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AFCA publishes draft guidelines on the application sustainability-agreements, asking for comments


The "European Green Deal" is the European Commission’s ambitious program for the transformation of the European economy and society towards sustainability and climate-neutrality. The measures proposed are intended to ensure that the Union's goals in these fields are achieved.

This is only feasible if all legal and political areas make a supporting contribution, even if they do not directly address the major relevant factors such as industry, energy, transport or agriculture.

This also applies to the area of ​​competition law. As a specific application, it is discussed here whether the ban on cartels stands in the way of cooperation between companies that can make a contribution to a sustainable economy.

While at the European level the legal framework of Article 101 TFEU remains unchanged and the topic therefore has been included in the ongoing revision of the guidelines on the applicability of Article 101 TFEU to agreements on horizontal cooperation, the Austrian legislator has gone one step further in the course of the latest amendment of the national Cartel Act and Competition Act (KaWeRÄG 2021).

In Sec. 2 Para. 1 KartG, which regulates the exemption of otherwise anti-competitive agreements, a special rule was introduced for so-called "sustainability agreements" in deviation from the general concept corresponding to Art. 101 Para. 3 TFEU. Accordingly, in the case of anti-competitive agreements, which at the same time contribute to improving the production or distribution of goods or the promotion of technical or economic progress, consumers are presumed to receive a fair share of the benefits, provided that the improvements contribute significantly to an ecologically sustainable or climate-neutral economy.

This is supposed to take account of the fact that such sustainability effects sometimes do not specifically benefit the consumer groups affected by the restriction of competition, but rather the general public or only occur with a time lag and can therefore not be taken into account or only to a limited extent according to the general exemption requirements.

Purpose and main content of the guidelines

The present draft guidelines are intended to provide guidance on how the FCA interprets and intends to apply this new provision. The document is based on the basic assumption that compliance with the rules of competition law in general does not stand in the way of a sustainable and climate-neutral economy, but rather that free competition is a powerful driver of change. This is in line with the approach chosen by the European Commission in the context of the revision of the horizontal guidelines. The Austrian Federal Competition Authority (AFCA) aims at ensuring a coherent application and smooth integration of the instruments provided by national law and EU-law.

Against this background the draft guidelines start by explaining the scope of application of the new provision. As a principle the new exemption under national competition law can only apply, if the agreement at hand does not affect trade between member states. Otherwise national law can only be applied in parallel to Art 101 TFEU on condition its application does not lead to diverging results.

Moreover, the new exemption is limited to specific types of sustainability goals, namely a contribution to ecological sustainability (particularly including transition to a circular economy, the prevention and reduction of environmental damage, the protection and restoration of biodiversity and ecosystems, and the sustainable use and protection of water resources) or a climate-neutral economy. Other initiatives relating to raising social or moral standards (e.g. animal welfare or labour standards) generally fall outside the scope, but may be considered applying the traditional criteria.

It is also noteworthy that the regulation demands for a contribution originally brought about by the cooperation, not only just a simplified or more cost efficient way of achieving sustainability goals already mandatorily set by existing regulations. Such monetary benefits may also be claimed under the existing exemption.

Also, the guidelines emphasize the self-evident fact that an exemption is only required if an agreement restricts competition at all. On this basis, the possibilities of cooperation neutral to competition are explored and other legal exceptions to the ban on cartels are explained. This applies in particular to agreements of minor importance (“de minimis”) and certain forms of cooperation in the field of agriculture; always subject to the exclusion of hardcore restrictions.

For agreements genuinely falling under the scope of the new “sustainability exemption” a modified scheme for assessment including five cumulative conditions has been developed:

1. The cooperation to be assessed leads to efficiency gains. This requires an improvement in overall social welfare. In contrast a mere redistribution of welfare between producers and consumers does not create an improvement and thus no gain in efficiency.

2. The efficiency gains contribute to an ecologically sustainable or climate-neutral economy (see above).

3. This contribution to an ecologically sustainable or climate-neutral economy is substantial. The balancing of positive and negative effects usually done at the level of the consumer’s fair share is shifted to the criterion of substantiality under the sustainability-exception, meaning that efficiencies contributing to ecological sustainability or climate neutrality must fully compensate the negative effects on competition. This is necessary to exclude attempts in “greenwashing” agreements aiming at restricting competition while only insignificantly contributing to the alleged green goals.

4. The constraints imposed by cooperation are indispensable to realizing the efficiency gains. The principle of proportionality requires to exclude restrictions going beyond what is necessary to achieve the objective.

5. The cooperation does not open up the possibility of eliminating competition for a substantial part of the goods in question. As with the existing exemption, possibilities for residual competition must remain intact.

A further section of the guidelines is dedicated to practical implications of the assessment of sustainability agreements. This includes procedural aspects like the general need for self-assessment as well as the possibilities of obtaining guidance from the FCA in individual cases according to Sec. 2 para 5 Competition Act.

However, invoking the sustainability exemption always requires a profound demonstration and documentation of the expected effects on competition as well as of the efficiencies claimed. The FCA gives a brief description of the most common methods of measuring sustainability-related effects and the standards required in applying those methods. While the exact application to individual agreements may vary, only general assertions of positive effects of an agreement will not suffice.

Way forward

In the course of the present consultation, the draft will be sent directly to the institutions involved and the relevant stakeholders for their comments but is also available here for download by all interested parties. The guidelines are currently only available in German, please see the German AFCA-Website.

Interested parties have the opportunity to send their feedback until 22.06.2022 to the mailbox wettbewerb[at]bwb.gv.at.

In this context, the BWB particularly welcomes examples of possible practical applications, which may be included in the practical examples part.