A few years ago, sustainability cooperations seemed to be the next big thing in antitrust. Today, however, it’s clear that some disillusionment has set in. The number of publicaly known cooperations offically justified by sustainability considerations is still very limited. Now, sustainability cooperations seem to encounter new headwind from the United States. Time to alert our readers that what seems workable in Europe could pose serious challenges across the Atlantic.
The status quo in Europe
We have repeatedly blogged about sustainability initiatives (see here and here). Publicly known cases reach from animal welfare over wages in the banana industry to Frech wine makers and joint purchasing of electric equipment for ports. These cases show that the application of sustainability arguments is very broad. In some cases, sustainability serves as the main criterion for justification while in other cases it was only an accompanying effect of permissible cooperation.
In general, the established antitrust criteria also apply to sustainability cooperations. However, whilst the German Federal Cartel Office (FCO) and the European Commission stick to their competition principles, they show a willingness to apply them in a way that gives favourable consideration to sustainability objectives. In order to gain green light, agreements must be transparent, limited in scope, and demonstrably necessary. The bar remains high, but there is a shared understanding that sustainability collaborations deserve a fair and constructive assessment. This is also reflected in the Commission’s Horizontal Guidelines, which include an entire chapter on sustainability cooperations.
A view across the pond
In times of global frictions, however, the question – in particular for initiatives with global implications – remains whether the aforementioned goodwill is common ground. Given some recent cases in the United States, some might doubt whether a similar goodwill exists:
- At the federal level, the DOJ Antitrust Division and the FTC submitted a joint Statement of Interest in the Texas Attorney General’s lawsuit against BlackRock, State Street, and Vanguard. The press release states that the lawsuit accuses BlackRock, State Street, and Vanguard of participating in an anticompetitive conspiracy aimed at reducing coal production as part of an industry-wide “Net Zero” initiative to advance anti-coal ESG objectives. The firms allegedly leveraged their positions as shareholders in competing coal companies to pressure them into cutting overall coal output. According to the multistate complaint, these actions – combined with the unlawful exchange of competitively sensitive information and other alleged conduct – drove up coal prices and forced American consumers to pay more for energy as part of an unlawful ideological scheme.
- At the state level, 23 U.S. State Attorneys General issued a letter to the Science Based Targets initiative (SBTi), requesting detailed information about the organization and its members. Founded in 2015, the SBTi aims to make science-based environmental target setting a standard corporate practice. It defines and promotes best practices for emissions reduction and net-zero targets, offers technical guidance, and provides independent validation of companies’ targets. The letter raised concerns over potential violations of antitrust, consumer protection, and other laws stemming from participation in the net-zero coalition. The AGs specifically highlighted the SBTi’s recently released Financial Institutions Net-Zero (FINZ) Standard, suggesting it amounted to an agreement to restrict funding and insurance for the oil and gas sector. The letter followed subpoenas to CDP (formerly the Climate Disclosure Project) and SBTi issued by Florida’s Attorney General.
- Back in 2024, the Nebraska Attorney General, together with two trade associations, filed a lawsuit against truck manufacturers. The complaint alleges that these companies conspired to reduce production of internal combustion engines for medium- and heavy-duty vehicles through their Clean Truck Partnership with the California Air Resources Board. According to the suit, this arrangement amounted to an unlawful horizontal agreement to cut output, inflate prices, and limit consumer choice – particularly impacting agricultural and logistics sectors that depend on long-haul diesel fleets.
Furthermore, the current political climate will potentially trigger follow-on lawsuits from private plaintiffs, which will significantly heighten the risk associated with sustainability initiatives.
The question of who profits after all and what role does politics play?
The challenge with many ESG initiatives is that they aim to achieve broader societal goals while potentially increasing direct costs for consumers. For instance, stricter environmental standards in an industry may lead to higher production costs and then higher product prices for end users, whereas the benefits are indirect, long-term, or difficult to quantify. If these positive effects are not acknowledged, justifying such initiatives becomes problematic – especially in the United States, where the consumer welfare standard is central to antitrust analysis.
In order to justify sustainability initiatives under antitrust principles, antitrust regulators – and the overall political environment – often have to be receptive to positive effects that may not be immediately tangible. Currently, this does not appear to be the case in the United States. Therefore, internationally active European (and other) companies would be well advised to assess the potential – real or perceived – impacts of their initiatives across the Atlantic. An initiative deemed compliant with antitrust law by the European Commission or a national competition regulator in Europe could still attract scrutiny from U.S. regulators or private plaintiffs. The risk might be even higher in case the initiative is reported publicly by European regulators.
Photo by Thomas Richter on Unsplash
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