Strong antitrust laws induce the competition necessary to rapidly innovate green technology – that’s key to solve climate change.

Green antitrust appears very sympathetic: a fast transition to more sustainable production and consumption is essential to the future of our planet, and corporations must certainly take their responsibility for it. Where government coordination fails to nudge the balance from grey to green equilibria – because of lack of information, legal options, political will, or otherwise – perhaps private coordination can come to the rescue. After all, polluting companies will typically know best how to reduce their own externalities. And indeed, green CEOs increasingly stand up for good causes. For some time now, passionate competition law scholars have been hammering home the importance of sustainability.15 But is contributing to the fight against climate change truly a nail in this case? Or is it rather a screw? Deciding this first is essential when selecting the right tool to use to fix the problem – all the more so when it is urgent. The central question here, therefore, is whether it can be expected that undertakings will take more corporate social responsibility when they compete less. The key premise of the green antitrust movement is that tensions between competition and sustainability can be eased with less competition. But is that premise true?

In this paper we review the available economic literature to find that it provides little to no ground for believing that restrictions of competition would incentivize companies to take more sustainability initiatives. On the contrary, it appears that competition induces companies to produce more sustainably, also if they are in part intrinsically motivated to so do. Even if first-mover disadvantage, a concept to which the proponents of green antitrust policy point, would lead to a deadlock preventing more sustainable production, sustainability agreements create no incentive to break that impasse. The rare genuine sustainability agreement cannot justify relaxing general competition rules. It seems proper, therefore, to regard the corporate cheers for green antitrust policy with some skepticism and suspicion. That is also the attitude that we should expect our competition agencies to have. After all, they are tasked first and foremost with the protection of competition.

We warn against two major risks of green antitrust policy. One risk is cartel greenwashing. Competitors who are allowed to coordinate their trade, have an incentive to provide minimal sustainability benefits for maximum price increases. The more accommodating the competition authority, the less green will be delivered. Competition authorities will have to strictly demand sufficient compensatory sustainability benefits, and then constantly monitor exempted agreements. This task requires a staggering amount of information that these agencies cannot reasonably be expected to have. It will tie up a lot of their resources at the expense of other enforcement and advocacy priorities. The second risk is that being able to point to corporate self-regulation gives the part of government that should promote sustainability further excuses to shun their responsibility for designing proper regulation. The green antitrust movement may thus exacerbate the very government failure it seeks to correct.