Colluding to Go Green: Global Antitrust Institute Comments on the Austrian Federal Competition Authority’s Draft Guidelines to Exempt 'Sustainability Agreements'

6 Pages Posted: 24 Jun 2022 Last revised: 19 Jul 2022

See all articles by Alexander Raskovich

Alexander Raskovich

George Mason University - Antonin Scalia Law School, Faculty

Douglas H. Ginsburg

U.S. Court of Appeals for the District of Columbia Circuit; George Mason University - Antonin Scalia Law School

Bruce H. Kobayashi

George Mason University - Antonin Scalia Law School

Abbott B. Lipsky

George Mason University - Antonin Scalia Law School

Joshua D. Wright

Lodestar Law and Economics

John M. Yun

George Mason University - Antonin Scalia Law School

Date Written: June 22, 2022

Abstract

The Austrian Federal Competition Authority (AFCA) invited comment on its draft guidelines for exempting “sustainability agreements” from condemnation under Austrian competition law. That law recently changed, allowing a specific exemption for otherwise anticompetitive horizontal agreements that yield efficiencies which substantially promote a sustainable or climate-neutral economy. This comment discusses some issues the AFCA should address in determining whether to grant such an exemption. First, it is difficult to assess claims of very distant out-of-market efficiencies, ones that are only tenuously related to the relevant market, accruing to “the general public” rather than to consumers in the market where the anticompetitive effects of a horizontal agreement arise, or to closely related or adjacent markets. Claimed gains in sustainability or climate neutrality are difficult for a competition authority to verify or quantify, absent expertise in environmental effects. Moreover, determining whether such claimed environmental gains are agreement-specific, such that the horizontal agreement is "indispensable" to realizing the claimed gains, should be carefully considered. In particular, the AFCA should account for the unilateral incentive effects of tax policy, such as the Austrian Parliament's recent passage of a carbon tax, in determining whether claimed environmental gains from a collusive sustainability agreement are indispensable to achieving those gains. A pollution tax induces unilateral incentives to shift energy sources or to innovate to avoid the tax, without the additional inducement of collusive pricing. A broad-based tax is likely to be the more efficient way to internalize externalities conceived in the "European Green Deal" than is a collusive agreement whose anticompetitive effects in a relevant market are akin to an excise tax imposed narrowly on consumers in that market, yielding potentially large deadweight losses. Adding an anticompetitive price increase on top of a pollution tax could introduce something analogous to a "double-marginalization" problem to the market, resulting in incremental pollution abatement that could be excessive.

Keywords: horizontal agreement, competition policy, efficiencies, sustainability, greenwashing, carbon tax, European Green Deal, Austrian Federal Competition Authority

JEL Classification: D0, D43, D61, D78, H21, H23, K21, K42, L24, L41, L51, O32, O38, Q38, Q51, Q55, Q58

Suggested Citation

Raskovich, Alexander and Ginsburg, Douglas H. and Kobayashi, Bruce H. and Lipsky, Abbott B. and Wright, Joshua D. and Yun, John M., Colluding to Go Green: Global Antitrust Institute Comments on the Austrian Federal Competition Authority’s Draft Guidelines to Exempt 'Sustainability Agreements' (June 22, 2022). George Mason Law & Economics Research Paper No. 22-29, Available at SSRN: https://ssrn.com/abstract=4143814

Alexander Raskovich (Contact Author)

George Mason University - Antonin Scalia Law School, Faculty ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States

Douglas H. Ginsburg

U.S. Court of Appeals for the District of Columbia Circuit ( email )

333 Constitution Ave NW
Room 5523
Washington, DC 20001
United States

George Mason University - Antonin Scalia Law School ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States

Bruce H. Kobayashi

George Mason University - Antonin Scalia Law School ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States
703-993-8034 (Phone)
703-993-8088 (Fax)

HOME PAGE: http://mason.gmu.edu/~bkobayas

Abbott B. Lipsky

George Mason University - Antonin Scalia Law School ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States

Joshua D. Wright

Lodestar Law and Economics ( email )

P.O. Box 751
Mclean, VA 22101
United States

John M. Yun

George Mason University - Antonin Scalia Law School ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States

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