Integrating Environmental Protection and EU Competition Law: Why Competition Isn't Special

• Author: Suzanne Kingston
• Published date: 01 November 2010
• Date: 01 November 2010
• DOI: http://doi.org/10.1111/j.1468-0386.2010.00533.x

eulj_533780..805

Integrating Environmental Protection and

EU Competition Law: Why Competition

Isn’t Special

Suzanne Kingston*

Abstract: One of the biggest challenges facing environmental policy makers at present is

that of integrating environmental protection goals into economic policy areas. Unless this

is genuinely achieved, it is clear that environmental degradation will continue apace.

Though one of the EU’s most important areas of economic competence is competition

policy, many policy makers and commentators reject the notion that environmental con-

cerns should play a significant role in EU competition analysis. In that light, this article

addresses two key questions. First, should this approach apply? Second, if not, what are

the principles that govern how environmental protection requirements should be taken into

account by decision makers applying EU competition law? In answering these questions,

the article puts forward three theoretical arguments as to why, and how, the environmental

benefits and damage flowing from goods and services should be taken into account by EU

competition decision makers, based, respectively, on legal systematic, governance and

economic reasoning.

I Introduction

One of the biggest challenges facing environmental policy makers at present is that of

integrating environmental protection goals into economic policy areas. Unless this is

genuinely achieved, it is clear that environmental degradation will continue apace.

Though one of the EU’s most important areas of economic competence is competition

policy, many policy makers and commentators reject the notion that environmental

concerns should play a significant role in EU competition analysis. Such arguments are

rooted in a number of different perspectives.

Some point to the Commission’s adoption of an economic, consumer welfare-

driven approach in its policy documents and decisions in recent years.1Though the

* Barrister and Lecturer in Law, University College Dublin.

1For examples of the Commission’s emphasis on economics-driven competition law, see the White Paper

on Modernisation of the Rules Implementing Articles 85 and 86 of the EC Treaty, [1999] OJ C132/1,

para 75 (the approach to Art 101 TFEU (ex Art 81 EC) will be ‘rigorously economic’); Guidelines on

Vertical Restraints, [2000] OJ C291/1; the creation in 2003 of the position of Chief Economist within

Directorate-General Competition; Guidelines on Technology Transfer, [2004] OJ C101/2; Guidelines on

the application of Article 81(3) of the Treaty, [2004] OJ C101/97; and Guidance on the Commission’s

enforcement priorities in applying Article 82 of the EC Treaty to abusive exclusionary conduct by

European Law Journal, Vol. 16, No. 6, November 2010, pp. 780–805.

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Commission has taken environmental factors into account in competition cases on

occasion,2this has often been done in passing, and has not been crucial to the

outcome of the case.3In only a few instances—in particular, in the case of horizontal

agreements on the energy efficiency of domestic appliances—have environmental

benefits to society at large been taken into account.4Moreover, such cases sit uncom-

fortably with the Commission’s 2004 statement that ‘objective economic benefits’ (ie

efficiencies) are necessary for exemption from Article 101(1) of the Treaty on the

Functioning of the European Union (TFEU; ex Article 81(1) EC) prohibition of

restrictive agreements.5This leads some to conclude that, as economic efficiency is

now the overriding goal of EU competition policy, competition decision makers

cannot legitimately take into account ‘non-economic’ factors such as environmental

protection.

From a theoretical perspective, such arguments are often rooted in the highly influ-

ential6Chicago School competition theory, one of the central tenets of which is that

dominant undertakings, [2009] OJ C45/7. See also, the Commission’s XXIX Report on Competition Policy,

1999 (Commission of the European Communities, 2000), at 6: ‘The first objective of competition policy

is the maintenance of competitive markets. Competition policy serves as an instrument to encourage

industrial efficiency, the optimal allocation of resources, technical progress and the flexibility to adjust to

a changing environment’. An emphasis on consumer welfare is present to a lesser extent in the case-law

of the EU courts: see, for instance, Case T-168/01, GlaxoSmithKline [2006] ECR II-2969, para 118 (the

aim of Art 81 EC is to ‘prevent undertakings, by restricting competition between themselves or with third

parties, from reducing the welfare of the final consumer of the products in question...’).

2It should be noted that, in the field of state aid—as opposed to antitrust—environmental considerations

have long been taken into account (see, for instance, the Commission’s most recent guidelines on the

topic, Guidelines on state aid for environmental protection, [2008] OJ C82/1). Clearly, there is a funda-

mental distinction between state aid control and the rest of competition policy in that, while state aid is,

in principle, prohibited (Art 87(1)), the Art 87(2) and (3) exemptions are premised on a recognition that

markets may not always work properly left alone—due, for example, to the present of externalities—and

may need some intervention from the state to work more effectively, and ultimately raise consumer

welfare. While the relevance of environmental factors to state aid policy is not, therefore, disputed, the

arguments developed in this article can nonetheless be applied in considering how such factors should be

taken into account in the state aid area.

3Carbon Gas Technologie, [1983] OJ L376/17, BBC/Brown Boveri, [1988] OJ L301/68, VOTOB, [1992]

XXIInd Competition Report, paras 177–186, Assurpol, [1992] OJ L37/16, Philips/Osram, [1994] OJ

L378/37, Notice pursuant to Article 19(3) ZVEI/Arge Bat, [1998] OJ C172/13, Commission Decision

2001/837, DSD, [2001] OJ L319/1, confirmed by Case T-289/01, DSD [2007] ECR II-1691. On the

relationship between EU competition law and environmental objectives generally, see F. Vogelaar,

‘Towards an Improved Integration of EC Environmental Policy and EC Competition Policy: An Interim

Report’, (1994) Fordham Corporate Law Institute 529, D. Geradin, ‘EC Competition Law and Environ-

mental Protection’, (2002) 2 Yearbook of European Environmental Law 117, V. Baccaro, ‘Collecte et

recyclage des batteries usagées en Italie: droits exclusives, exigences environnementales et droit de la

concurrence’ (2001) 1 Competition Policy Newsletter 39, H. Vedder, Competition Law and Environmental

Protection in Europe: Towards Sustainability? (Europa Law Publishing, 2003), and G. Monti, EC Com-

petition Law (Cambridge University Press, 2007), at 91–94.

4See Horizontal Cooperation Guidelines, [2001] OJ C3/2, ch 7, Draft Horizontal Cooperation Guidelines,

SEC (2010) 528/2, ch 7, Commission Decision 2000/475, CECED, [2000] OJ L187/47, EACEM, [1998]

Competition Report, at 152, CEMEP, Commission Press Release IP/00/58 (23 May 2000).

5See, for instance, Guidelines on the application of Article 81(3) of the Treaty, [2004] OJ C101/97, para 33.

6Though influential, it would be wrong to characterise present EU competition policy as based exclusively

on Chicago School theory. The better view is that current EU competition policy displays attributes of a

mixture of theoretical models, combining elements of the Chicago School with Harvard School and

ordoliberal influences. See further O. Budzinski, ‘Monoculture Versus Diversity in Competition Econom-

ics’, (2008) 32 Cambridge Journal of Economics 295.

November 2010 Integrating Environmental Protection and EU Competition Law

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