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European Commission Adopts New Antitrust Guidelines for ESG Competitor Agreements

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The European Commission (the “EC”) recently adopted new guidelines that outline the antitrust assessment of agreements between competitors related to environmental, social, and governance (“ESG”) initiatives, including combating climate change, reducing pollution, limiting the exploitation of natural resources, upholding human rights, ensuring a living income, protecting animal welfare, and reducing food waste. This article gives a brief overview of the EC’s framework for analyzing so-called “sustainability agreements.” Although the EC is the only jurisdiction thus far to adopt ESG-specific antitrust guidelines, the EC’s guidelines are generally consistent with horizontal guidelines in other jurisdictions, including the United States, and serve as a helpful resource for companies globally seeking to balance ESG initiatives and antitrust risks.

EC Framework for Assessing ESG Agreements Between Competitors

The initial step under the EC framework is to assess whether the sustainability agreement affects “parameters of competition,” including price, quantity, quality, choice, or innovation. If the agreement does not affect competition, then it does not fall within the scope of the relevant EU antitrust law. For example, the EC’s Horizontal Guidelines make clear that agreements do not affect competition and are permissible under EU antitrust law when such agreements merely: require compliance with certain sustainability requirements in legally binding international treaties; govern internal corporate conduct (e.g., eliminating single-use plastics from their business premises); identify in a shared database suppliers that have unsustainable business practices but that do not forbid the parties from purchasing from such suppliers; or relate to industry-wide awareness campaigns. This is generally true outside of the European Union as well. For example, if an ESG agreement has no effect on price or output, and does not facilitate the exchange of competitively-sensitive information between competitors, it is unlikely to face significant antitrust scrutiny in the United States.

If the agreement does affect competition, but the main purpose of the agreement is the pursuit of a sustainability objective, then the EC will generally not treat the agreement as per se unlawful, but instead assess its effects on competition by considering, among other factors, the nature and content of the agreement; the nature of the goods or services affected; and the extent to which the parties individually or jointly have or obtain market power through their agreement. This is a recognition of the potential procompetitive and societal benefits offered by ESG agreements. The EC’s framework here is consistent with the “ancillary restraints” doctrine in the United States. As applied, under the ancillary restraints doctrine, courts consider restraints that are integral to an arrangement that has procompetitive benefits under a full-blown rule of reason analysis, even if the restraint would otherwise be evaluated under a per se standard. But companies should be wary that an ESG objective will not automatically shield an agreement between competitors from per se antitrust liability. For example, if the ESG objective is merely a disguise for a nakedly anticompetitive arrangement, or if the restraint is not necessary to achieve the ESG objective, conduct that is traditionally viewed as per se unlawful, such as agreements to fix prices, divide markets or customers, rig bids, or boycott suppliers, will be viewed as unlawful in most cases despite the nominal ESG benefits.

For agreements that set sustainability standards, the EC’s Horizontal Guidelines provide a safe harbor for such agreements that satisfy the following six conditions:

  1. The standard-setting process must be transparent and open to all competitors;
  2. The sustainability standards must be opt-in only and must not impose compliance obligations on companies that do not wish to participate;
  3. The agreement can establish a floor, but not a ceiling, for sustainability standards, meaning that companies must be free to apply higher sustainability standards;
  4. Parties must not exchange commercially sensitive information that is not objectively necessary and proportionate for the development, implementation, adoption or modification of the standard;
  5. Non-discriminatory access to the outcome of the standard-setting process must be ensured, including access to any logos or other marketing assets for companies that comply with the standards; and
  6. The sustainability standards must not lead to an increase in price or reduction in the quality of the products concerned, and the combined market share of the participating companies must not exceed 20% of the relevant market.

In the United States, the Department of Justice and the Federal Trade Commission have similarly created a “safety zone” for competitor collaborations where the collective market share of the parties is 20% or lower. The other five factors identified in the EC’s framework are prudent guiding principles for competitor collaborations on ESG standards, regardless of jurisdiction, but especially where the parties’ market share exceeds 20% in the United States.

Sustainability agreements that restrict competition may still be permissible under the EC’s framework if the parties can prove that: (1) the agreement achieves efficiencies (e.g., reduction of supply chain disruptions); (2) the restrictions in the agreement are indispensable to achieving the efficiencies; (3) the effect on consumers is neutral or positive; and (4) the agreement does not eliminate all parameters of competition between the parties. These factors are also relevant to assessing competitor collaborations in the United States and may be helpful in establishing procompetitive benefits that outweigh anticompetitive effects.


The EC’s revised Horizontal Guidelines around “sustainability agreements” are the first ESG-specific antitrust guidelines but they likely will not be the last, as companies adopt ESG initiatives with greater frequency, competitors seek to collaborate on those efforts, and antitrust agencies look to encourage the potential benefits of such collaborations. In the meantime, companies inside and outside of the European Union should consider elements of the EC’s framework when designing ESG collaborations to minimize antitrust risks.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.