WHEN COMPETITION HAS POSITIVE EFFECTS ON ENVIRONMENTAL GOALS

There are many areas within competition law, where the strong enforcement of law has a positive effect on environmental goals. One of them is the energy sector. India has huge energy consumption and has been facing issues with the shortage of supply and the exceeding demand for energy inputs. Moreover, the conflicting Indian laws between the Electricity Act, 2003, and the Competition Act, 2002, has not made the situation any easier. This has led to environmental exploitation, where around 37% of the total greenhouse gases emissions are through the power and energy contribution.

In such a case, Germany might act as a good inspiration for India. The market conditions within Germany have given rise to the emergence of huge energy conglomerates and collaborations. As a result, the German Government has avoided the strict implementation of the Competition laws and has rather introduced a market share guarantee for small producers of renewable energy (mainly for the windmills in Northern Germany). Even when Preussen Electra, a dominant energy company in Germany, accused this law to be violative of the EU competition and subsidies provision, the European Court of Justice (ECJ) ruled that even though the law was violative of the provisions, the fact that this was done for the legitimate goal of protecting the environment was good enough reason for the law to prevail.[1] The ECJ ruled, “[t]he use of renewable energy sources for producing electricity, which a statute such as the amended Stromeinspeisungsgesetz (The Original Energy Feed Law) is intended to promote, is useful for protecting the environment in so far as it contributes to the reduction in emissions of greenhouse gasses  which are amongst the main causes of Climate Change which the European Community and its Member States have pledged to combat.”[2]

WHEN COMPETITION IS AN OBSTACLE FOR ENVIRONMENTAL GOALS

While Competition might act as an advantage for some sectors, it can have its harmful effects as well. The same can be seen in the area of waste management, where the growing producer liability, results in problems for the interaction between competition and environment. This is because, while on one hand there is a capacious disposal of electronic waste, on the other hand, the recycling industry takes in a substantial economic interest through a part of this waste. Due to the statutory obligations, provided in the law, for entering into an agreement with the producing sector of the country, competition concerns arise, and environment faces difficulties.

Such an example can also be seen through the green channel amendment, brought by the Competition Commission of India (CCI). The addition of Regulation 5A under the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Amendment Regulations, 2019, came into effect from 15th August 2019. The added regulation is called the “green channel route”, which relates to obtaining an approval for specific transactions (combinations) by the CCI. The amendment has provided for some requirements that the firms need to keep in mind, before entering into an agreement or having a transaction with each other. If the acquirer group and the target group are not engaged in any activities which demonstrate any sort of horizontal, vertical, or complementary overlaps, then you can approach the Commission under the Green Channel Route. Within overlaps, we even look at those entities which may not necessarily be group entities, but which either the acquirer or the target holds shares, or exercises control.

Therefore, under this amendment, two chocolate manufacturers cannot enter into a transaction, and a manufacturer of a product and a distributor of the same product cannot enter into a transaction. So, to obtain the approval of the CCI faster, without any delay, the manufacturer of electric vehicles cannot enter into a transaction with the seller of the electronic vehicles. Now even though the sound of this amendment does not have any environmental relation to it, the fact that the company cannot enter into a transaction with another company within the same industry as them, acts as a discouragement for companies to collaborate and work together. This thus, results in companies individually working on the manufacture and sale of a product, which results in more individual waste by the companies, as the process is not divided. This just becomes another example of when economic growth is given more importance than the environmental growth.