Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Federal antitrust agency heads reiterate: no plans for ESG cooperation safe harbor, (Apr 15, 2024)

By Jeffrey May, J.D.

Enforcers debated whether antitrust is hurdle for environmental sustainability goals at American Bar Association Section of Antitrust Law Spring Meeting.

Do not hold your breath waiting for the federal antitrust agencies to issue guidance on cooperation agreements related to environmental sustainability goals. One takeaway from the American Bar Association Section of Antitrust Law 72nd Annual Spring Meeting “Enforcers Roundtable” on April 12 was that the heads of the FTC and Department of Justice Antitrust Division were holding firm on their view that there is no exemption from the antitrust laws for climate cooperation. As a result, the agencies would not be offering a safe harbor for such conduct. The position frustrates some who see a lack of guidance from the U.S. antitrust enforcement agencies as an impediment to furthering environmental, social, and governance-related (ESG) practices.

“Antitrust and competition law is not standing in the way of progress of sustainability goals,” Jonathan S. Kanter, Assistant Attorney General in charge of the Antitrust Division, told meeting attendees. Rather than blaming antitrust rules for serving as an impediment, firms can take a bold step and be market leaders in this area, Kanter suggested.

FTC Chair Lina Khan explained that there is no ESG exemption to the antitrust laws. It is the job of Congress to create exemptions to the antitrust laws, she added. Pointing to the exemptions created for labor and agricultural cooperatives as examples, Khan suggested that the business community consider engaging with Congress for relief.

European position. In Europe, enforcers see things differently, and guidance has been provided to the business community. The European Commission (EC) does not ban agreements between competitors to pursue green objectives. In June 2023, the EC adopted guidelines, clarifying that the antitrust rules do not stand in the way of agreements between competitors that pursue a sustainability objective. The idea is that cooperation in this area supports larger EC goals. At that time, Margrethe Vestager, EC Executive Vice President in charge of competition policy, said the guidance was “a key tool to push forward the green and digital transitions.”

At the Spring Meeting, Vestager reiterated this view. She noted that the EC had the authority to provide the guidance. She also expressed her view that encouraging cooperation in this area was important because the market will not deliver “with necessary speed.” Vestager questioned whether a company can easily adopt a green position in a competitive market in the absence of some industry commitment.

Separately, the United Kingdom’s Competition & Markets Authority in October 2023 published guidance on environmental sustainability agreements. The CMA takes a similar position to that of the EC, seeking to encourage competitor cooperation that advances sustainability goals while at the same time avoiding harm to competition.

Even with the guidance, some still question how much certainty the general advice released by the agencies provides the business community.

State AG involvement. A further complication for companies operating in the United States is the existence of differing opinions of state enforcers on the issue of collusion or cooperation to achieve ESG goals. The sharp differences of opinion among state attorneys general over ESG cooperation were identified by Gwendolyn Cooley, National Association of Attorneys General Antitrust Task Force Chair and Assistant Attorney General at the Wisconsin Department of Justice.

For instance, Arizona Attorney General Mark Brnovich announced in October 2022 that he and 18 other attorneys general were investigating American banks over a purported agreement involving the United Nations’ Net-Zero Banking Alliance or NZBA to not work with companies engaged in fossil fuel-related activities.

At the Spring Meeting, Cooley agreed with Khan on the need for congressional action and recommended that companies consider reaching out to Congress for an exemption.

Strong opinions on both sides of the issue likely will preclude a congressional resolution any time soon, however.

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