INTRODUCTION
Competition law as legislation to regulate the market activities in an economy is not a recent phenomenon. The legislation has progressively developed to cater to the needs of changing times. On a closer study of such legislation, one cannot help but notice the inherent push for capitalism they provide by not just facilitating its existence but also normalizing it as the only way forward. Not delving into how this is inherently problematic if viewed from a Marxist perspective, what this article tries to expound upon is how competition law acts as a barrier to achieving sustainability and non-consumptiveness by acting as a facilitator of the capitalistic idea. As is often portrayed if corporations are so willing to adopt a sustainable lifestyle, how is the legislation acting as a hurdle under the name of consumer welfare?
“We just cannot consume our way into a more sustainable world[1].”
The CEO Action Network formed as a result of the World Economic Forum’s meeting at Davos to encourage public-private partnership in the area of sustainability boasts this quotation on its page. The page defines the objectives of the group’s formation as, “We are a coalition of leaders with a purpose to shape policies, win stakeholders, and create a favorable ecosystem for sustainable businesses and sustainable development[2]”. The fact that the organization formed to promote sustainable development mentions the same in the last few words of its objective is a picturesque depiction of the ironic situation on display.
Competition law is one of the fastest-growing legislations in the world with the rampant growth in technology leading to the emergence of new industries and the declining environmental quality. The growing carbon footprint, decline in the quality and quantity of natural resources, and inequitable distribution and access to the same are some of the key reasons that give rise to the obligation of sustainability. The need for coherence between the competition law and sustainability as a concept arises from the very fact that there is an overlap of the stakeholders involved. The major stakeholders in this situation are the big corporations, that are now being included in the process of policy formation through groups like CAN, CEO Action Group[3], consumers at the other end of the table, and society at large.
The interesting dilemma in this situation is the conflict of interest that exists between the key objectives of competition law and the measures required to achieve sustainability. Theoretically, competition law aims to provide consumer protection through consumer welfare policies[4] and curb monopoly in the market. On the other hand, sustainability[5] is a long-term benefit essential for the very existence of humankind but falls short of fulfilling the conditions of the economic-centric approach[6] of the legislation. At first instance, it is easy to eliminate the concern of legislation as the other side of the situation presents an existential threat, however, a nuanced understanding of the issue presents a serious challenge of maintaining equilibrium between the two as the only way out.
COST OF SUSTAINABILITY AND THE THREAT OF ELIMINATION
Sustainability has a cost and the beauty of this cost is that it is not a one-way street. Cost of innovation in the field of sustainability, lack of a bigger market cap, and lack of proper incentivization are some of the quantifiable and non-quantifiable costs that the companies or corporations will have to bear while moving towards sustainability. This largely explains the hesitation of most corporations in fully investing or shifting to a sustainable model even after so many years. Moreover, the already-established market offers a more profitable deal with comparatively less amount of cost incurred. The investments made by big corporations like Adani group in cement industries[7], which is the largest contributor to pollution and environmental degradation on one hand and on the other setting targets of completely shifting to renewable energy is an example of the half-hearted involvement of these corporations.
It is important to understand that the threat of environmental degradation is faced by the world at large with its diverse population. With disparities in the purchasing power of different economies, the amount of burden that can be levied upon each state or each individual, for that matter, differs. The concept of differed responsibilities[8] as stated in the Paris Agreement was formulated on this very principle. Moreover, the corporations that stem out of such countries have differential access to resources to control production. Expecting corporations from developing or underdeveloped countries to change their mode of production based on the structure modelled after the developed world is unfair and arbitrary due to the simple fact that they do not have equal access to resources and are not equally culpable.
Although the existential threat presented by the lack of sustainability is easily understood, non-conformity with the legislation will lead to the same threat with a moral dearth of elimination. As the purchasing power of countries vary and this inequitable distribution of resources leads to the selection or elimination of people from the safety net, blindly moving toward sustainability will lead to the expelling of those who can’t pay the price of sustainability. As the prices of commodities will rise due to changes in the process of production or materials utilized, the lowest strata of society will face the worst hit. The catch-22 situation is that if we do not move towards sustainability, the class of people worst hit by environmental concerns will be the same as they often do not have the health facilities or resources flaunted by the bourgeoisie. Moreover, the inequality in the vulnerable sections of society across the globe, makes it a difficult task to legislate internationally.
CONSUMER WELFARE: THE POINT OF CONFLICT
The legal institution tries to address this dilemma under the domain of consumer welfare. This is where the provisions of competition law and the need for sustainability come in direct conflict with each other. Both of them try to protect the consumer[9] essentially, but in lieu of the same, end up standing in conflict with each other.
The definition of consumer welfare widely accepted in competition law is to protect the consumer from unruly monopolies in the market and uncompetitive prices. The inherent threat in moving towards sustainability lies in the increase in prices and lack of affordability on the part of consumers. The introduction of new sustainable technology in the market by a few companies will give them an undue advantage in deciding the prices and controlling the quantity of production in the market leading to the creation of cartels. What once was created to curb cartels and monopolies in the market, today faces a similar challenge due to the growing need for sustainability. This cartel will again be restricted by legislation and international resolutions like the Treaty on the Functioning of the European Union (Art 101)[10]. Even if any cartel formation or unruly monopoly is restrained, it will lead to unfair competition in the market as the players opting for sustainable means will have to compete with the already available products. The higher one tries to climb up the ladder of morality, the lower they are pulled by the heat of reality.
From the vantage point of fast fashion, which is a growing industry and is also responsible for a major chunk of carbon emissions and inhumane working conditions- moving towards sustainable fashion would incur heavy costs for the industry. This in turn will lead to a rise in prices of these commodities making them unfavourable for the public’s wallet. This is where the competition law will come and tell the corporations to lower the prices in the name of consumer welfare making sustainability an unfavorable investment for them. The consumer welfare standard here complicates the inclusion of sustainable means due to its traditional focus on price-related harms.[11]
ECONOMIC CENTRIC APPROACH
One of the fundamental problems with competition law which also further becomes its points of conflict with a sustainable way of life, is the economic-centric nature of the legislation. The legislation at certain points fails to acknowledge the broader social aspects of the situation. The long-term harms of cheap prices and cheap means of production are way too high to ignore. This neglect on the part of authorities to this date makes one ponder on the intent behind such delay. Several guidelines, resolutions, and conventions have been signed and conducted to make industrial living more suitable for future generations but the practical compliance fails to reach the mark.
An identifiable reason for the practical failure of this movement is the lack of compatibility of the idea with the current market situation. By default, the economic structure we live in is capitalistic. The legislations promote such a way of living with regulated markets and commercial contracts. In such a situation where the economy of it all is profit-driven, moving toward social welfare is not a lucrative idea one could suggest. Moreover, competition law, by its very nature tries to seek the best deal for the consumer but this idea of the ‘best deal’ is flawed as it takes into consideration only the economic or capitalistic point of view.
Furthermore, the lack of support or backing provided to sustainability in the legislation is one of the reasons for its poor application. In the treaty signed between EU countries which led to the Green Deal[12], debarred the undertaking provision. This will basically provide the companies taking initiative to venture into the sustainable market no incentive or protection if they fall back. Even if it is feasible for large corporations to venture out all on their own, small business across the globe can hardly afford to do so. The engine of change can never run if it is not supported by the functioning of the small applications in place.
CONCLUSION
The key question that this article began with was why are we not moving toward sustainability? A very simple answer to the same, that we have expounded upon in this article, is that most of the efforts put forth to achieve sustainability want the new model of a sustainable way of business production to fit without any dents in the structure of competition law, i.e., without affecting prices or the quantity or quality of production or else that will harm to the consumers and hence go against the principal objectives of competition law.
The new emerging middle classes of developing and underdeveloped worlds that have the means of affordability need to be targeted to achieve desired results. A change in the understanding of consumer welfare is what we vouch for- a broader interpretation of the term keeping in mind not just the economic aspect of it but also the societal and global aspects of welfare. The standard of living as a result needs to be redefined in more holistic terms. The need to differentiate between society and consumers when defining stakeholders at the beginning of the article is because of the consumer-centric approach of the competition law. A more holistic or interdisciplinary approach to the issue will help one understand the need for sustainability and the threat of delay.
Apart from the legal understanding of the issue, dealing with internal consistency within the legislation, it is equally if not more important to understand the external perspective revolving around the same, i.e., how will the law affect the general masses? How can we regulate sustainability in a manner that does not harm the consumer instead of blatantly calling it against their interest, this is something that needs to be sought after. Working in silos for something that will affect the entirety of humankind willed to discrepancies in the understanding of the looming threat of environmental degradation.
Notes:
[1] CAN, CEO Action Network, (last visited Mar. 19, 2024).
[2] Ibid.
[3] World Economic Forum, CEO Action Group for a European Green Deal | World Economic Forum (weforum.org), (last visited Mar. 19, 2024).
[4] Mei Todhe, Competition Law and Sustainability: Friends or Foes? Challenges to the Incorporation of Sustainability Issues in Competition Law, and How the Commission Can Address Them, SSRN.
[5] Ben Purvis, Yong Mao and Darren Robinson, ‘Three Pillars of Sustainability: In Search of Conceptual Origins’ (2019) 14 Sustainability Science 681.
[6] Ibid.
[7] Business Standard, https://www.business-standard.com/companies/news/adani-group-to-invest-rs-1-700-crore-in-cement-sector-in-uttarakhand-123120801188_1.html, (last visited Mar. 19, 2024).
[8] Humanities and Social Sciences Communications, Subtle differentiation of countries’ responsibilities under the Paris Agreement | Humanities and Social Sciences Communications (nature.com) , (last visited Mar. 19, 2024).
[9] Ibid at 3.
[10] legislation.gov.uk, Consolidated version of the Treaty on the Functioning of the European Union (legislation.gov.uk), (last visited Mar. 19, 2024).
[11] Ioannis Lianos, ‘Polycentric Competition Law’ (2018) 71 Current Legal Problems.
[12] Ibid at 3.
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