Consequently, this often requires companies to work together and enter into agreements. Although these agreements can bring great environmental benefits, they run the risk of falling under the prohibition in Article 101(1) TFEU, as they are often considered to be restrictive of competition.
Following the reform of the Commission made in 2004, steps towards seeing economic efficiency as the sole objective of competition law has been taken. Consequently, the application of Article 101(1) TFEU does not clearly take environmental benefits that follows from an agreement into account. In light of this, the application of the exemption provided for in Article 101(3) TFEU would appear to be the main opportunity to consider positive effects for the protection of the environment. The assessment of Article 101(3) TFEU should include all the benefits of society at large. Therefore, environmental benefits should be taken into account within the assessment made under Article 101(3) TFEU.
Furthermore, in the opinion of the author, an assessment of Article 101 TFEU that would focus solely on economic benefits is not fully consistent with the Treaties as they require the EU to strive for a high level of environmental protection. Essentially, it is argued that the EU Treaties should form a coherent system where open-textured Treaty provisions should be interpreted to help reaching other Treaty objectives. The policy-linking provisions would thereby require that environmental policies are to be integrated under Article 101 TFEU.
Keywords: EU competition law, Article 101 TFEU, environmental protection, environmental agreements, non-economic benefits
List of Abbreviations
Charter Charter of Fundamental Rights of the European Union
Commission The European Commission
EU European Union
EU Courts The General Court and the Court of Justice together
ECJ or the Court The Court of Justice
TEU Treaty on European Union
Table of Content
1 Introduction ... 1
1.1 Background... 1
1.2 Purpose and Research Questions ... 2
1.3 Delimitations ... 2
1.4 Method and Material ... 2
1.5 Outline ... 4
2 EU Competition Law and Article 101 TFEU ... 5
2.1 Article 101 TFEU in General ... 5
2.1.1 Article 101(1) TFEU ... 6
2.1.2 Article 101(3) TFEU ... 8
2.2 The Modernization Process ... 9
3 EU Public Policy: Environment ... 10
3.1 Legal Framework – Protection of Environment ... 10
3.2 The Shift to Market-based Instruments ... 11
3.3 The Relation Between Article 101 and Environmental Protection ... 12
3.3.1 Two Integration Approaches... 13
3.3.1.1 The Teleological and Systematic Approach ... 13
3.3.1.2 The Economic Approach ... 15
4 Environmental Agreements and Article 101 TFEU... 17
4.1 2001 and 2010 Commission Guidelines ... 17
4.2 101(1) TFEU and Environmental Agreements ... 18
4.2.1 Three Different Types of Environmental Agreement ... 18
4.2.1.1 Agreements That Do Not Fall Under Article 101(1) TFEU ... 18
4.2.1.2 Agreements That Almost Always Fall Under Article 101(1) TFEU ... 19
4.2.1.3 Agreements That May Fall Under Article 101(1) TFEU ... 20
4.3 101(3) TFEU: The Exemption to the Prohibition ... 23
4.3.1 Case CECED ... 23
4.3.2 The Four Cumulative Conditions of Article 101 (3) TFEU and Environmental Protection... 24
4.3.2.1 First Condition – Benefit ... 25
4.3.2.2 Second Condition – A Fair Share to Consumers ... 25
4.3.2.3 Third Condition - Indispensability ... 27
4.3.2.4 Fourth Condition – No Elimination of Competition ... 27
5 Conclusion ... 29
1 Introduction
1.1 Background
“When companies are in doubt about the interpretation, they may not dare to conclude agreements that not only would be good for the environment but also permissible under competition law.”
Antti Neimala Director General at the Ministry of Economic Affairs and Employment Protecting the environment is one of the greatest challenges of our time and it has been a hot topic in the debates in the European Union the last decade. In 2019, this was one of the main discussions on the Finland’s Presidency of the Council of the EU’s agenda. The debate mainly concerned the relationship between the interpretation of agreements promoting sustainability and competition law. A central issue that was addressed was to what extent competing companies can agree under EU competition law when entering into agreements that restrict competition but promote the environment.1
Traditionally, to achieve environmental goals, regulatory measures have guided collaborative action within the environmental policy. More recently, however, it has become more common with the use of other instruments, such as environmental agreements between market participants. As companies seek to minimize their environmental impact by integrating environmental concerns into their businesses, they are often required to cooperate to benefit from such actions.2 However, while such agreements can protect the environment and thereby
bring great environmental benefits, they risk being anti-competitive under Article 101 Treaty on the Functioning of the European Union (TFEU).3 Consequently, the shift towards voluntary
instruments on the market has opened up for the discussion how environmental agreements may fall within the scope of competition law. Additionally, it has been questioned whether Article 101 TFEU takes environmental benefits into account.
Despite the fact that environmental policy has been given a more important role on the EU’s political agenda, there are however other different, partially opposing interests, objectives and principles that must be considered within the context of the Union's policy. Consequently, it is not uncommon that two of EU’s policies come in conflict with each other. The environmental policy which encourages environmental cooperation between market actors is can easily come to conflict with EU competition law, which primary purpose is to increase consumer welfare and contribute to economic efficiency. The balancing of these interests is extremely complex because EU competition law, in essence, takes economic considerations into account and is merely designed to promote economic efficiency, rather than to meet the need for non-economic interests, such as environmental protection. Consequently, the crucial issue is whether agreements restricting competition but promoting protection of the environment can be accepted under EU competition law, which this paper aims to examine.
1 Ministry of Economic Affairs and Employment, ‘Sustainability agreements and consumer power in the digital
world to be discussed at Competition and Consumer Day’ (VNK, 25.9.2019) < https://vnk.fi/en/article/- /asset_publisher/1410877/kestavyytta-edistavat-sopimukset-ja-kuluttajanvalta-digimaailmassa-kilpailu-ja-kuluttajapaivan-aiheena> accessed 21 April 2020.
2 Commission, ‘'Environment 2010: Our future, Our choice' - The Sixth Environment Action Programme’
(Communication) COM (2001) 0031 final, 2.3.
1.2 Purpose and Research Questions
The link between the increased cooperation among companies aiming at protecting the environment and competition law policy raises a number of interesting questions. Accordingly, the purpose of this paper is to examine environmental agreements concluded between companies in the light of EU competition law. More precisely, this paper aims to analyze whether environmental policy can be integrated into Article 101 TFEU. Thus, the purpose of this paper is to analyze whether and how environmental agreements can be covered by the prohibition on anti-competitive cooperation laid down in Article 101(1) TFEU, as well as whether such an agreement can be exempted under Article 101(3) TFEU.
Accordingly, the following research questions are examined in this paper:
1. How do environmental agreements fall within the scope of the prohibition laid down in Article 101(1) TFEU?
2. To what extent and how are environmental interest taken into account under Article 101(1) TFEU and Article 101(3) TFEU?
1.3 Delimitations
Since the purpose of this paper is to examine environmental agreements between companies, this paper deals exclusively with Article 101 TFEU that prohibits anti-competitive agreements. Moreover, EU competition law is a broad area of law and environmental protection can be assessed in relation to different provisions regulating competition law within the EU. However, due to the limited scope of the paper, environmental protection will be examined only in relation to Article 101 TFEU, meaning that other provisions regulating EU competition law will not be examined.
Finally, this thesis will only focus on the link between environmental protection and competition law. Therefore, other non-economic benefits and public policies will not be addressed, even if the same lines of arguments could be considered to apply in relation to the assessment.
1.4 Method and Material
In order to reach the purpose of this paper and analyze the research questions stated in the previous section, the legal dogmatic method is used.
The legal dogmatic method involves presentation and systematic review of the applicable law within the subject, which for this paper implies a deeper analysis of relevant EU law and material. Thus, by applying this method, it is therefore established what the applicable law is in the area that is being analyzed based on the sources of law that constitutes de lege lata.4
4 Jan Kleineman, ’Rättsdogmatisk metod’ in Maria Nääv and Mauro Zamboni (eds), Juridisk metodlära (2nd
In accordance with the purpose of this paper, the legal sources relevant to environmental protection and competition law within the EU will be analyzed and discussed. Thus, the analysis will mainly be based on an examination of various sources of Union law.
The fact that EU law can be regarded as an autonomous legal system in itself has a bearing on how the legal dogmatic method is to be understood. Consequently, the method must be interpreted according to EU’s own sources of law by using its own methods of interpretation. It can be seen that, the so-called EU legal method, is rather treated as an approach dealing with EU legal sources. Thus, it will be of particular importance to understand the EU's character as an own legal system.5 Consequently, the legal dogmatic method is intended to be applied in line
with the hierarchical order of EU sources of law.
The sources of EU law can be divided into primary law and secondary law. EU’s primary law involves the Treaties (today the Treaty of Lisbon which has two separate Treaties, Treaty on European Union and the Treaty on the Functioning of the European Union), the Charter of Fundamental Rights of the European Union and the general principles of EU law.6 These
sources are at the top of the hierarchical pyramid of EU norms.7 As for this paper, Article 101
TFEU will be examined as it is this Article that sets the main rule governing the anti-competitive agreements.
The secondary EU law involves acts (legislation) adopted on the basis of the Treaties.8
Secondary legislation can be binding and non-binding. According to Article 288 TFEU, regulations, decisions and directives are binding acts, whereas recommendations and opinions are non-binding.9 The European Commission issues decisions in a large number of individual
cases10 in the area of EU competition law. The decisions of the Commission are of importance
because they execute EU competition rules in individual cases and clarifies the interpretation of the competition provisions.
Furthermore, in addition to the acts listed in Article 288 TFEU, there are some other acts that are mostly provided for in different provisions in the Treaty or developed through the institutional practice.11 In principle, such acts are soft-law and not binding.12 Despite the fact
that these acts are non-binding and are found at the bottom within the hierarchy of norms, they can be relevant to the application of law as they can provide clarity, for example, on how to interpret a particular rule in the field of EU competition law. The ECJ has stated that when soft-law seeks to complement binding EU legal provisions, soft-soft-law can be used as a basis for the interpretation of a part of an provision or related issues.13 With regard to such acts, guidelines
and communications of the Commission are important for the purpose of this paper, because the Commission’s Guidelines and Communications which clarify how a provision should be interpreted or more detailed information on a particular issue are used.
5 Jane Reichel, ’EU-rättslig metod’ in Maria Nääv and Mauro Zamboni (eds), Juridisk metodlära (2nd edn,
Studentlitteratur AB 2018) 109.
6 Ulf Bernitz and Anders Kjellgren, Europarättens grunder (5th edn, Nordstedts Juridik 2014) 178–179. 7 Catherine Barnard and Steve Peers (eds), European Union Law (2nd edn, OUP 2017) 104.
8 Bernitz & Kjellgren (n 7) 180. 9 TFEU (n 3) Art 288.
10 Bernitz and Kjellgren (n 7) 74. 11 ibid 180.
12 Reichel (n 6) 126. 13 ibid 128–129.
Additionally, the ECJ’s case-law is of importance as it provides for interpretation of the provisions in the Treaty and secondary legislation. 14 Even if there is a lack of exhaustive case
on environmental agreements assessed under Article 101 TFEU, the case law of the ECJ which relates to competition law is used in this paper.
It is important to briefly explain the importance of the Commission in the area of EU competition law. As the guardian of the Treaties, the Commission enforces EU competition rules against individuals (natural and legal persons).
Finally, the legal doctrine is used in this paper as there has been a thorough discussions about environmental protection within the EU’s framework of competition law.
1.5 Outline
This paper is divided into five chapters. Chapter 2 begins with a general introduction of EU competition law and its goals. Thereafter, it provides for the main rules in regard to Article 101 TFEU. For the purpose of the paper Article 101(1) TFEU and Article 101(3) TFEU is further analyzed. This chapter provides for an overview of the framework of Article 101 TFEU for a better understanding of the further analysis in the following chapters.
Chapter 3 discusses the development of environmental policy within the EU. It further discusses the role of environmental protection within the Union’s activities and policies. Additionally, it provides for an analysis on why environmental protection objectives are relevant and to be considered within EU competition law. It does so by presenting two different approaches according to which it is possible to integrate environmental considerations into the Union's competition law.
Chapter 4 analyzes the extent to which environmental considerations are possible within the framework of Article 101 TFEU. The chapter first examines the relevant Commission Guidelines for the further analysis. Thereafter, an examination on Article 101(1) TFEU is made in order to present to what extent the assessment made under the provision considers environmental interests represented by an environmental agreement. It will further analyze if environmental agreements can restrict competition under Article 101(1) TFEU. This part mainly focuses on what types of environmental cooperation that are likely to be covered by the prohibition under Article 101(1) TFEU. Thereafter, it continues with the assessment of Article 101(3) TFEU in regard to whether environmental agreements can be exempted under Article 101(3) TFEU. The conditions of Article 101(3) TFEU is examined in detail in order to assess whether environmental protection objectives can be considered in the balancing process under 101(3) TFEU.
Finally, Chapter 5 analyzes and links the previous findings. It provides for a conclusion that briefly highlights the important findings presented in this paper.
2 EU Competition Law and Article 101 TFEU
This section provides for a short overview on the general goals and interests that are protected by the EU competition rules. By briefly explaining the main objectives behind the competition rules, the conflict of the integration with environmental protection objectives, which is addressed in Chapter 4, will be better understood.
One of the main goals in EU is to protect the internal market and to ensure that competition is not distorted.15 The core values of EU competition law is to promote competition, integration
in the internal market and economic efficiency.16 Economic efficiency is to be understood as
when goods and factors of production are utilized in a manner that produces the most economic output at the lowest possible cost.17 Furthermore, the goal of EU competition law is to maintain
economic freedom and enhance consumer welfare on the market.18
To begin with, before getting into the discussion whether environmental protection can be given a substantial role within the scope of competition, some basic rules will first be laid down for a better understanding of EU competition law. This chapter will therefore provide for a general overview of the EU competition rules applicable to companies within the European Union. The main rules on EU competition can be found in the TFEU.19 Hence, as stated under
delimitations, only Article 101 TFEU will be further assessed and analyzed in accordance with the purpose of this thesis.
2.1 Article 101 TFEU in General
Article 101 TFEU lays down the rules on the prohibition of anti-competitive agreements, whereby it aims to protect both consumers and companies while maintaining a competitive market within the EU.20
With regard to the structure of Article 101 TFEU, the article involves three parts. Article 101, paragraph 1 TFEU prohibits agreements concluded between companies which distort, restrict or prevent competition on the internal market in the EU and which may affect trade between the Member States. In fact, Article 101(1) TFEU prohibits collusions between companies. A collusion can be an agreement, a concerted practice or decision of association of undertakings. As for the scope of this thesis, only agreements will be at the focus. Article 101, paragraph 3 TFEU provides for an exemption for agreements concluded between companies.21 As obvious,
this step only becomes relevant when an agreement is found to be restrictive of competition within the meaning of Article 101(1) TFEU. In such a case, the pro-competitive benefits produced by that agreement are to be determined under Article 101(3) TFEU. Furthermore, the pro-competitive effects have to outweigh the restriction of competition in order for the agreement to get exempted. Finally, Article 101, paragraph 2 TFEU states that agreements that
15 Jasminka Pectić Kaufman and Siniša Petrović, ‘The Enforcement of EU Competition Law by National Courts’
in Vesna Tomljenović, Nada Bodiroga-Vukobrat, Vlatka Butorac Malnar and Ivana Kunda (eds), EU
Competition and State Aid Rules: Public and Private Enforcement (Springer 2017) 49, 51. 16 Giorgio Monti, EC Competition Law (CUP 2007), 20-21.
17 Organisation for Economic Co-operation and Development, ‘Glossary of Industrial Organisation Economic
and Competition Law’, 41.
18 Monti (n 25). 19 TFEU (n 3).
20 Alison Jones and Brenda Sufrin, EU Competition Law: Text, Cases & Materials (4th edn, OUP 2011) 119. 21 TFEU (n 3) Art 101.
cannot benefit from the exemption envisaged in Article 101(3) TFEU are void.22 However, if it
is possible to severe the void clauses from the remaining provisions of the contract the agreement as a whole will not be void.23 In the following two sub-chapters the conditions within
Article 101(1) TFEU and 101(3) TFEU will be further developed.
2.1.1 Article 101(1) TFEU
The first step of Article 101 TFEU is to assess whether the agreement in question is restricting competition or not. The essential issue is whether the agreement is likely to have a negative effect on competition by reducing consumer welfare. 24 Furthermore, agreements that fall under
Article 101(1) TFEU are prohibited regardless whether they are concluded between companies that operate at different levels of the supply chain (vertical agreements) or at the same level - between competitors (horizontal agreements). Such agreements include, for example, market-sharing or price-fixing, and they are, in principle, prohibited.25 In general, four conditions are
to be met for an agreement to be prohibited under Article 101(1) TFEU.26
The first condition for Article 101 TFEU to be applicable is existence of undertakings. In other words, the prohibition envisaged in Article 101(1) TFEU only applies to parties that qualifies as undertakings or as an association of undertakings. What is regarded as an undertaking has been described in the case law of the ECJ as “every entity engaged in an economic activity”. What legal status the undertaking has and in what way it is financed is not of relevance.27 What
is of relevance is, however, whether the activity in question conducted by the undertakings concerned involves offering goods or services on the market in return for what can be perceived as a profit.28
The second condition for Article 101 TFEU to be applicable is an existence of a collusion between undertakings. As regards agreements Article 101(1) TFEU is given a broad interpretation by the case law of the EU Courts. The ECJ has stated that the concept of an agreement is basically based on the existence of a common will between at least two parties. Additionally, the form of the expression is of no significance as long as it is a faithful expression of the parties’ intension.29
The third condition for Article 101 TFEU to be applicable is restriction of competition. An agreement must have as its object or effect of the distortion, prevention or restriction of competition.30 Agreements that constitutes restrictions of competition by object are those that
by their very nature have the potential to restrict competition.31 The list of object restrictions in
22 Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to
horizontal co-operation agreements (Guidelines 2011), Communication from the Commission [2011] OJ C 11/01, paragraph 20.
23 Moritz Lorenz, An Introduction to EU Competition Law (CUP 2013) 117.
24 Guidelines on the application of Article 81(3) of the Treaty (Guidelines 2004), Communication from the
Commission [2004] OJ C 101/08, paragraph 13.
25 ‘Competition: Antitrust procedures in anticompetitive agreements’ (European Union, July 2013)
<www.ec.europa.eu/competition/publications/factsheets/antitrust_procedures_101_en.pdf> accessed 21 April 2020.
26 Lorenz (n 32) 63.
27 Judgement of 23 April 1991, Höfner and Elser v Macrotron GmbH, C-41/90, EU:C:1991:161, paragraph 21. 28 Suzanne Kingston, Greening EU Competition Law and Policy (CUP 2012) 197-198.
29 Judgement of 26 October 2000, Bayer AG v Commission of the European Communities, T-41/96,
EU:T:2000:242, paragraph 69.
30 TFEU (n 3) Art 101(1).
the article includes, for example, price-fixing and market sharing. However, as the list provided for in Article 101(1) TFEU is non-exhaustive other practices need to be assessed individually.32
To assess whether an agreement has an anti-competitive object, the content of the agreement, the objectives it seeks to attain, and the economic and legal context of which it forms part must be examined.33 In cases where an agreement is found to be anti-competitive by object it is not
necessary to examine the effects of the agreement in question.34 However, if the agreement does
not restrict competition by object, an examination on whether it has an actual or even potential effect on competition must be made.35 A restrictive effect on competition is for example when
the agreement, for a reasonable probability, allows the parties to reduce product quality or raise prices for a profit. To determine whether an agreement has restrictive effects, an extensive analysis of the market context is required, including the context in which competition would occur in the absence of the agreement.36 In other words, in the assessment a comparison is made
between the current factual situation to the hypothetical situation which would persist if the agreement in question would not have been concluded.37 Consequently, the interpretation of
what can constitute a restriction of competition is quite broad. However, it is of importance to stress that the existence of a restriction in an agreement does not automatically entail the existence of a restriction of competition.38 If the restriction of competition is by effect then an
applicability assessment must be made, a requirement also known as the ‘de minimis’ rule.39
The ‘de minimis’ rule states that agreements which have an insignificant influence on competition are not covered by the prohibition in Article 101(1) TFEU and are such acceptable. Where the market shares of the parties are small it is rare that the agreement has a negative effect on the competition and will therefore fall under the ‘de minimis’ rule.40 In other words,
the rule creates a ‘safe harbor’ for agreements that do not exceed a certain market share threshold. 41
Finally, the fourth condition requires that the practice must may have an effect on trade between the Member States.42 The ECJ has adopted a broad interpretation of this requirement stating
that there is an effect on trade between Member States wherever it is likely to predict with a sufficient degree of probability that the agreement in question may have an influence, direct or indirect, actual or potential, on trade between Member States.43
32 Lorenz (n 32) 104. 33 Guidelines 2004 (n 33)paragraph 25. 34 Guidelines 2011 (n 31) paragraph 24. 35 ibid paragraph 26. 36 ibid paragraphs 28-29. 37 Lorenz (n 32) 96.
38 Anthony M. Collins, ‘Of Cattle Crashes & Cards – Recent Case-Law of the Court of Justice on Restriction by
Object’ in Adriana Almășan and Peter Whelan (eds), The Consistent Application of EU Competition Law,
Substantive and Procedural Challenges (Springer 2017) 43, 48.
39 Commission Notice on agreements of minor importance which do not appreciably restrict competition under
Article 81(1) of the Treaty establishing the European Community (de minimis), Commission Notice [2001] OJ C 368/07, paragraph 3.
40 Janja Hojnik, ‘De Minimis Rule within the EU Internal Market Freedoms: Towards a More Mature and
Legitimate Market?’ (2013) 6(1) European Journal of Legal Studies 25, 28-29.
41 Lorenz (n 32) 113. 42 TFEU (n 3) Art 101(1).
43 Judgement of 30 June 1966, Société Technique Minière (L.T.M.) v Maschinenbau Ulm GmbH (M.B.U.),
2.1.2 Article 101(3) TFEU
For an agreement to get exempted under Article 101(3) TFEU four criteria must cumulatively be met.44 The criteria are aimed at determining the pro-competitive effects of an agreement and
balancing them with the anti-competitive effects the agreement results in. The advantages of the agreement must then outweigh the negative effect to be compatible with the competition rules. The assessment is made of the positive economic effects that arise from the restrictive agreement, since they can lead to the promotion of the consumer welfare.45
To satisfy the criteria of Article 101(3) TFEU an agreement must first contribute to improving the production or distribution of goods, or to promoting technical or economic progress. The benefit derived from the agreement must be of an objective value of the EU as a whole, rather than a private benefit for the contracting parties themselves.46 Additionally, according to the
Commission, only benefits that constitute economic efficiencies can be capable of being exempted under Article 101(3) TFEU.47 Whether other policy objectives or non-economic
benefit can be accepted and taken into account will be discussed later.
According to the second criterion the consumers must receive a fair share of the resulting benefits. The concept of consumers includes all direct or indirect users of the products covered by the agreement. Thus, both the customers of the parties to the agreement and the subsequent purchasers are included.Furthermore, the concept of ‘fair share’ indicates that the benefits must at least compensate consumers for any actual or possible negative effect caused to them by the restriction of competition found under Article 101(1) TFEU. The second condition of Article 101(3) TFEU is not fulfilled if the consumers are worse off following the agreement.48 In some
cases, a certain period of time may be required before the benefits occur. It is namely not unusual that it takes some time before the consumers are given the benefit that comes from the agreement and that the effect of the agreement until then only has negative effects.49
According to the third criterion, the imposed restrictions must be indispensable to the fulfillment of the objectives pursued. In other words, the restrictions on competition must be necessary in order to achieve the economic benefits.50 The indispensability condition comprises
a two-fold test. Firstly, it must be assessed that there are no less restrictive means to achieve the efficiencies. Secondly, it must be established that the individual restrictions of competition that flow from the agreement are reasonably necessary for the attainment of the efficiencies.51 Thus,
if an agreement involves restrictions that are not in proportion to what it is trying to achieve, then there is no basis for an exception under the third criterion.
The last and fourth criterion is that the agreement must not provide undertakings the possibility of eliminating competition in a substantial part of the market in question. In the assessment, protection of the competitive process is prioritized over possible pro-competitive efficiency gains that result from a restrictive agreement.52 Regardless of the efficiency benefits that a
44 Guidelines 2011 (n 31) paragraph 49. 45 Guidelines 2004 (n 33) paragraphs 32-33.
46 Richard Whish and David Bailey, Competition Law (7th edn, OUP 2012) 155.
47 Anne C Witt, The More Economic Approach to EU Antitrust Law (Hart Publishing 2016) 173. 48 Guidelines 2004 (n 33) paragraphs 83-85.
49 ibid paragraph 87.
50 Guidelines on the applicability of Article 81 of the EC Treaty to horizontal cooperation agreements
(Guidelines 2001), Commission Notice [2001] OJ C 3/02, paragraph 35.
51 Guidelines 2004 (n 33)paragraph 73. 52 Whish and Bailey (n 55) 164.
restrictive agreement may entail, it is a fundamental condition that competition in the relevant market must remain. Restrictions on competition which mean that competition completely disappears cannot be considered proportionate or allow for exceptions under the fourth criterion.
2.2 The Modernization Process
Of relevance to the assessment of Article 101 TFEU is that the Commission’s new guidelines have been revised in line with the modernization process of EU competition rules, including the Council Regulation No 1/2003. As a consequence, today the entire Article 101 TFEU is directly applicable at national level, instead of only 101(1) TFEU as before. Thus, it is a matter for the companies themselves to assess whether the agreement falls under the prohibition in Article 101(1) TFEU and, if so, whether the criteria for exemptions under Article 101(3) TFEU are met.53 However, this can be seen as problematic as it means that companies, who are relying
on Article 101(3) TFEU in order for the agreement to get exempted have already themselves confirmed that they are being subjects to the prohibition provision. In other words, they have already confirmed that they are infringing Article 101(1) TFEU. Consequently, if the agreement is not exempted by Article 101(3) TFEU the companies will find themselves in an undesirable position with a void agreement. As companies are not sure about the interpretation of Article 101 TFEU, as it is rather vague in its wording, it is of great importance that the Commission’s decisions and Guidelines, as well as the case-law from ECJ will clarify what applies in the context of Article 101 TFEU.
53 Council Regulation (EC) 1/2003 of 16 December 2002 on the implementation of the rules on competition laid
3 EU Public Policy: Environment
Having laid down the main rules on Article 101 TFEU in the previous chapter, it is now of importance to present and analyze if and why environmental considerations even have to be taken into consideration in questions regarding competition law. What is the actual relation between environment and competition, two of the EU’s public policies? Is it possible to separate the two objectives or are they integrated with each other? This chapter will give an overview on how the EU has developed and started to include environmental aspects in its policies. Moreover, a small discussion on what role the environment actually has in the Union’s activities and policies will be provided for. It will thereafter conclude with two different approaches that interpret the role of environmental protection within the assessment of competition law. These approaches argue for that integrating environmental protection into competition law is not only possible but should be made.
3.1 Legal Framework – Protection of Environment
The European Union was initially founded as a clear economic project. Little room was left to consider other social factors, which typically fall outside a strict economic approach. However, the Union’s focus has shifted from a purely economic view to give way and recognize other objectives and values in the context of its policies.Consequently, environmental policy has been given an increasing role on the Union’s political agenda. Today articles concerning environmental protection can be found in several different Union Treaties.54
The expansion of EU’s objectives can be seen particularly in Article 3 Treaty on European Union (TEU), in which a number of values can be identified that are missing from the original Treaty of Rome.55 Environmental policy was, unlike the competition policy, not included or
even mentioned in the original Treaty.56 Article 3(3) TEU states, inter alia, that the internal
market must be based on a social market economy with high competitiveness, that strives for a high level of environmental protection.57 The development that has taken place within the
Union can also clearly be seen in Article 191(1) TFEU where a number of environmental objectives are listed. Taking a closer look, the article explicitly states that one of the objectives of the Union policy on the environment is the protection of the environment.58 Hence, the
objectives expressed in Article 191 TFEU are of great relevance in the implementation of the Union's environmental policy. The question is, however, to what extent these objectives, especially environmental protection, are considered in other areas of the EU’s activities. The answer can be found in Article 11 TFEU according to which environmental protection requirements must be integrated into the definition and implementation of the EU's activities and policies, particularly in order to promote sustainable development.59 Thus, the article, due
to its policy-linking character, requires that environmental considerations must be regarded in a structured way when other policy objectives are developed and when measures are taken in all policy areas by the EU.60 However, it does not mean that environmental considerations
54 Nicolas de Sadeleer, EU Environmental Law and the Internal Market (OUP 2014) v, Consolidated Version of
the Treaty on European Union [2016] OJ C 202/1, Art 3(3), TFEU (n 3) Arts 11 and 191(1), Charter of Fundamental Rights of the European Union [2016] OJ C 202/401, Art 37.
55 Catherine Barnard, The Substantive Law of the EU: The Four Freedoms (4th edn, OUP 2013) 28. 56 Kingston (n 37) 98.
57 TEU (n 107) Art 3(3). 58 TFEU (n 3) Art 191(1). 59 ibid, Art 11.
should be given priority over other political objectives.61 Yet, it means that the interpretation of
legal rules that are formally outside the scope of environmental policy can be made in the light of the environmental protection requirements found in the Treaties.62 A comparable provision
like the one in Article 11 TFEU is to be found in Article 37 of the Charter of Fundamental Rights of the EU (Charter). It also stresses that environmental protection must be integrated into the Union’s policies.63 Consequently, the importance of environmental protection can be
found in three of the EU’s fundamental treaties which emphases the value of the environmental policy.64
Moreover, it can be said that environmental policy developed into one of EU’s most important areas of law during the latter half of the 20th-century. Furthermore, it is obvious that several articles are stressing the importance of environmental protection and linking environmental policy with other policies. For this paper, it is therefore of relevance to consider whether, and how, environmental protection can be considered in the context of EU competition law. Before commencing with this discussion, another development regarding environmental policy will be analyzed. In order to understand why environmental policy has begun to integrate specifically within competition policy, the next section provides for an overview of the shift of legal instruments used to regulate the activities in the internal market.
3.2 The Shift to Market-based Instruments
Another significant development in the EU’s environmental policy, apart from the one in the Treaties as presented above, has been the shift towards market-based instruments from the exclusive use of direct, or command and control, regulation.65 Such regulation involves a
prescribed command, for example an adoption of a standard, that is backed by a negative sanction, the control. Direct regulation is often characterized by the use of complete prohibition or permits systems. 66 Thus, it is a well-suited instrument to certain areas of environmental
protection, for example, by adopting regulations on emission when deciding on the limits on the permissible amount of pollution that, for example, factories in the EU can release. Despite the level of legal certainty and transparency, enforcement of such an instrument is highly time consuming and is therefore hard to adapt to a prevailing situation at a specified time. Consequently, it is emphasized that within the framework of such instruments, it is usually not possible to consider constant technological development or economic and environmental changes.67 However, as direct regulation still remains the main mechanism in the EU
environmental policy, market-based instruments are being recognized as essential for the environmental protection. Common to all market-based instruments is the use of market mechanisms in order to stimulate more environmentally friendly behavior on the market, for example by choosing a more environmentally friendly production process.68
There are several different market-based instruments, whereby the establishment of so-called voluntary environmental agreements is one of them.69 Such agreements have been defined by
61 Ludvig Krämer, EU Environmental Law (8th edn, Sweet & Maxwill 2016) 21. 62 Langlet and Mahmoudi (n 113) 86.
63 Charter (n 107) Art 37.
64 TEU (n 107), TFEU (n 3), Charter (n 107).
65 Hans Vedder, Competition Law and Environmental Protection in Europe: Towards Sustainability? (Europa
Law Publishing 2003) 47-48.
66 Kingston (n 37) 43. 67 ibid 45-46.
68 ibid 51. 69 ibid 78.
the Commission as those by which stakeholders undertake to reduce pollution or deal with environmental objectives set out in Article 191 TFEU.70 By referring to environmental
objectives set out in Article 191 TFEU, environmental agreements encompass not only agreements with the aim to reduce pollution, but also agreements with a wider purpose of protecting the environment.71 Furthermore, market actors can establish such an agreement
themselves on a voluntary basis as a means to regulate and organize their activities and thus being able to form the framework of the agreement as they prefer.72 The transition to an
increased use of market-based instruments in the Union's environmental policy with an increased focus on creating incentives and opportunities for market participants to engage in voluntary environmental initiatives have had major consequences for the separation of EU environmental and competition policy. Through the promotion of such an instrument, in which market actors play a central role, the agreements may fall within the scope of competition law.73
As market actors on the internal market start to coordinate their environmental activities and co-operate to achieve environmental objectives, the growing connection between EU environmental and competition policy cannot be left unnoticed. 74 In particular, voluntary
environmental initiatives may in the long run pose a barrier to free market entry and thus have anti-competitive effects.75 As agreements between private actors can conflict with Article 101
TFEU, they have consequently introduced another way of bringing the environmental policy within the scope of EU competition law.76
3.3 The Relation Between Article 101 and Environmental Protection
In order to examine whether environmental aspects can be considered in the context of Article 101 TFEU in the following chapter, this section presents a review of the relation between environment protection and competition law. In that context, a question of particular relevance to the continuing discussion on the integration of environmental policy into competition law is the objectives of competition law. Especially if any room is given to consider environmental protection and environmental considerations in the context of effective competition is the question that is of particular importance.
It has been agreed that the objective of modern EU competition law is the improvement of consumer welfare. However, an important unresolved question is what the concept of consumer welfare includes. Is it limited to the achievement of allocative economic efficiency, or can it include a broader view of consumer well-being? A clear dividing line can be found between those who advocate that competition law should only strive for economic efficiency and those who argue that other objectives that are not strictly financial should be considered. Following the reform of the Commission made in 2004, steps towards seeing economic efficiency as the sole objective of competition law has been taken.77 However, the opinions in this area are
disjointed. Some authors claim, for example, that the structure and wording of the Treaty open up to consider other non-economic objectives within the framework of Union competition law.78 Others claim that, through this modernization, the Commission has actively rejected
70 Commission, ‘Environmental Agreements at Community Level Within the Framework of the Action Plan on
the Simplification and Improvement of the Regulatory Environment’ COM (2002) 412 final, 4.
71 Kingston (n 37) 79. 72 Commission (n 123) 7. 73 Kingston (n 37) 93–95. 74 Vedder (n 118) 45. 75 Kingston (n 37) 93–95. 76 Vedder (n 118) 45. 77 Kingston (n 37) 9-10.
purposes other than economic ones. Purposes such as protecting and maintaining competition as such in the marketplace or promoting social welfare and other social policy objectives are no longer asserted to have any significance in the competition law context.79 However, such a
view can be called into question. Indeed, there is little evidence to suggest that the economic objectives attributed to competition law are exclusive. It is therefore far from clear that other objectives, including environmental protection, are excluded. This claim is also supported in the Competition Policy Report 2016, in which the Commission clearly states that competition law also intends to drive companies to make maximum use of scarce resources and thus includes an environmental protection perspective.80 Whether this is the practice is examined in the
following chapter.
3.3.1 Two Integration Approaches
In this sub-section, two approaches will be presented and analyzed, which support that integrating environmental protection objectives into Article 101 TFEU is possible. Despite the fact that such an objective lacks strict economic benefits, it can still be argued that environmental protection benefits can be taken into account within the assessment of Article 101 TFEU. As previously mentioned, the increased use of environmental agreements has resulted in the consequence that such agreements may fall within the scope of competition law. This has further led to problems with the separation of the two policies. The difficulty lies in assessing how environmental protection should be balanced against a competitive market economy. The two lines of argument, that hold that environmental concerns should be taken into consideration in Article 101 TFEU, are of a teleological and systematic approach on one hand, and of an economic approach on the other hand. However, as will be seen, the approaches have been faced with critics or complications.
3.3.1.1 The Teleological and Systematic Approach
The teleological and systematic approach argues for that non-economic objectives, including environmental protection, can be taken into account in the context of competition law. It does so by emphasizing the system and the underlying principles of the Treaty. Essentially, the argument is grounded in that the fundamental treaties should form a coherent system where open-textured treaty provisions should be interpreted to help reaching other treaty objectives.81
By this view, it is fundamentally wrong to isolate environmental concerns and regard EU competition law as a special area in EU law. As two objectives set out in the Treaties, such as environmental protection and competition in the market, collide, the EU Courts should adopt a holistic perspective and look at the structure and purpose of the Treaty to weigh interests against each other based on systematic and teleological arguments.82 However, the lack of, and the
difficulty of even having provisions that clearly regulate the hierarchical order between different EU objectives, creates a problem and a risk of conflicts. Therefore, giving a priority to environmental protection objectives lacks support in the Treaties. Thus, it would not be possible to exclude an agreement with the aim of protecting the environment to fall under Article 101(1) TFEU only by reference to the positive effect of the measure on the environment.83 However, environmental protection has been considered by the ECJ to be an
overriding reason in the public interest that could justify a restriction on free movement of
79 Alison Jones and Brenda Sufrin, EU Competition Law: Text, Cases, and Materials (6th edn, OUP 2016) 39. 80 Commission, ‘Report on Competition Policy’ COM (2017) 285 final, 2.
81 Kingston (n 37) 97.
82 Judgement of 6 October 1982, CILFIT v Ministero della Sanità, C-283/81, EU:C:1982:335, paragraph 20. 83 Townley (n 131) 48.
goods under certain conditions.84 Additionally, the Court has stated that protecting the
environment is a “priority objective” for the Union.85 Thus, it has been argued that the Union's
competition rules should be interpreted in accordance with the Union's rules on free movements, and environmental interests should also be taken into account within the Union’s competition law rules. Consequently, this means allowing a compromise with environmental concerns within Article 101 TFEU.86 A similar balance of interest can be found in Article
101(3) TFEU, which is written in a way that makes balancing different objectives possible. However, it has been argued that the wording of the provision does not allow for non-economic purposes, including environmental protection, to be taken into account. Proponents of the teleological and systematic approach, however, argue that such an opportunity is provided, in particular by referring to the improved production criteria and consumer benefits. If interpreting the terms widely, they are considered to be broad enough to be included as environmental benefits and therefore fall within the scope of Article 11 TFEU, which oblige environmental protection to be integrated into Article 101(3) TFEU.87 In case of an irresolvable conflict
between the two EU policy objectives, such as effective competition and environmental protection, it is advocated that the principle of proportionality would be used.88 The principle
provides in general terms that the content of an action must not exceed what can be considered necessary to achieve the objective.89 The EU Courts have an extensive practice of using the
principle of proportionality when balancing public policy goals within Article 101(1) TFEU and Article 101(3) TFEU.90 This will be further analyzed in Chapter 4.
In general, it can be stated that a wide interpretation of the Article 101 TFEU together with a systematic and teleological approach to the Treaty has enabled environmental protection consideration to be taken into account in the competition law. However, this approach has been criticized for not being legitimate when taking public policy concerns and non-economic objective, such as environmental protection, into account under Article 101 TFEU.
Firstly, it has been asked whether the approach to link different public policies together can create rights and obligations for private actors on the market under EU Law. Thus, it has been argued that the only way to derogate from an EU objective is if the policy-linking clause, for example the previously mentioned Article 11 TFEU, can create an obligation to pursue other goals. It is however argued that nothing indicates that this is the case. In other words, Article 11 TFEU cannot create obligations within competition law by linking environmental objectives into the scope.91 In its case law, the Court has explicitly rejected the idea that policy-linking
clauses can create rights for, or impose obligations on, individuals.92 The Court has also pointed
out that policy-linking clauses require public policy to be considered when the Union legislates, not when Union legislation is enforced.93 Consequently, Article 11 TFEU cannot require that
environmental policy is being considered when Article 101 TFEU is enforced.
84 Judgement of 20 September 2007, Commission v Netherlands, C-297/05, EU:C:2007:531, paragraph 77. 85 Judgement of 13 March 2001, PreussenElektra AG v Schhleswag AG, C-379/98, EU:C:2001:160, paragraphs
73-74.
86 Kingston (n 37) 119-120.
87 Julian Nowag, Environmental Integration in Competition and Free-Movement Laws (OUP 2016) 35. 88 Kingston (n 37) 115.
89 TEU (n 107) Art 5(4). 90 Townley (n 131) 65.
91 Okeoghene Odudu, 'The Wider Concerns of Competition Law’ (2010) 30(3) Oxford Journal of Legal Studies
599, 606-607.
92 Judgement of 29 September 1987, Giménez Zaera v Institut Nacional de la Seguridad Social and Tesorería General de la Seguridad Socia, C-126/86, EU:C:1987:395, paragraphs 11.
Secondly, it is argued that taking environmental interests into account under Article 101 TFEU would result in misuse of power. In order to reach wider goals, by including non-economic considerations such as environmental protection, would result in that competition law would exceed the limited competence conferred onto the Union.94
Thirdly, it is further argued that by balancing public policy goals such as the environmental protection within Article 101 TFEU would require Article 101 TFEU to be read beyond its wording.95 Stressing that, in order to forgo Article 101 TFEU for some other socially desirable
goal, such circumstances must be explicitly stated and specified.96 Additionally, a systematic
and teleological approach is however limited to the wording of the Treaties, which the policy-makers cannot exceed since the EU is restricted by its competence. Thus, the EU is only allowed to act insofar as the Treaties allow for such power. Moreover, it is not open to the policy-makers to select a certain “greener” policy option where the wording of the Treaties clearly does not allow for such an option. Neither is it possible to prohibit an agreement under Article 101 TFEU if it has an unsatisfactory result only on the environment, but however does not restrict competition. It would go beyond the scope of Article 101 TFEU as it explicitly applies only to restrictions of competition and such an act would therefore exceed the limited competence conferred to the EU.97
3.3.1.2 The Economic Approach
Contrary to the systematic and teleological argumentation, in which environmental objectives are considered as non-economic factors, the economic approach proposes another way of taking environmental protection considerations into account in the context of competition law. This approach argues that environmental protection is to be considered as a factor improving consumer welfare and economic efficiency. As mentioned in chapter 2, such an improvement constitutes the primarily aim when enforcing EU competition law.98 The fact that an agreement
would contribute to a reduced environmental impact can and should be considered as a factor that has a positive effect on this aim. Consumer welfare and economic efficiency are namely dependent on how the environmental resources are used and will adversely be affected by environmental damage.99 Therefore, according to this approach, environmental aspects could
be considered as “objective economic benefits” and thus be taken into account in the EU competition law.100
The essence of the economic approach is to investigate whether environmental considerations can be integrated as a factor affecting consumer surplus,which occurs when the consumer is willing to pay more for a certain product than the current market price. 101 However, estimating
the monetary value of environmental benefits or consumer welfare is associated with a number of difficulties, whereby this approach encounter some challenges. Contrary to goods in general, environmental goods such as satisfactory air quality, do not have any existing market price.102
In accordance with the purpose of this paper, a further discussion on the economic aspects and
94 Odudu (n 144) 608.
95 Okeoghene Odudu, The Boundaries of EC Competition Law: The Scope of Article 81 (OUP 2006) 164. 96 ibid 169. 97 Kingston (n 37)115-117. 98 ibid 163. 99 ibid 189. 100 Guidelines 2004 (n 33)paragraph 33. 101 Kingston (n 37) 174. 102 ibid 177.
complications will be left out. However, despite the challenge to put a value on environmental protection, it is still possible to regard environmental benefits as “objective economic benefits” in order to balance them against anti-competitive effects on the market. If one of the aims of Article 101 TFEU is to improve consumer welfare, then the benefits of environmental protection become relevant in an assessment of the article. Thus, the economic approach still lays down why environmental considerations can be taken into account in the context of Article 101 TFEU. Therefore, according to the approach, an exclusion of environmental factors would not necessarily be the result of the current drive towards a more economic approach at the Commission.103
4 Environmental Agreements and Article 101 TFEU
The debate on how non-economic interests may be considered by competition authorities in their interpretation and enforcement of the competition rules has been going on for many years. While the importance of environmental protection has emerged within EU law and has become one of EU’s core objectives, as examined in chapter 3, the Commission has taken an even more economic perspective to its competition policy after the modernization in 2004. As seen in the previous discussion, environmental concerns may be relevant when dealing with competition law. However, it is not clear to what extent environmental protection can be considered within this field of law. Furthermore, there are no clear guidelines how the balancing of the objectives should be made. The two approaches, discussed above, have shown that environmental protection should be integrated into competition law. Thus, the next step will be to apply these arguments in practice.
It is now of relevance to assess to what extent environmental considerations are possible within the framework of Article 101 TFEU. This chapter examines whether environmental protection actually has a considerable role within EU competition law or if it is only a desirable object being restricted by the article. Is there a risk that Article 101 TFEU has a too limited objective to include environmental considerations under both Article 101(1) TFEU and Article 101(3) TFEU. The chapter will mainly focus on to what degree environmental protection can be balanced with restriction of competition under different balancing tests considered under Article 101(1) TFEU and Article 101(3) TFEU. When considering environmental protection, one of the main questions is how environmental benefits can be taken into account in the assessment of Article 101(3) TFEU. Consequently, an assessment under the article is made in order to examine the balancing between competition and environmental protection. Generally, it can be said that the Commission takes a broad view of what constitutes a restriction of competition under Article 101(1) TFEU. However, it takes a rather strict and formalistic approach when it comes to applying the conditions in Article 101(3) TFEU.104
4.1 2001 and 2010 Commission Guidelines
With regard to environmental agreements concluded between direct or potential competitors, it is quite clear that the first paragraph of Article 101 TFEU may pose possible problems for the use of certain restrictive environmental agreements. Before providing for an analysis, it is first of importance to consider the relevant guiding provisions found in 2001 and 2010 Commission’s Guidelines, that are used in the assessment.105 In 2001, the Commission
published guidelines for the application of Article 101 TFEU to horizontal cooperation agreements, which contained a separate chapter concerning voluntary environmental agreements. It described the assessment of environment agreements between competitors under Article 101(1) TFEU.106 However, in 2010, this section was removed when the Commission
issued new revised guidelines for agreements concluded between horizontal cooperation. These new guidelines only provided for some guidance regarding the assessment of environmental standard agreements and the question that arose was whether a stricter approach to environmental agreements was adopted by the Commission. However, that does not seem to be the case. The Commission has stated that the removal of the specific chapter does not imply any downgrading for the assessment of environmental agreements. Contrarily, instead of
104 Jones and Sufrin (2011) (n 29) 646.
105 Guidelines 2001 (n 59) and Guidelines 2011 (n 31). 106 Guidelines 2001 (n 59) section 7.
addressing such agreements in a chapter with a narrow aspect, they are to be assessed under the Guidelines as a whole. Thus, today environmental agreements are to be assessed under general principles of horizontal cooperation.107 Accordingly, the 2001 Guidelines might still serve as a
guidance on how environmental agreements should be analyzed in the absence of exhaustive practice by the ECJ.108 Therefore, the 2001 and 2010 Guidelines will together form the basis
for the discussion on the assessment of environmental agreements under Article 101(1) and 101(3) TFEU.
4.2 101(1) TFEU and Environmental Agreements
This section investigates when environmental concerns are relevant in the application of Article 101(1) TFEU. It analyzes to what extent the assessment made under the provision considers environmental interests represented by an environmental agreement. Furthermore, it examines under what conditions such an agreement may be subject to the prohibition under Article 101(1) TFEU. Therefore, this section focuses on considering what types of environmental cooperation that are likely to be affected by the prohibition provision and how environmental agreements have been assessed under Article 101(1) TFEU.
4.2.1 Three Different Types of Environmental Agreement
In the 2001 Guidelines, the Commission identifies three different categories of environmental agreements. These agreements are agreements that never restrict competition and thus never fall under the prohibition provision, agreements that always restricts competition and thereby fall under the article, and those agreements that may fall under the prohibition and thus require a comprehensive assessment. Consequently, the difference between the 2001 and 2010 Guidelines is that the 2010 Guideline states that, in order to determine whether an environmental agreement restricts competition, it must be assessed individually on the basis of the current circumstances.109 Thus, from an undertaking such as company’s perspective, the
modernization by Council Regulation No 1/2003 made the self-assessment under Article 101(1) TFEU more complicated, while the 2001 Guidelines provided for some more clearer categorization. In the following, these three categories found in the older Guidelines will be further examined under different sub-chapters.
4.2.1.1 Agreements That Do Not Fall Under Article 101(1) TFEU
In the first categorization of environmental agreements it is possible to distinguish three situations where an agreement will not infringe Article 101(1) TFEU.
The first situation is where the agreement does not place any specific individual obligations upon the parties, or if the parties are only loosely committed to achieve a sector-wide environmental target. This assessment is based on the degree of discretion that is left to the parties when deciding on the technical and economic means that are available for the agreement to achieve its goals.110 This can be exemplified, for example in ACEA, where an agreement was
concluded between the automobile manufacturers in order to reduce carbon dioxide emissions
107 ‘Competition: Commission adopts revised competition rules on horizontal co-operation agreements’,
Commission Press Release (2010 MEMO/10/676) 4.
108 Nowag (n 140) 73.
109 Guidelines 2011 (n 31) paragraph 29. 110 Guidelines 2001 (n 59) paragraph 185.
from their cars.111 The Commission found that the agreement in question did not infringe Article
101(1) TFEU since the parties only agreed on sector-wide emission targets, while independently being free to decide how to fulfill the goal. Furthermore, the Commission found that the agreement in question would encourage ACEA’s (European Automobile Manufacturer’s Association) members to individually develop new technologies for the benefit of the environment.112
The second situation is when the agreement covers environmental performance for the products that only has a marginal influence on purchase decisions or product diversity in the relevant market. Consequently, such an environmental agreement will not fall under Article 101(1) TFEU. According to the 2001 Guidelines, in situations where certain categories of a product are prohibited or phased out of the market, restrictions cannot be considered appreciable provided that their share is minor on the relevant market.113
The third situation where an agreement does not fall under the prohibition envisaged under Article 101(1) TFEU is where it leads to the creation of a new market. However, it must be determined that such a market could not have been obtained without the agreement because of the lack of other alternatives and/or competitors. If it is entirely possible for undertakings to achieve the goal of the agreement on their own, question will be raised about why the parties to the agreement even choose to cooperate. The example used by the Commission in its Guidelines concerned environmental agreements on recycling systems where the need for collaboration is usually required to create the huge infrastructure networks for its function.114 A corresponding
provision can be found in the 2010 Guidelines.The provision specifies that agreements that allow the parties to launch a new product or service which they could not otherwise have launched, for example because of their technical capacity, are not covered by the prohibition.115
4.2.1.2 Agreements That Almost Always Fall Under Article 101(1) TFEU
The second category consists of agreements which are almost always covered by Article 101(1) TFEU. These are environmental agreements that are likely to cover a hidden cartel and where the cooperation does not actually concern environmental objectives. Instead, they consist of price fixing, production limitation or division of markets in a way that is prohibited. Additionally, cooperation that are used in the context of a more extensive anti-competitive agreement, which is intended to exclude actual and potential competitors do also go under this category.116 An example is the IAZ case, in which the parties to an agreement jointly decided to
use an eco-label for washing machines and dishwashers as an evidence that they met certain environmental requirements. 117 However, the ECJ found that the actual objective was in fact
to prevent imports of similar machines, as the proposed labeling was only available to national manufacturers or sole importers.118 Consequently, the agreement fell within the scope of
prohibition laid down in Article 101(1) TFEU.
111 Commission, `Implementing the Community strategy to reduce CO2 emissions from cars: an environmental
agreement with the European Automobile Industry' (Communication) COM (1998) 495 final.
112 XXVIIIth Report on Competition Policy, European Commission (1998) paragraph 131. 113 Guidelines 2001 (n 59) paragraph 186.
114 ibid paragraph 187.
115 Guidelines 2011 (n 31) paragraph 163. 116 Guidelines 2001 (n 59) paragraph 188.
117 Judgement of 8 November 1983, NV IAZ International Belgium and others v Commission, C-96-102, 104, 105, 108 and 110/82 , EU:C:1983:310.
