Competition policy in support of the Green Deal - European Commission about:reader?url=https%3A%2F%2Fec.europa.eu%2Fcommission%2...

ec.europa.eu

Competition policy in support of the

Green Deal - European Commission
14-17 perc

Executive Vice-President Vestager’s keynote speech at the

25th IBA Competition Conference, delivered by Inge
Bernaerts, Director, DG Competition

'Please check against delivery'

Introduction

Ladies and gentlemen

I’m delighted to have the chance to speak to you today. I’m only
sorry that I can’t be there in person. The IBA Antitrust
Committee did incredible work last year, to allow this whole
conference to happen online. But two years is a long time to go
without getting together.

In those two years, it’s often felt as though time has stood still.
But of course, that’s an illusion. Though our economies have
slowed, and our lives have been put on hold, the pace of climate
change has hardly missed a beat. And the floods and fires that
have devastated so many communities this summer – in
Belgium, Germany and Greece, the US and China – are a
powerful reminder that this isn’t just about the world we leave
our children. The climate crisis is happening right now.

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Meeting the challenges of climate change and

environmental damage

So what we need now is a green revolution. We’re going to have

to transform the way that we power our lives. We’ll have to
replace a linear economy with a circular one, and make huge
investments in infrastructure – in wind and solar plants, in
energy-efficient buildings, in networks of filling stations to charge
electric cars or fill up with green hydrogen.

Here in Europe, we showed how we plan to rise to that

challenge, when we put forward our Green Deal two years ago.
With that Green Deal, we aim to make Europe the world’s first
climate-neutral continent by 2050, decarbonising not just
electricity but also buildings and transport, agriculture and
industry. We plan to make better use of resources, stop
pollution, restore the ability of our water and land to support
biodiversity.

To support those goals, we now have a binding legal

commitment to cut our carbon emissions by at least 55% by
2030. And in July, we published our “Fit for 55” package, which
will put the regulations in place that will get us to that goal.

To transform our economy so thoroughly will also need

investment – and lots of it. So 30% of the 1.8 trillion euros from
Europe’s new long-term budget and our recovery instrument,
NextGenerationEU, will be spent to tackle climate change.

Competition policy and the Green Deal

Green policies like regulations, taxes, and investment are the

key to the Green Deal. But with so much to do in such a short
time, all of us – including competition enforcers – also need to
make sure that we’re doing what we can to help.

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That’s why, just under a year ago, we launched a debate on how

the competition rules work with green policies – and how they
could support those policies even better.

The response to our consultation was fantastic. We got 200

contributions from businesses and governments, NGOs and
competition experts across the EU, and beyond. Some 3000
participants joined us in February for an online conference. And
later today we will publish a Policy Brief that sets out the
conclusions we’ve drawn from that debate, about what a
greener competition policy could look like. And I’d like to share a
few of the main points with you.

The starting point here is that a green competition policy still has
to be – well, a competition policy. We still need to carry out our
fundamental task, of keeping markets open and competitive –
not least, because competition helps to make our economy
greener.

Companies today face powerful incentives to find more

sustainable ways to do business. Consumers are demanding
greener products from them. And environmental taxes and rules
make it expensive for companies to operate in ways that harm
the planet.

But it’s competition that actually transmits those pressures to the

boardroom. It’s the need to compete that pushes companies to
do more to meet consumers’ needs, and use less costly
resources – changing business models, for instance, or
investing in green innovation. And so one of the main messages
from our consultation and the conference was the need to
support the green transition by enforcing our rules more
vigorously than ever.

Merger control

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For instance, several contributors urged us to enforce our

merger rules strictly, to protect green innovation. And I agree
with that. In the last few years, we’ve already had to step in
several times, to protect innovative efforts to find less toxic
pesticides, or to develop more energy-efficient turbines. And
we’ll go on vigorously defending innovation in the future.

Of course, in a system like the one we have in Europe, where

we only review mergers that are notified to us, we first have to
get to see the mergers that matter. And I sympathise with the
worry that big businesses could buy up green innovators, and
kill their new ideas, while those companies are still too small for
the mergers to have to be notified. In March this year, we
published guidance to encourage Europe’s national competition
authorities to refer mergers that they think we should review –
even if they don’t have the power to review those mergers
themselves.

Antitrust

Antitrust enforcement also supports the green transition, by

protecting the competition that drives companies to innovate
more, and to operate more sustainably. This July, we fined a
group of carmakers 875 million euros, for agreeing not to
compete to produce cleaner cars. But at the same time, the
rules shouldn’t discourage companies from working together, to
make their products more sustainable – especially when that
cooperation doesn’t have much effect on the way companies
compete with each other.

In practice, that could involve companies setting joint standards

for what counts as a green product, or pooling resources to
speed up green innovation. It could even mean companies
agreeing to cut dirty products out of their supply chains, without

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being forced to do that by regulation.

There’s huge scope to set up these agreements in line with the

antitrust rules. Many sustainability agreements just don’t harm
competition – like some agreements on open standards for
green products, for instance. Others can be legal, even though
they do restrict competition, so long as the benefits they bring
for consumers outweigh those restrictions.

Of course, every agreement is different. To decide if a

sustainability agreement is legal, we need to carefully weigh the
benefits it brings against the harm it could do to consumers.
That’s why the best form of guidance for business comes from
our decisions in individual cases – like our car emissions cartel
case in July, which gave some important pointers on what is and
isn’t allowed. It’s also why we want to encourage companies to
ask us for our assessment of specific agreements. And in the
right cases, we’re ready to give individual guidance – or even
take a formal decision that an agreement is legal.

At the same time, as part of our review of the antitrust guidelines

and rules on agreements between companies – both horizontal
agreements between competitors, and vertical ones between
different levels of the supply chain – we also want to give
companies more general guidance. In July, we launched a
public consultation on the options for revising the horizontal
rules. We’re also engaged in detailed discussions with Europe’s
national competition authorities. And we plan to have new rules
in place by the end of next year.

In particular, we want to be clear about when an agreement to

produce more sustainable products can count, under our rules,
as one that delivers benefits for consumers that can justify some
restrictions of competition.

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There are three main situations that we want to cover here.

First, a sustainability agreement could benefit consumers simply
because a more sustainable product is also a better one – like a
toy made out of durable wood instead of plastic.

Second, the benefit for consumers might come from knowing

that they’re doing their bit for the environment. Many of us
already pay more for fair-trade coffee, for instance, not because
it tastes better, but because it’s produced more sustainably. And
as we become ever more aware of our impact on the planet, we
may find that becoming a more sustainable consumer is worth a
certain extra cost.

The third kind of benefit comes when an agreement helps

society as a whole – like an agreement to cut the pollution or
carbon emissions from a product. Of course, those benefits are
welcome. The trouble is that to get a better environment for
everyone, a limited set of consumers have to pay more. And
that could mean those agreements contradict a fundamental
principle of the competition rules – the principle that restricting
competition for a product can only be justified if the consumers
of that product are not worse off on balance. That’s why we think
that these agreements should only be legal if the consumers of
the product get a fair share of the benefits they produce – a
share that outweighs the extra price that they pay.

These rules apply right across our economy. But some

industries, like agriculture, have an especially vital role to play in
the Green Deal – and they’ll have their own specific rules.

Green farming methods can mean less pollution from pesticides,

less carbon from livestock, better protection for biodiversity. So
in Europe’s new Common Agricultural Policy, agreements to
improve sustainability in agriculture beyond what the law

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requires will be exempt from the competition rules – so long as

those agreements don’t restrict competition more than is
necessary. And we’re now starting to put together a set of
guidelines, to help farmers navigate these new rules.

State aid control

Clear, up-to-date rules are even more important when it comes

to state aid. In the years to come, European governments will
have to invest billions of euros in greening the economy – and
our rules need to give them room to do that, while also making
sure that we get the best results for the planet from the money
that’s spent.

This summer, we consulted on a set of draft guidelines on state

aid for climate, energy and the environment – and we plan to
adopt the final guidelines soon. Those new rules will vastly
expand the scope for using state aid to help reach the goals of
the Green Deal – and allow governments to fund, where
necessary, a larger share of the cost than before. At the same
time, we’ve also expanded the scope of our general block
exemption regulation, creating new ways for governments to
invest in green infrastructure, like charging stations and energy
efficiency, without needing our approval in advance. And we
plan to expand the block exemption even further, in line with the
new guidelines.

But greener state aid doesn’t just mean more money for
sustainable investments. It also means that we shouldn’t use
state aid for projects that will make climate change worse.
That’s why the new rules will guide governments away from
investments that use the most polluting fossil fuels, like coal or
lignite or oil. And even for gas, the rules will discourage support
that’s more than a strictly temporary solution.

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With so much to do, and only finite resources, it’s also vital that
we get the most from every euro we spend. One very effective
way to do that is with competitive tenders. Since we started to
require more use of tenders for renewable energy subsidies,
we’ve seen a huge fall in the cost of those subsidies. So under
the new rules, aid to help industry decarbonise should also be
given through competitive tenders. And to help make our green
investments even more efficient, governments should also be
transparent about how many euros of subsidy it takes, for each
project, to save a tonne of CO2. That way, we can focus our
limited resources on the projects that produce the biggest
benefits for the climate at the least cost.

Meanwhile we’re also reviewing our whole portfolio of state aid

rules, to make sure they’re in line with our green goals.

For instance, our state aid rules on important projects of

common European interest help governments across Europe
come together with industry, to fund infrastructure and
breakthrough innovation – including in new green technologies.
In the last two years, we’ve approved investments of more than
6 billion euros by 12 EU countries to develop innovative,
greener batteries, unlocking another 14 billion euros in private
investment; and new projects are in the pipeline, to develop the
infrastructure and innovation needed for hydrogen to
decarbonise industry and transport. And we’re now reviewing
those rules to make them even more effective and inclusive, and
to make sure that projects under the rules are in line with the
aims of the Green Deal, and other key EU policies.

We’ve also adapted our rules to help make sure that the costs of
greening our economy are shared fairly across Europe.
Europe’s Just Transition Mechanism will make as much as 75
billion euros available, to support the European regions that face

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the biggest challenges in adapting to the green transition –

regions that rely on coal mining, for instance, or on industries
that produce a lot of emissions. And the new state aid rules for
regional aid, which we adopted in April, will make it easier for
governments to direct state aid to these areas – and allow more
aid for projects in the poorest of these regions.

Conclusion

Today, as the effects of climate change become ever more

visible, I think a lot of us have a sense that our world has been
turned upside down. We see the temperature in Canada
reaching nearly fifty degrees; smoke from fires in California
choking the air in New York; summer in Europe bringing not only
heat, but also devastating floods.

That’s forcing us all to think really hard about what we can do to

help turn things around. And that’s as true for competition
enforcers as anyone else. We need to find ways to help tackle
these threats – without rushing into actions that will just make
things worse.

These are tough choices to make. But if two heads are better
than one, then 3000 heads are much better still. So above all
today, I want to say thank you. Thank you to all the thousands of
people and organisations who’ve helped us to think about how
the competition rules can best support the Green Deal.

Those rules, on their own, won’t solve all the problems we face.
But they will allow us to answer the call that’s going out right
now to every member of our global society – to do what’s in our
power, to make a difference.

Thank you.

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