Federal antitrust officials have faced criticism for the vague parameters of their enforcement stance.
At the American Bar Association’s recent antitrust meeting in Washington, D.C., the Federal Trade Commission (FTC) Office of Policy and Coordination’s Deputy Assistant Director Synda Mark cautioned companies seeking to collaborate on environmental initiatives that they are not exempt from antitrust enforcement. Mark commented during a panel discussion that antitrust officials will not “turn a blind eye” to anticompetitive conduct, despite corporate promises of the environmental benefits of collaborative conduct, noting that the FTC works only to prevent economic harms and that environmental justice goals do not “seep into the antitrust analysis.”
FTC Chair Lina M. Khan echoed Marks’ comments, stating that the FTC is not authorized to provide exemptions from adherence to competition laws and that a specific exemption for environmental justice goals could only be provided by Congress. Khan previously commented on the FTC’s position on this topic, noting last year that enforcers have “taken a hard line” on environmental exemptions and that otherwise illegal mergers or collaborations “cannot be cured through some promise or commitment to various types of [environmental, social and governance] values.”
At the same panel discussion, the head of the U.S. Department of Justice’s Antitrust Division, Jonathan Kanter, assured companies that competition laws are not “standing in the way of progress” on sustainability and that guidance on collaborations could be found in the laws on the books and precedent from antitrust cases in the courts.
Federal antitrust officials have faced criticism for the vague parameters of their enforcement stance. Specifically, critics claim that the lack of guidance on environmental collaborations in the United States may have a chilling effect on corporations’ transition to low-waste operations and renewable energy sources, which may necessarily require agreements to combine their business efforts, restrain trade or limit consumer choices. The absence of guidance in the United States stands in stark contrast to international efforts. In Europe, individual countries and competition authorities have encouraged intercompany collaboration on environmental issues and allowed agreements that restrict competition, so long as the benefits they bring for consumers and the environment outweigh the competitive harm associated with the restriction.
The recent statements by Mark, Kanter and Khan may come as a surprise to some who had hoped the federal antitrust enforcement agencies would adopt a European-like approach to antitrust scrutiny of sustainability efforts—particularly in contrast to the scrutiny from certain state attorneys general who have used competition laws to put corporate efforts toward sustainability under the microscope. However, the Department of Justice and FTC have now made clear that it is their policy that the antitrust laws will be enforced without regard to purported environmental benefits of collaborations.
Takeaways
Federal antitrust enforcers have made clear that collaborations on environmental initiatives are not immune from the antitrust laws. Businesses should be aware that undertaking collaborative commitments or agreements regarding environmental goals, such as pollution initiatives, low emissions standards or fossil fuel usage, may be subject to scrutiny by law enforcement. International organizations, which may be accustomed to different regulations, must be cautious about entering agreements with companies in the United States that although commonplace in Europe and elsewhere could be deemed anticompetitive here.
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