Mind the Consumer Behaviour: Overcoming Consumer Biases in the Assessment of Sustainability Cooperation Agreements

Click here to read the full article online

‘Sustainable development’ is a concept that has been expanded over the years, to cover not only aspects of production and waste but also the quality of the output and the externalities generated by products or services. This has offered companies the opportunity to market more and more products as sustainable, seeking high penetration and acceptance rates within consumers. However, companies are aware that their sustainability-related efforts can be relatively easily undermined or subject to ‘free-riding’ by their more profit-seeking competitors. They therefore acknowledge the imperative for a certain level of cooperation and coordination with their competitors to successfully introduce a sustainable product on the market. In these situations, nonetheless, traditional competition law enforcement may represent a material obstacle to cooperation in order to achieve sustainability objectives. As part of the European Union Green Deal, the European Commission is committed to applying and enforcing EU law in an appropriate manner, that takes into account the pursuit of legitimate sustainability objectives. To this end, the European Commission has included in its draft revised Guidelines on Horizontal Agreements a specific chapter on sustainability agreements that aims to clarify the assessment of these kinds of agreement under EU competition law. Among other things, the draft Guidelines expressly acknowledge the possible need for agreements in the context of sustainability objectives to overcome consumers’ cognitive biases or to prevent free-riding. This article aims to analyse a range of possible legal, economic and policy arguments that may justify cooperation among competitors in order to overcome consumer bias, ensure the viable launch of sustainable products and further the sustainability objectives sought by corporations and the EU as a whole as part of the EU’s Green Agenda. This is a critical aspect of the competition law analysis of such cooperative agreements, as antitrust principles are underpinned by the desire to pursue open competition in order to achieve the optimum welfare results that inure to the benefit of consumers. By the same token, the Green Agenda pursues long-term public policy goals, which also benefit consumers and all individuals as a whole. Reconciling those two positions with the information we now have regarding inherent consumer biases is an important challenge that both private industry and policy-makers must address.