EU Relaxes Antitrust Regulations on Climate-Focused Alliances

The European Commission has announced the relaxation of antitrust guidelines for companies involved in collective climate action initiatives, as reported by the Financial Times on June 3. Starting from July 1, the commission will establish a “safe harbor” provision that exempts companies participating in “standardization agreements” from certain competition rules, even if these agreements result in price increases. Examples of such agreements include a boycott of plastics, fossil fuels, or steel produced from coal-fired power plants. Under the new guidelines, participating companies must not exceed one-fifth of a particular market, and must not exchange commercially sensitive information unless necessary. The should also not impede other companies from joining the agreement.

The introduction of the safe harbor policy aims to provide clarity in defining “legitimate” and “genuine” sustainability collaborations while preventing the formation of cartel-like green coalitions masquerading as sustainability initiatives. The guidelines offer relief to collective climate action groups that face increased antitrust pressure, particularly from US Republican politicians. Recently, at least six large insurers withdrew from the Net-Zero Insurance Alliance (NZIA), a sub-group of the Glasgow Financial Alliance for Net Zero (GFANZ), due to antitrust concerns raised by US state attorneys-general. The GFANZ has welcomed the EU’s decision and called other jurisdictions to follow suit. In February 2023, the UK’s Competition and Markets Authority (CMA) also released a draft proposal to approve climate collaborations, provided they have a significant and demonstrable impact on climate change, without explicitly limiting market share.

Sources:

https://www.ft.com/content/97fbacfa-cc95-47ac-874e-75cb79ec6c7d

https://ec.europa.eu/commission/presscorner/detail/en/IP_23_2990

https://www.esgtoday.com/insurers-exit-net-zero-insurance-alliance-as-u-s-political-pressure-builds/