WTP Principle in EU Antitrust Law: Need for Reform in Sustainability Agreements (Part II)

[Aastha Bhandari and Tarusi Jain are third-year students at O.P Jindal Global Law School, Sonipat]

I. Analysing the Amendment to the Austrian Cartel Act: Making A Case for Pre-Mature Enactment

It is to be noted that Austria is the first country worldwide to introduce an amendment in its Federal Cartel Act of 2005 (“the Act”) by way of the Austrian Cartel and Competition Law Amendment Act 2021 (“the Amendment”) to provide an explicit exemption to assimilate sustainability agreements under their competition law. The new provision extends the general exemptions from cartel prohibition under section 2(1) of the Act. to In consequence, the requirement of fair share to consumers (being an essential under competition law) will now be considered to be fulfilled if “the improvement of the production or distribution of goods or the promotion of technical or economic progress significantly contributes to an ecologically sustainable or climate-neutral economy” ("the provision"). Moreover, the legislative materials concerning the amendment have further asked for the Austrian Federal Competition Authority to release guidelines on its implementation in consultation with the Ministry for Climate Protection, however the same are yet to be released.

As such, the amendment has made a positive step towards accounting for non-economic benefits by moving away from the WTP model. However, we point out to the fact that the amendment was carried out in a rather hurried manner without accounting for various issues and is thus pre-mature in its enactment:

i) Firstly, the consultation process for inviting public comments on the proposed amendment was limited to only 3.5 weeks and received about 30 statements of which not all related to the amendment.

ii) Secondly, it must be considered that section 2(1) of the unamended Act was an identical provision to that of Article 101(3) of the TFEU, which provides for certain exemptions to cartel prohibition. To juxtapose the amended section 2(1) with Article 101(3), section 2(1) contains an addition of the provision. Scholars and writers who have analysed the amendment point out that it is still unclear whether the amendment is compatible with the legal text of Article 101(3). This may pose difficulties on account of the fact that Article 3 para 2 of Regulation 1/2003 indicates that national and EU competition laws have to generally be compatible with one another. This rule of convergence has also been reiterated by the Austrian Supreme Court.

iii) Thirdly, it is highly significant to note that the amendment is pre-mature considering the ongoing debates on the subject matter within the European Union. In fact, it is ironic that Austrian legislators (“the legislators”) have themselves questioned the legal standing of a sustainability agreement that partially restricts competition. Would the effects of the partial restriction be outweighed by the broader ecological benefits as a result of it and thereby justify its exemption? The legislators themselves do not have an answer to this yet and the growing debates only add to the ambiguity with different competition authorities within the EU taking different stances. Austria has said that it will release guidelines to address this issue in the “near future”. However, it is posited that the fact that there is this imminent need for guidelines shows that the law on its own is too vague and ambiguous.

iv) Consequently, the question arises: What good can a law that cannot stand on its own do? The current provision in itself raises various difficulties. Victoria Robertson points out thar it is unclear as to: a) which sustainability agreements will contribute to an ecologically sustainable economy and b) what is the test to fulfil the requirement of “significantly contribute” under section 2(1).

We highlight that the current framework of the TFEU is adequate to accommodate for sustainability agreements. One must realise that not all forms of cartelization are considered to be anti-competitive under competition law and cartel law can in fact help in promoting sustainability. Although, Austria has taken a step in the right direction, this step is premature considering the ongoing debates on various ambiguities in green antitrust that have no clear answer up to date. The next part of the post suggests a better alternative to solve the concern of exclusion of non-economic benefits.

II. Advocating for Competition Authorities to Apply the Wouters’ Rationale

A non-conventional route that can be taken in order to accommodate non-economic interests under Article 101 is the rule of non-applicability of Article 101(1) of the TFEU. This does not require the invocation of Article 101(3). This approach was first used in Wouters v Algemene Raad van de Nederlandse Orde van Advocaten (generally referred to as the Wouters case) where the CJEU had to analyse whether multidisciplinary collaborations between accountants and lawyers infringe Article 101 TFEU.

The CJEU held that such behaviour must be assessed in light of its public policy goals, i.e., ensuring the impartiality of the legal profession and that the court needs to look at the “overall context.” CJEU observed that those anti-competitive behaviours that are inherent in the pursuit of legitimate public policy objectives are valid and held that the above partnerships are allowed as they did not violate Article 101(1). Hence, a proportionality test is employed with the doctrine. It could be argued that sustainability agreements can fall under the Wouters doctrine.

Although the cases that have followed the Wouters judgement are all related to associations that are authorised by the regulatory state to safeguard public good and that the same cannot be said to be case with sustainability agreements as there is no such authorisation from the state per se, it is argued that such regulatory authority and legitimacy should not be determinative when applying this doctrine as it forms a part of the wider rule of reason that could be used to exclude agreements from Article 101(1).

The Wouters principle is different from Article 101(3) because it does not impose the “fair share” condition, accommodates non-economic and qualitative benefits, allows ancillary restraints and doesn’t require the balancing of positive and negative consequences. It is puzzling that responses by several European competition authorities including the Dutch-ACM Draft Guidelines see no mention of this case law as this is one of the most feasible ways to accommodate sustainability agreements under competition law. The Wouters principle addresses the problems of the WTP model and ensures that the law as it stands today is sufficient; it accommodates agreements in the present framework without unnecessarily broadening the scope of law and facilitating greenwashing.

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