Futureproof Competition Law [1 ed.] 9789462748316, 9789462368323

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Futureproof Competition Law Anna Gerbrandy

The need to change towards a sustainable economy has propelled companies to collaborate in sustainability initiatives. Such initiatives, however, might be held against European competition law. This poses the question: can competition law be rebalanced so as to provide room for sustainability initiatives? In her inaugural lecture, the author argues that European competition law cannot remain isolated from broader societal considerations. To retain its legitimacy, competition law needs to respond to the changed societal situation. It needs to be ready for the future, so to continue to be acceptable to the European citizens. The argument is based on an insightful account of the changing roles of the State and the market in providing for the public interest. Set against the backdrop of globalisation and the need for a sustainable society, it is argued that companies and civil society also have an important role to play. The author does not shy away from moral questions of fairness, and shows how European competition law can balance the interests of well-functioning markets against supporting sustainability initiatives. Futureproof Competition Law is essential reading for policy makers, legal professionals, responsible business conduct-managers, and civil society organizations. The lecture will also appeal to a broader audience, including students, interested in developments regarding how to shape institutions for a sustainable and open society. Anna Gerbrandy is Professor of Competition Law at the Europa Institute of Utrecht University School of Law, and is part of the Renforce research program. Her institutional responsibilities cover leadership of education and research. She holds several trust positions at societal organisations. Her current research focus lies on the form and foundations of European and national competition law in a changing societal context.

ISBN 978-94-6236-832-3

9 789462 368323

FUTUREPROOF COMPETITION LAW

FUTUREPROOF COMPETITION LAW

Anna Gerbrandy

Published, sold and distributed by Eleven International Publishing P.O. Box 85576 2508 CG The Hague The Netherlands Tel.: +31 70 33 070 33 Fax: +31 70 33 070 30 e-mail: [email protected] www.elevenpub.com Sold and distributed in USA and Canada International Specialized Book Services 920 NE 58th Avenue, Suite 300 Portland, OR 97213-3786, USA Tel: 1-800-944-6190 (toll-free) Fax: +1-503-280-8832 [email protected] www.isbs.com Eleven International Publishing is an imprint of Boom uitgevers Den Haag. ISBN 978-94-6236-832-3 ISBN 978-94-6274-831-6 (e-book) © 2018 A. Gerbrandy | Eleven International Publishing This publication is protected by international copyright law. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher. Printed in The Netherlands

Table of contents

Introduction

7

Competition Law in Relation to Contextual Changes

13

State, Market and Civil Society in European Competition Law

23

Competition Law’s Adaptibility

33

Final Remarks

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5

Introduction*

I am a great fan of science fiction. The essence of science fiction lies in presenting a vision of the future (or of elsewhere in the universe). Notably, as opposed to fantasy, the futures it creates have the potential to become true. Many novels of this genre focus on the impact that technological or scientific developments might have on society. One of my favourites is the novel Nightfall. Published in 1941, the author (and scientist) Isaac Asimov conjures up a world where the suns always shine.1 In this world, at least one, but, most often, several of the six suns is up. As a result, the world’s inhabitants have a great fear of darkness. During the time of the narrative, archaeologists conclude from newly discovered excavation sites, that approximately every two thousand years a devastating fire rages around the planet. At the same time, a young astronomer (our protagonist) deduces from the orbits of the suns that the world is on the brink of what he calls a ‘total eclipse’. This defies imagination, but our hero and his colleagues try to prepare the population for the resulting ‘night’. However, no one is quite prepared for the psychological effects *

1

This is a somewhat reworked version of my inaugural lecture, held in public at Utrecht University on 4 November 2016. In the Dutch tradition, an inaugural lecture is aimed at involving the general public with the academic debate, at setting out some of the research agenda of the newly minted professor and at giving academic peers a glimpse of the hopefully fruitful career that lies ahead. The Dutch version of the lecture was published in Markt & Mededinging, 2016,  3, p. 102-112. I have not included here the personal words of thanks, which are, for many, the actual highlight of any inaugural lecture. I would like to thank Laurens van Kreij, Rebecca Larsen, and Viktorija Morozovaite for their assistance. Original: I. Asimov, ‘Nightfall’, Astounding Science-Fiction (28) 1941, 1, p. 9-34. Published later as a book: I. Asimov & R. Silverberg, Nightfall, New York: Bantam Books 1991.

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of total darkness. Except for some mad-raging doom-preaching priests, who base their clearly lunatic apocalyptic visions on texts that are ancient and predate scientific progress, no one has imagined the existence of this frightening star-spangled night-sky that has suddenly become visible. People are utterly unprepared to deal with the mind-shattering idea that their six suns are not the only suns in existence and cannot deal with the immense universe that remained hidden behind perpetual sunlight for so long. Of course, total chaos erupts: an uncontrollably raging fire is started to fight the darkness, our hero struggles to survive, and a few scientists pay with their lives. It is a great story, but it is also relevant for the argument of this inaugural lecture: the story illustrates the impossibility of adequately imagining the future. It also shows that society needs to be resilient enough to weather changes. The same holds true for law. The novel also shows that even without perfect knowledge, science has an important role to play in designing these futureproof institutions.2 Therefore, the title of this inaugural lecture is ‘Futureproof Competition Law’ (Toekomstbestendig mededingingsrecht), which connotes the idea that resilient competition law connects and responds to societal developments. These include expectations for the future. The argument rests on the position that law is not separate from society. Law needs both to be understood and applied in context: it needs to be ‘responsive’.3 Of course, this does not equal to having to react to every fickle whim society throws at the law. Law needs also to be conservative for reasons of legal certainty and equality. However, 2 3

In addition, the story illustrates that scientists themselves are not necessarily doomed – the resilient ones do survive the long night. On the notion of responsive law see: P. Nonet & P. Selznick, Law and Society in Transition: Towards Responsive Law, New York: Harper & Row 1978.

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the purpose of law is not just to brew short-term solutions to current legal cases. Its higher purpose always is to serve justice. Focussing on European competition law, it can be questioned whether it is not in danger of alienating itself from the societal context within which it is nested and whether it is not, considering this context, drifting away from the purpose of serving justice. As to context, it is submitted here that competition law needs to find a better answer than it has done so far (which is to be stoically inert) to the inevitable aim of changing into a sustainable society and economy.4 The use, here, of ‘inevitable’ is on purpose, though there is no consensus on the problem–analysis that necessitates this change, nor, indeed, on the shape of such a society and economy. Many different scenarios are imaginable. A fan of science fiction has but to turn to her bookshelves to get intimately acquainted with visions of the future, ranging from the rise of a post-capitalist or post-materialist society to nanotechnology-based societies, or dark post-apocalyptic prophecies. I will leave these be, for now,5 and for the sake of keeping 4

5

See of course: G.H. Brundtland, Our Common Future: The World Commission on Environment and Development, New York: Oxford University Press 1987; and for Dutch policy ambitions e.g. the programme ‘Van Afval naar Grondstoffen’ at: , and on the Netherlands as ‘Circular hotspot’: . At EU level see Communication from the Commission ‘A Sustainable Europe for a Better World: A European Union Strategy for Sustainable Development’, COM/2001/264 final; European Commission, Manifesto for a resource-efficient Europe, MEMO/2012/989); and Communication from the Commission 3 March 2010, EUROPA 2020. A strategy for smart, sustainable and inclusive growth, COM/2010/2020 final. For consideration of whether reading science fiction is actually useful in this respect: D. Walter, ‘Can Science Fiction Lead Us Away from Economic Collapse?’, The Guardian 1 December 2011 and if that is accepted, while we

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this lecture within reasonable time limits, treat the inevitability of change as a given. Apart from the need for a sustainability-led change, there are other contextual factors relevant for European competition law. First is the notion that social corporate responsibility can be perceived as an ethical obligation for companies.6 Second is

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are on the topic of post-industrial dystopias, recommendations are, for example, the almost unimaginably painful The Road (by Cormac McCarthy, London: Picador 2009), and the masterful post-apocalyptic books of Margaret Atwood. There is also a hoard of relevant non-fiction: for early insights into circular economy see H.E. Daly, Economics, Ecology, Ethics: Essays Towards a Steady State Economy, San Francisco: W.H. Freeman 1980; on post-capitalism e.g. P.  Mason, Postcapitalism, A Guide to Our Future, London: Penguin 2015 (and for a shorter version: P. Mason, ‘The End of Capitalism Has Begun’, The Guardian 17 July 2015); and for the ‘now for something quite different’ category, as calling for ending industrialization and actually help kick-start the post-industrialized apocalypse see: A. McBay, L. Keith & D. Jensen, Deep Green Resistance: Strategy to Save the Planet, New York: Seven Stories Press 2011. For an overview see: A. Crane et al., The Oxford Handbook of Corporate Social Responsibility, Oxford: Oxford University Press 2001; also E. Garriga & D. Mele, ‘Corporate Social Responsibility Theories: Mapping the Territory’, Journal of Business Ethics (53) 2004, 1, p. 51-71. On stake-holder theory: R.E. Freeman, ‘A  Stakeholder Theory of the Modern Corporation’, in: T.L.  Beauchamp & N.E.  Bowie (eds.), Ethical Theory and Business, Upper Saddle River, NJ: Pearson Prentice Hall 2004, p. 55-64, as answer to the idea of shareholdervalue (M. Friedman, ‘The Social Responsibility of Business Is to Increase Its Profits’, The New York Times Magazine 13 September 1970). An alternative is offered by J.  Heath, Morality, Competition and the Firm. The Market Failures Approach to Business Ethics, Oxford: Oxford University Press 2014. See also W. Norman, ‘Business Ethics as Self-Regulation. Why Principles That Ground Regulations Should Be Used to Ground Beyond-Compliance Norms as Well’, Journal of Business Ethics (102) 2011, 1, p. 43-57; but also L. Sacconi, M. Blair, R.E.  Freeman & A. Vercelli (eds.), Corporate Social Responsibility and Corporate Governance. The Contribution of Economic Theory and Related Disciplines, New York: Palgrave Macmillan 2011; or V.  Vanberg, ‘Corporate Social Responsibility and the “Game of Catallaxy”. The Perspective of Constitutional Economics’, Constitutional Political Economy (18) 2007, 3, p. 199-222.

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the globalization of (many) markets.7 Third, is the shifting balance between the influence of the market and of the state within societies, as exemplified by the shift from state-provisioned to market-provided public services and interests.8 I will come back to these contextual developments throughout my narrative. Its central idea is that these developments ought not to be ignored by European competition law.

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On globalization much has been written. An example: J.E. Stiglitz, Globalization and Its Discontents, New York: W.W. Norton 2002. On the link between globalization and corporate social responsibility see: A.G. Scherer & G.  Palazzo, ‘Globalization and Corporate Social Responsibility’, in: A. Crane et al., The Oxford Handbook of Corporate Social Responsibility, Oxford: Oxford University Press 2001, p. 413-432. See e.g. M. Moran, ‘Understanding the Regulatory State’, British Journal Political Science (32) 2002, 2, p. 391-413; J. Gingritch, Making Markets in the Welfare State. The Politics of Varying Market Reforms, Cambridge: Cambridge University Press 2011; S.I. Benn & G.F. Gaus, ‘The Liberal Conception of the Public and the Private’, in: S.I. Benn, & G.F. Gaus (eds.), Public and Private in Social Life, London: Croom Helm 1983; J. Weintraub, ‘The Theory and Politics of the Public/Private Distinction’, in: J. Weintraub & K. Kumar, Public and Private in Thought and Practice. Perspectives on a Grand Dichotomy, Chicago & London: The University of Chicago Press 1997; A. Stark, Drawing the Line. Public and Private in America, Washington: The Brookings Institution 2010; and in general also: G. Stoker, Governance as Theory. Five Propositions, Oxford: Blackwell Publishers 1998; P. Pattberg, ‘The Institutionalization of Private Governance. How Business and Nonprofit Organizations Agree on Transnational Rules’, Governance (18) 2005, 4, p. 589-610; a different starting point has R. Shamir, ‘The Age of Responsibilization. On Market-embedded Morality’, Economy and Society (37) 2008, 1, p. 1-19. Liberalization is subject of (amongst many others) G. Majone, ‘The Rise of the Regulatory State in Europe’, West European Politics (17) 1994, 3, p. 77-101. For criticism see e.g. C. Crouch, The Strange Non-Death of Neoliberalism, Cambridge: Polity Press 2011; C. Cordelli, ‘The Institutional Division of Labor and the Egalitarian Obligations of Non-Profits’, Journal of Political Philosophy (20) 2012, 2, p. 131-155.

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Competition Law in Relation to Contextual Changes

It seems useful to outline what the relationship is between European competition law and the developments pointed out above. To do so, I would like to invite the reader to imagine themselves standing in a pasture. It is a clear, dewy fresh, spring morning. You might imagine hearing birds calling, like the lapwing and the black-tailed godwit. A lovely image, but to actually hear the call of these birds is getting more and more difficult. Their dwindling habitats, resulting from intensive farming, lead to endangerment of the birds. Avid birdwatchers, casual wanderers and many farmers find this regrettable. But not all is bleak: maybe a group of farmers now decide to farm in a more bird-friendly manner.9 They band together to pool resources and brand their dairy products. The initiative might also be picked up by large dairy corporations, adopting the small-scale operation on a much larger scale. This is good news for the black-tailed godwit. However, it might also result in higher production costs for milk. Higher production costs may lead to a higher consumer price. Thus, potentially, a competition law issue would arise. Now, try to imagine being a young factory worker in Northern India. You work at a clothing factory and produce the shirts and trousers that are sold in the European Union (EU) by wellknown brands. Hours are long, conditions are poor and earnings low. It is not inconceivable, however, that your fate will improve. 9

See for this example: ‘Boerengilde kansrijker dan biologisch’, Leeuwarder Courant 15 February 2014.

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The brand owners might take collective action: enter into negotiations with the factory owner on providing better conditions and a living wage.10 Funding for the higher costs will come from the clothing brands. Of course, this may lead to a higher price for clothing in the EU. It is, therefore, a (potential) competition law issue. Similar initiatives have occurred in the Netherlands. Wellknown examples are the Kip van Morgen (the Chicken of Tomorrow), aimed at improving animal welfare in the chicken farmer’s industry, and the Energieakkoord (Energy Agreement) on the transition to more sustainable forms of energy production.11 All these initiatives (and others of the same kind) share several characteristics. They are aimed at protecting (at least in part) a public interest, labelled the ‘sustainability’ interest for the purpose of this lecture.12 Also, these initiatives, as resting on agreements between companies leading to a higher consumer price, may restrict competition. If so, they run into the limits to cooperation between companies provided by competition law. Competition law is aimed at the protection of the market mechanism. The market mechanism, of course, is generally an efficient 10 See Fair Wear Foundation. Competition Law and Living Wages, Arnold & Porter, June 2015, . 11 See on these initiatives for example: Energieakkoord voor duurzame groei (rapport 6 September 2013), The Hague: SER 2013). The competition law analysis of ACM can be found here: (Notitie ACM over sluiting 5 kolencentrales in SER Energieakkoord, Den Haag: ACM 2013) and (Analyse ACM van duurzaamheidsafspraken Kip van Morgen, Den Haag: ACM 2013). 12 ‘Sustainability’ is a ‘fuzzy concept’, but at its core not really contested; see for the EU’s definition: .

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way of offering products and services without consumers having to pay too much. It is a game of supply and demand, based on the premise that its outcome is most efficient when the game is played by the rules. These rules include the rules of competition law. Thus, competition law prohibits corporate behaviour that restricts competition: cartel-agreements and monopolists’ behaviour generally lead to inefficient outcomes such as higher prices.13 In this sense, competition law has a strong grounding in economic theory; economic theory lies at the heart of the legal rules. The European Commission, in charge of enforcement of the European competition law, thus focusses its efforts on protection of the economics-informed notion of consumer welfare.14 A competition law assessment of agreements (or behaviour of dominant companies, which I will not focus on in this lecture), follows the structure of the relevant legal provision. This means that it is first established whether there is a restriction of competition. These restrictive agreements are prohibited (on the basis of Article 101 (1) TFEU and, in the Netherlands, its Dutch equivalent of Article 6 (1) Competition Act).15 However, secondly, the benefits resulting from the agreement can be taken into account. If the benefits outweigh the negative effects, the agreement may 13 Art. 101 TFEU and Art. 6 of the Competition Law Act. Competition Law, of course, includes other provisions such as the prohibition on abuse of a dominant position and merger control. These will not be considered in this lecture, however. 14 The one does not necessarily lead to the other though: placing consumer welfare centrally is not an inevitable consequence of a greater influence of economics on competition law. See O. Budzinski, ‘Monoculture versus Diversity in Competition Economics’, Cambridge Journal of Economics (32) 2008, 2, p. 295-324; A. Pera, ‘Changing View of Competition, Economic Analysis and EC Antitrust Law’, European Competition Journal (4) 2008, 1, p. 127-168. 15 The Competition Act (‘Mededingingswet’) entered into force in 1998, and provides for a system of competition law that is very much in line with European competition law.

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nonetheless be allowed by way of exception from the prohibition (Art. 101 (3) TFEU/Art.e 6 (3) CA). In this assessment, (current) competition law emphasizes the actual effects of the agreement, both negative and positive, on consumer welfare.16 Often these effects are quantified and expressed in terms of consumer welfare gains and losses thus, allowing for the required balancing. The sustainability-related examples provided above do not quite fit into this system of assessment. It is difficult to take full account of the protection of the black-tailed godwit or of the position of workers in India within this framework, as the relationship to consumer welfare is not easily expressed. Also, animal welfare – an issue in the Chicken of Tomorrow case – is difficult to fit in this scheme. So are the long-term effects of a reduction of harmful emissions (at issue in the Energy Agreement). Other examples of interests and values, which do not fit very well in a competition law assessment based on consumer welfare effects are enhancing social cohesion, maintaining the polderdialogue,17 protecting the purity of certain horse breeds,18 countering the lack of occupancy in office buildings, protecting the position of precarious workers by entering into wage agreements, countering erosion of topsoil by long-term investments 16 The concept of ‘consumer welfare’ is not always clear. See e.g. K. Cseres, ‘The Controversies of the Consumer Welfare Standard’, Competition Law Review (3) 2007, 2, p. 121-173. 17 On this specific aspect of the Energy-agreement see J. Mulder, Social Legitimacy in the Internal Market – A Dialogue of Mutual Responsiveness (diss. Florence), Florence: European University Institute 2016. 18 Hof Arnhem 17 November 2009, ECLI:NL:GHARN:2009:BL7079 (De Nieuwe Heuvel B.V./Koninklijke Vereniging ‘Het Friesch Paarden-Stamboek’). See also J.  Mulder, Finding the Public Interest, Wouters and the Case of the Friesian Horse (Amsterdam Centre for Law and Economics Conference Paper), Amsterdam 2013, .

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in plantations, combatting binge-drinking, or protecting workers unions’ rights in South American mines.19 It is worth mentioning here that the negotiations leading to the Energy Agreement and the Chicken of Tomorrow Agreement were initiated by coalitions, encompassing market parties, civil society organizations and – to a certain extent – the government. Still, both initiatives ran into a ‘no’ from the Dutch competition authority (ACM).20 The ACM did quantify the potential positive effects of these agreements and, in doing so, it seems to have pushed the limits of the consumer welfare approach. Still, its assessment resulted in a disapproval of the initiative.21 In the Chicken of Tomorrow case, the ACM used a ‘willingness to pay’ method, asking consumers whether and how much they were willing to pay for the ‘better’ chicken (consumers were not willing to pay as much as the increase in price, though they were willing to pay substantially more for a substantially more sustainable chicken).22 This led to critique. Some of it had a political angle: how can ACM prohibit these agreements when there is not just considerable support from market parties and civil society, but also from the government itself? Some centred on economics: is the assessment well-executed and did it generate valid conclusions? Some of it took a normative perspective, which is 19 Just to clarify: not all initiatives will constitute a restriction of competition. Only if there is a (appreciable) restriction will the exception clause come into play. 20 These are ‘informal’ opinions, not decisions that can be appealed in court. Informal opinions are non-binding (but, of course, have a strong effect on actual practice). 21 See analyses of ACM (Notitie ACM over sluiting 5 kolencentrales in SER Energieakkoord, Den Haag: ACM 2013 and Acm.nl/nl (search Notitie Energieakkoord); Analyse ACM van duurzaamheidsafspraken Kip van Morgen, Den Haag: ACM 2013, Acm.nl/nl (search Analyse Kip van Morgen). 22 See also A. Gerbrandy, ‘Solving a Sustainability-Deficit in Competition Law’, World Competition (40) 2017, 4, p. 539-562.

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the perspective that is most relevant for this lecture: is this really the way we ought to weigh and balance essentially incommensurable values?23 For competition lawyers reading this text, it must have been clear where the discussion is heading: to the question of how to take into account ‘non-economic interests’ in competition law. These are interests or values that are essentially alien to the market mechanism’s logic.24 The market mechanism has led to economic growth and greater welfare. It has many advantages, but it is, in essence, not based on the notion of cooperation or on taking a long-term perspective.25 It does not worry about fairness or about just outcomes.26 As a result, current competition law

23 In June 2015, several experts, including president of ACM Mr. Chris Fonteijn and myself, were invited for an expert meeting of the ‘Vaste Kamercommissie voor Economische Zaken’ of Parliament, to discuss the Chicken of Tomorrow. See also the report of Parliament ‘Verslag van een Algemeen Overleg van 5 augustus 2015, over de Versterking van de positie van de consument’, Kamerstukken II 2014-15, 27879, 53. 24 A well-functioning market, is, on aggregate level, of course also in the public interest. 25 See on the values and principles underlying competition and sustainability: A. Gerbrandy, ‘Competition Law and Private-Sector Sustainability Initiatives. Government Action or Private Initiatives in Reaction to Science’s Call for Sustainability’, in: A.L.B. Colombi Ciacchi, M.A. Heldeweg, B.M.J. van der Meulen & A.R. Neerhof (eds.), Law & Governance. Beyond the Public-Private Law Divide?, Utrecht: Eleven International Publishing 2013, p. 81-104. 26 On ‘fairness’ in the competition law e.g. T.J. Horton, ‘Fairness and Antitrust Reconsidered: An Evolutionary Perspective’, McGeorge Law Review (44) 2013, 4, p. 823-863; E.D. Hughes, ‘The Left Side of Antitrust: What Fairness Means and Why It Matters’, Marquette Law Review (77) 1994, 2, p. 265-306; D.J. Gerber, Fairness in Competition Law: European and U.S. Experience (Conference on Fairness and Asian Competition Laws 5 March 2004), Kyoto 2004, ; G.  Amato, Antitrust and the Bounds of Power. The Dilemma of Liberal Democracy in the History of the Market, Oxford: Hart 1997; C.  Ahlborn & A.J.  Padilla, ‘From Fairness to Welfare’, in: C.D. Ehlerman & M.  Marquis (eds.), European Competition Law Annual 2007, Oxford: Hart

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has difficulties taking into account the values and interests that are at issue in the examples of sustainability initiatives provided above. Competition law cannot easily take note of the idea of tipping-points or of the complexities and interconnections of sustaining an ecological equilibrium.27 Competition law cannot easily take into account actual and immediate improvements that occur elsewhere, but which are not accruing to the consumers paying a higher price, such as better conditions for the Indian factory worker paid for by a (higher) price of a jersey.28 Also, from a non-market perspective, it is questionable whether the consumers’ willingness to pay for – say – protection of the black-tailed godwit, biodiversity in rain forests, union liberty of mineworkers in Colombia, or living wages in India is the right way to express those interests at all.29 Recalling the philosopher Ecclesiastes – ‘there is nothing new under the sun’30 – let me stress here that questioning the relationship between economic and non-economic interests in competition law is not a new endeavour.31 However, the changing

27 28 29 30 31

2008; M.E. Stucke, ‘Should Competition Policy Promote Happiness?’, Fordham Law Review (81) 2013, 5, p. 2575-2644. For an introduction see: . A general discussion on this point, with reference to the guidelines on Art. 101 (3) TFEU, is provided by e.g. R. Whish & D. Bailey, Competition Law, Oxford: Oxford University Press 2015, p. 172. See in general: M.J. Sandel, What Money Can’t Buy. The Moral Limits of Markets, London: Allen Lane 2012. Ecclesiastes 1:9. See amongst many others: Tom Ottervanger for example, my colleague from Leiden, discussed the issue in his inaugural lecture: T.R. Ottervanger, Maatschappelijk verantwoord concurreren: mededingingsrecht in een veranderende wereld (oratie Leiden), 19 March 2010. See also, amongst many others: T. Prosser, The Limits of Competition Law. Markets and Public Services, Oxford: Oxford University Press 2005; D. Zimmer (red.), The Goals of Competition Law, Cheltenham: Edward Elgar 2012; O. Budzinski, ‘Monoculture versus Diversity

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societal context, introduced above, necessitates pondering on this relationship anew. The move towards a (more) sustainable economy requires reconsideration of both the economic order’s general legal foundations and the economic foundations of European competition law. This changing context, including globalization of the marketplace, leads to questioning whether competition law should not (also) take into account issues of justice and fairness on a global scale. The growing role of corporate social responsibility asks for reflection on the role of companies and whether this new role should not be accommodated within in Competition Economics’, Cambridge Journal of Economics (32) 2008, 2, p. 295-324; C. Townley, ‘Is Anything More Important than Consumer Welfare (in Art. 81 ERC)? Reflections of a Community Lawyer’, Cambridge Yearbook of European Legal Studies (10) 2008, p. 345-381; C. Townley, Article 81 EC and Public Policy, Oxford: Hart 2009; A. Gerbrandy, ‘Competition Law and Private-Sector Sustainability Initiatives. Government Action or Private Initiatives in Reaction to Science’s Call for Sustainability’, in: A.L.B. Colombi Ciacchi, M.A. Heldeweg, B.M.J. van der Meulen & A.R. Neerhof (eds.), Law & Governance. Beyond the Public-Private Law Divide?, Utrecht: Eleven International Publishing 2013, p. 81-104; O. Odudu, The Boundaries of EC Competition Law: The Scope of Article 101, Oxford: Oxford University Press 2006; W. Kerber, ‘Should Competition Law Promote Efficiency? Some Reflections of an Economist on the Normative Foundations of Competition Law’, in: J. Drexl, L. Idot & J. Moneger, Economic Theory and Competition Law, Cheltenham: Edward Elgar 2009; I. Lianos, ‘Some Reflections on the Question of the Goals of EU Competition Law’, in: I. Lianos & D. Geradin (eds.), Handbook in EU Competition Law: Substantive Aspects, Cheltenham: Edward Elgar 2013, p. 1-85; O. Andriychuck, ‘Rediscovering the Spirit of Competition: On the Normative Value of the Competitive Process’, European Competition Journal (6) 2010, 3, p. 575-610; O.  Black, Conceptual Foundations of Antitrust, Cambridge: Cambridge University Press 2005. One of the core questions of the field of Public Economic Law, the basis of my chair in competition law, is traditionally the relationship between the economic foundations of law and its normative grounding in legal and moral principles, such as freedom, equality and solidarity. See K. Hellingman & K.J.M. Mortelmans, Economisch Publiekrecht: rechtswaarborgen en rechtsinstrumenten, Deventer: Kluwer 1989. Also Johan van de Gronden and Saskia Lavrijssen, both at the time at Utrecht University, were interested in this topic: J.W. van de Gronden & K.J.M. Mortelmans, Mededinging en niet-economische belangen, Deventer: Kluwer 2001; S.A.C.M. Lavrijssen, ‘The Protection of Non-competition Interests: What Role for Competition Authorities after Lisbon’, European Law Review (35) 2010, 5, p. 634-659.

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competition law too. Here also the changed relationship between the State and the market calls for reconsideration of responsibilities of market parties: could not also private parties, legitimately, claim responsibility for protection of the public interest of a sustainable society? Thus, the little black-tailed godwit symbolizes quite fundamental questions, though it is truly not a very remarkable bird, except for its sound and me having grown up with them around in what now seems as abundance.

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State, Market and Civil Society in European Competition Law

The central proposition of this lecture is that European competition law should change. It ought to adapt to societal changes to retain its relevance and, ultimately, its own legitimacy. When considering European competition law, one cannot but start by considering the European Commission. In the European competition law landscape, the Commission is of utmost importance and any competition law change conceivably starts there. However, the Commission seems to be focussed, still, very much on consumer welfare (illustrated by its reaction to the Dutch developments, see below). Thus, change might not be around the corner. It must be recalled, however, that it is not the European Commission who has the final say on European competition law. This power rests with the European Court of Justice in Luxembourg. Its position is less clear. The Court has ruled that consumer welfare is, indeed, one of the goals of competition law, accepting the policy choice made by the European Commission to focus its enforcement efforts on combatting infringements leading to a detrimental effect on consumer welfare. However, the Court also holds that consumer welfare is not the only relevant goal of competition law.32 It recognizes a plurality of goals and values relevant to competition law. This pluralism fits within the European constitutional framework (in

32 See Court of Justice 4 June 2009, ECLI:EU:C:2009:343 (T-Mobile Nederland/ NMa).

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which competition law is only one element).33 The EU is vested in a social market economy and is, among others, based on the policy aims of sustainable growth and a high level of environmental protection. As a consequence, also for competition law, there is no a priori ranking in the EU’s constitution, at least between economic and non-economic values.34 Such a notion of balancing economic and non-economic values has always been clearly visible in the free movement rules of the Treaty. A restriction to the free movement of goods and services may, on the condition of proportionality, be allowed for the protection of non-economic interests, such as public health, protection of the environmental, or social interests. In juxtaposition with competition law – traditionally closely connected to the free movement rules35 – it should be pointed out, however, that the free movement rules generally apply to restrictions caused by Member States themselves. Therefore, both the prohibition and the exceptions are applied in the public domain. Member states infringe the free movement rules; member states invoke a public-interest exception. In contrast, competition law prohibits certain behaviours of companies (‘undertakings’), who are mar33 See Arts. 2 and 3 TEU and the cross-sectional clauses (such as Art. 11 TFEU). Also: M. Scholten & A. Gerbrandy, ‘Core Values: Tensions and Balances in the EU Shared Legal Order’, in: T. van den Brink, M. Luchtman & M. Scholten (red.), Sovereignty in the Shared Legal Order of the EU. Core Values of Regulation and Enforcement, Maastricht: Intersentia 2015, p. 9-30. On Art. 11 TFEU see also: S. Kingston, Greening EU Competition Law and Policy, Cambridge: Cambridge University Press 2012. On the economic constitution also: D. Gerber, Law and Competition in Twentieth Century Europe, Oxford: Clarendon Press 1998. 34 Protocol 27 does not change this non-hierarchical order: G. Monti, ‘EU Competition Law from Rome to Lisbon. Social Market Economy’, in: C. HeideJørgensen, C. Bergqvist, U.B. Neergard & S. Troels Poulsen (eds.), Aims and Values in Competition Law, Copenhagen: DJØF Publishing 2013, p. 27-66. 35 See for example Court of Justice 13 July 1966, ECLI:EU:C:1966:41 (Consten and Grundig/Commission).

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ket domain actors. In the current set-up, companies can rely on the exception (of Art. 101 (3) TFEU), but only in as far as the positive effects stay within the market domain. Indeed, having companies rely on the exception for reasons of public-interest protection would blur this distinction. However, note (first) that in the free movement rules, the neatness of this market and State division of tasks has also already become somewhat blurry. The horizontal effect of the free movement rules also enables non-public actors to rely on public-interest exceptions (though it remains to be seen if this is true for ‘real’ companies too).36 Allowing companies to invoke public interest in the competition law sphere would only mirror this development. In addition, note (second) that the resulting fuzziness fits within the broader societal development in which the boundaries between the public domain and the market domain have in general become less clearly defined as a result of the liberalization and privatization of previously non-market activities. This has brought a growing influence of economic rationality (though causality might equally run the other way) and a strengthening, as well as widening scope of the market domain as governments have introduced market incentives, or have transferred the provision of public services to the market domain completely. As a 36 See e.g. C. Krenn, ‘A Missing Piece in the Horizontal Effect “Jigsaw”: Horizontal Direct Effect and the Free Movement of Goods’, Common Market Law Review (49) 2012, 1, p. 177-216; S.A. de Vries & R. van Mastrigt, ‘Horizontal Direct Effect of the Four Freedoms. From a Hodgepodge of Cases to a Seamless Web of Judicial Protection in the EU Single Market?’, in: U. Bernitz, X. Groussot & F. Schulyok (eds.), General Principles of EU Law and European Private Law, Deventer: Kluwer 2013, p. 249-280. On the link between competition law and free movement law also: K.J.M. Mortelmans, ‘Towards Convergence in the Application of the Rules on Free Movement and on Competition?’, Common Market Law Review (38) 2001, 3, p. 613-649; S.A. de Vries & A. Gerbrandy, ‘Convergentie tussen vrij verkeer en mededinging “revisited”’, SEW 2015, 11, p. 516-521.

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result, the public domain of relationships between the State and its citizens has shrunk. The fuzziness is, however (and third), also a result of growing emphasis on corporate social responsibility of actors in the market domain. Again, I am not certain of the causality here, but clearly this new emphasis has shifted perspectives, because taking corporate social responsibility seriously means that the protection of public interests is taken up by companies, who, of course, also remain market actors. The consequence of these developments is that the notion that (only) the State provides for the public interest and the market provides (only) for private interests breaks down, while this notion underlies the free movement provisions allowing for wider public interest derogations than in competition law. Of course, European competition law has always had an eye for the relationship between the domains of market and State. For example, the Treaty includes a specific provision aimed at companies that are entrusted by the State with offering services of a general economic interest (Art. 106 TFEU). The arrangement of Article 106 TFEU, however, fits within the classical division of roles: it is the State, and not companies, that safeguard public interests, unless the government has specifically charged them with these tasks (which would typically entail providing some form of remuneration or granting an exclusive right). Therefore, this provision does not really help us with the sustainability initiatives introduced above. Clearly, one of the problems in having companies rely on a public-interest exception in competition law is the fear of giving them a broad, unchecked mandate to enter into anti-competitive agreements. Recall that companies are not generally held accountable in the way States’ governments are, so why

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should they be allowed to pursue public interests unchecked? In response, I would like to propose that civil society might play a legitimizing role. Competition law generally does not pay much attention to the role of civil society (though there are exceptions),37 but civil society organizations can play a role both in defining what the public interest is, and (therefore) also in bringing legitimacy to the process of deciding how to protect that public interest. Of course, civil society encompasses many organizations, ranging from labour unions and non-governmental organizations (NGOs), to activist groups, including those on social media.38 These institutions, collectively, form a part of society that lies between the State and the market (which is maybe why competition law generally ignores it?). Some of these groups transcend national borders and are part of a global civil society.39 At this supra-State level, where a government is absent, an ongoing dialogue between governments, market representatives and civil society organizations is already aimed at determining (and protecting) global public interests. Thus, civil society takes part in the determination, in a more or less organized manner, of what society should look like; what a ‘just’ society is supposed to be at a certain time and place. Clearly, what is ‘right’ or ‘just’ is not fixed. In these post-modern times, to the extent that that would be theoretically possible, 37 See: J.W. van de Gronden, ‘EG-recht en het maatschappelijk middenveld’, SEW 2001, 9, p. 302-313. 38 The Dutch word ‘maatschappelijk midden(veld)’ and its English-language equivalent ‘civil society’ do not have the exact same connotations. Civil society seems to have a somewhat broader meaning. See on the concept of civil society: M. Edwards, Civil Society, Cambridge: Polity Press 2014. 39 M. Kaldor, ‘The Idea of Global Civil Society’, International Affairs (79) 2003, 3, p. 283-593; M. Castells, ‘The New Public Sphere: Global Civil Society, Communication Networks, and Global Governance’, ANNALS of the American Academy of Political and Social Science (616) 2008, 1, p. 78-93.

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there are fundamental ideological differences between organizations. If follows that it is also not immediately obvious that civil society (as a collective) speaks for an agreed upon definition of the public interest, which is truly common to all. Some groups remain unrepresented. It is also not clear whether these institutions themselves are – or should be – democratically organized to obtain legitimacy for their role.40 These are relevant issues to take into account when determining what role civil society can play in competition law. My proposition, however, is that an involvement of civil society can improve the legitimacy of sustainability initiatives between companies. As to these companies themselves, the push for, or towards, engaging in responsible business conduct, both locally and globally, is again relevant in considering their own mandate and legitimacy.41 The awareness that companies have a responsibility that is greater than their private (market) interest has already been mentioned in the context of the shifting balance between the market and the State. Partly as a result of pressure of civil society, companies are expected to be concerned with, and take responsibility for, their impact on the environment and society. Any negative impact should be prevented, reduced and, if possible, repaired. It follows that if this is not possible for a single company, collective action might be necessary. On a normative 40 A.M. Eikenberry & J.D. Klover, ‘The Marketization of the Nonprofit Sector: Civil Society at Risk?’, Public Administration (64) 2004, 2, p. 132-140. 41 Responsible business conduct and corporate social responsibility seem mostly overlapping concepts. On RBC see: OECD Guidelines for Multinational Enterprises, Paris: OECD 2012; for the EU: Communication from the Commission to the European Parliament, the Council, the European and Social Committee and the Committee of the Regions, A renewed EU strategy 2011-14 for Corporate Social Responsibility /* COM/2011/0681 final; for the UN see: United Nations Global Compact, UN 2000, .

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level, this can lead to accepting that companies have an ethical obligation to care; an obligation independent of State regulation.42 Such ethical obligations have consequences in law,43 but also change the legitimacy of companies’ actions. This includes – important for competition law, where teaming up is always a dangerous thing to do – the moral legitimacy of joint actions where those are called for.44 All this leads to the question whether the above needs to be accommodated within competition law. Not all will agree that this would be so. Some may (vehemently) object to the direction this lecture is taking by pointing out that companies have no role to play in the protection of the public interest. Companies 42 There are many reasons for companies to engage in corporate social responsibility, but that does not detract from the ethics of it. See on these reasons e.g.: J. Graafland, M. Kaptein & C. Mazereeuw, Motives for Socially Responsible Business Conduct (Tilburg University Center Discussion Paper Series 2010-74), Available at SSRN: or ; D. Baron, ‘Morally Motivated Self-Regulation’, American Economic Review (100) 2010, 4, p. 1299-1329; D. Vogel, ‘The Private Regulation of Global Corporate Conduct’, Business & Society (49) 2010, 1, p. 68-87. 43 Such as in business law and tort law; the subject of research conducted by my colleagues from the Molengraaff Instituut. See e.g. L. Enneking, Foreign Direct Liability and Beyond. Exploring the Role of Tort Law in Promoting International Corporate Social Responsibility and Accountability (Diss. Utrecht), Den Haag: Eleven International Publishing 2012; L. Enneking, F. Kristen, K. Pijl, T. Waterbolk, J. Emaus, M. Hiel, A. Schaap & I. Giesen, ‘Zorgplichten van Nederlandse Ondernemingen inzake Internationaal Maatschappelijk Verantwoord Ondernemen. Een rechtsvergelijkend en empirisch onderzoek naar de stand van het Nederlandse recht in het licht van de UN Guiding Principles’ (UCALL rapport december 2015), Den Haag: WODC 2015. 44 On ‘transnational private regulation’ (which is ‘doing it together’), but without the competition law angle e.g.: F. Cafaggi, ‘New Foundations of Transnational Private Regulation’, Journal of Law and Society (38) 2011, 1, p. 20-49; J. Gond, N. Kang, & J. Moon, ‘The Government of Self-regulation. On the Comparative Dynamics of Corporate Social Responsibility’, Economy and Society (40) 2011, 4, p. 640-671.

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also ought not to have such a role, as it is the States’ job to define and protect these interests, preferably through democratically legitimized legislative processes. The current competition law debate mirrors this, arguing that competition law ought not to be concerned with public interests. Competition law should keep its focus on market efficiency and consumer welfare, and cannot, and ought not, accommodate notions such as ‘fairness’ or ‘equity’. Allowing these values to creep into a competition law assessment would lead to political and subjective decision making (which may or may not be substitutable words). Even in the absence of (a possibility to provide) State regulation there is no, and there ought not to be, room for companies to take this role upon themselves, especially if, by doing so, they would infringe competition law. That would allow providing a public-interest veil for cartels and the opportunity for greenwashing.45 These arguments raise valid points, but I am, ultimately, unconvinced. Considering the societal developments outlined above, the position to keep competition law focussed only on efficiency seems normatively indefensible. First, consider the necessity of moving towards a sustainable society (as introduced in the first section).46 That necessity translates into a normative 45 From the Dutch perspective see e.g. E. Loozen, ‘De onwenselijkheid van de beleidsregel mededinging en duurzaamheid’, ESB 2015, p. 746-750; P. de Bijl & T. van Dijk, ‘Mededingingsbeleid en publieke belangen: een economisch perspectief’, M&M 2012, 4, p. 149-156; M.P. Schinkel & Y. Spiegel, ‘Can Collusion Promote Sustainable Consumption and Production?’, International Journal of Industrial Organization (53) 2017, p. 371-398; B. Baarsma, ‘Rewriting European Competition Law from an Economic Perspective’, European Competition Journal (7) 2011, 3, p. 559-585. 46 I realize that in the first section, I have merely posed the necessity for such a move. This means that for those who either think the needs for change are exaggerated, or those who think that solutions will come from science (and there are science fiction books exploring that notion too, of course), this part of my normative argument might not be convincing.

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obligation, both in an individual-ethical sense for citizens and companies and – derived from the European constitutional embeddedness of a sustainable market economy pointed to in the second section – in a legal sense. Second, consider that the Court holds to a view of plurality of goals of European competition law. And third, though the objection that companies’ collaborative public-interest aimed action lacks legitimacy is a serious one, the growing role of companies and – though not in all circumstances – the absence of credible (possibilities for) State intervention, makes the inertia of competition law untenable. The notion of legitimacy needs a bit more attention here. Generally, of course, it is a coercive State action that needs legitimacy: each limitation of civil liberties requires a legitimizing ground and process (in a society that is based on the rule of law). Thus, legitimacy – as layered a concept as they come – connects to the qualitative foundation of State power.47 State action, which is understood to be aimed at protecting the public interest, obtains

47 As tip of the iceberg see: J. Rawls, Political Liberalism, New York: Columbia University Press 1993; but for an introduction see Stanford Encyclopedia of Philosophy, Plato.stanford.edu (under political legitimacy). Also: J. Habermas, Between Facts and Norms. Contributions to a Discourse Theory of Law and Democracy, Cambridge, MA: MIT Press 1996; C. Matheson, ‘Weber and the Classification of Forms of Legitimacy’, British Journal of Sociology (38) 1987, 2, p. 199-215; A. Buchanan, ‘Political Legitimacy and Democracy’, Ethics (112) 2002, 4, p. 689-719; S. Chambers, ‘Deliberative Democratic Theory’, Annual Review of Political Science (6) 2003, 1, p. 307-326; V. Schmidt, ‘Democracy and Legitimacy in the European Union Revisited. Input, Output and “Throughput”’, Political Studies (61) 2013, 1, p. 2-22; J. Parkinson, ‘Legitimacy Problems in Deliberative Democracy’, Political Studies (51) 2003, 1, p. 182. On legitimacy of decision making by competition authorities in cases where balancing of economic and non-economic interests is at stake: A. Gerbrandy, ‘Addressing the Legitimacy Problem for Competition Authorities Taking into Account Non-Economic Values: The Position of the Dutch Competition Authority’, European Law Review (40) 2015, 5, p. 769-781.

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legitimacy through the democratic organization of society. Citizens and civil society organizations are involved in this process. When we now consider actions of companies, it is clear that when they act in their own interest – generally by making profit – the question of whether this is legitimate does not arise. This changes when companies act towards protecting the public interest; some form of legitimacy can be said to be, indeed, needed. On this topic, my political philosophy colleague Rutger Claassen and I have argued elsewhere that such collective business conduct, aimed at serving the public interest, does not just need (which is not really contested), but also can obtain legitimacy (which is).48 Our argument ultimately is that obtaining legitimacy cannot entirely be realized without some form of actual or potential intervention from the public sphere. At minimum, public supervision – generally through a regulatory or supervisory agency – should be potentially possible, though not necessarily actually exercised. In our argument, we have not given civil society a role in the legitimizing process. However, it follows from the discussion above that the legitimacy of a collective initiative, which is in the public interest, may be strengthened if it is brokered through civil society participation.

48 R. Claassen & A. Gerbrandy, ‘Doing Good Together’, BEQ 2018 (forthcoming).

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Competition Law’s Adaptibility

I have argued that competition law should be responsive to a changing society. I have pointed towards societal changes that are relevant for the questions that arise in competition law. I have also pointed towards the questions of legitimacy of joint initiatives and the implications of involving civil society in the process of shaping them. Still, in a way, all these considerations (and there are still many more) are preliminary. Where companies enter into an agreement that – on the one hand – is aimed at protecting a public interest, but – on the other hand – leads to an increase in consumer price, European competition law comes into play. If competition law needs to adapt, the next question is: how can a legal test be designed (which preferably does not need a Treaty amendment) to balance these different interests at stake? Several options have been brought forward. Often, there is a focus on the exception of Article 101 (3) TFEU. This is not illogical as – it may be recalled – in the Netherlands, the ACM said ‘no’ to the Chicken of Tomorrow and the Energy Agreement based on an assessment of precisely these exception-criteria. Therefore, also in the Dutch discussion that followed these assessments, the initial focus was on drafting a new Policy Guideline on Sustainability and Competition (Beleidsregel Duurzaamheid en Mededinging).49 However, after receiving critical feedback on its too-wide scope from the ACM and the European Commis49 See Consultatieversie Beleidsregel mededinging en duurzaamheid (Beleidsnota 23 december 2015), Minister van Economische Zaken 2015, .

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sion, the Minister of Economic Affairs decided to withdraw the most far-reaching points. During this process, the advantages and disadvantages of using the exception have been extensively discussed.50 Besides noting that the act of drafting new guidelines itself can already be seen as a reaction to the lack of societal and political acceptance of the ACM’s assessments, which points towards a lack of output-legitimacy (in the sense that policy-outcomes, at least collectively and over time, should resonate with the values in a society),51 I will not focus on Article 101 (3) TFEU. In addition, I will not discuss the Wouters doctrine (the doctrine of ‘inherent restrictions’), though it might be a useful tool in the context of public interests and competition law. I will also leave aside – as not really fitting the situation of companies keeping up their end of the burden of corporate social responsibility – Article 106 (2) TFEU. Here, I would like to discuss yet another possible alternative and point towards the case law of the Court of Justice in which European competition law is held to be inapplicable to certain types of agreements and to certain non-State entities. Both of these exceptions rely on the notion of solidarity. The notion of solidarity is inherent in many public-interest initiatives too. Both (in parallel to, for example, the Wouters doctrine) rely on an Article 101 (1) TFEU-assessment and thus, preclude the necessity of an Article 101 (3) TFEU-analysis. Agreements that have been held 50 See on all this the documents at: ; but also see G. Monti & J. Mulder, ‘Escaping the Clutches of EU Competition Law’, Elrev (42) 2017, 5, p. 635-656; A. Gerbrandy, ‘Solving a Sustainability-Deficit in Competition Law’, World Competition (40) 2017, 4, p.539-562. For a short overview A. Gerbrandy, ‘The Netherlands Move Ahead with Competition and Sustainability’, RENFORCE Blog 2016, Blog.renforce.eu. 51 See on output-legitimacy: V.A. Schmidt, ‘Democracy and Legitimacy in the European Union Revisited’, Political Studies (61) 2013, 1, p. 5.

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outside the scope of competition law are collective labour agreements. Here, the Court bases its analysis on the social value of these collective agreements and the place of the social dialogue in the Treaty.52 It is interesting to note that these are both manifestations of solidarity between the weaker and the stronger party to these agreements. Thus, the value of the social dialogue is held to trump the competition interest (which is affected by collective labour agreements too). The Court has also held that some non-State entities fall outside the scope of competition law because these entities are not engaged in a market activity.53 The reasoning here is that their activities are of a genuine social nature. Again, the reasoning is based on the idea that the activities are based on considerations of solidarity, which does not conform to the market logic. The examples in the Court’s case law are (necessarily) fairly case-specific, and it is not easy to draw general conclusions.54 However, the essential question seems to be whether the public interest of solidarity needs to be given such weight as to over-ride the application of European competition law. The concept of solidarity is of fundamental relevance in these cases.55 Solidarity also often lies at the core of sustainability ini52 Court of Justice 21 September 1999, ECLI:EU:C:1999:430 (Albany). 53 There is no economic activity, and thus no undertaking. On the concept of undertaking, see also V. Hatzopoulos, The Concept of ‘Economic Activity’ in the EU Treaty: From Ideological Dead-ends to Workable Judicial Concepts (College of Europe Research Paper in Law 06/2011), Brugge 2011. 54 See Court of Justice 17 February 1993, ECLI:EU:C:1993:63 (Poucet); Court of Justice 16 November 1995, ECLI:EU:C:1995:392 (FFSA); Court of Justice 16 March 2004, ECLI:EU:C:2004:150 (AOK). 55 See also: N. Boeger, ‘Solidarity and EC Competition Law’, European Law Review (32) 2007, 3, p. 319-340; A. Winterstein, ‘Nailing the Jellyfish: Social Security and Competition Law’, European Competition Law Review (20) 1999, 6, p. 324-333.

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tiatives:56 solidarity between individuals and groups of people (and between subgroups within groups), between generations, and even between people and their environment (although conceptualizing this as solidarity-based is more controversial).57 The concept of solidarity is, however, not very easy to define.58 Solidarity focusses on the relationship between groups and individuals; and will normally encompass moral, and, in principle, mutual obligations. Theoretically, when it is based on a classical-liberal idea of everyone having equal rights, solidarity knows no limits: all others – at least all other humans – are inherently and fundamentally equal. However, it has been pointed out, that such a conceptualization seems not to square with the reality of how people perceive social solidarity. There are limits to the solidarity-obligations we accept, which are related to identity and bound to cultural and historical realities.59 It is clear, however, that such a concept of solidarity can also be given a normative shape, for example by connecting solidarity to ‘community’ (as seems the basis of some case law of the Court of Justice).60

56 Also: A. Gerbrandy, ‘Competition Law and Private-Sector Sustainability Initiatives. Government Action or Private Initiatives in Reaction to Science’s Call for Sustainability’, in: A.L.B. Colombi Ciacchi, M.A. Heldeweg, B.M.J. van der Meulen & A.R. Neerhof (eds.), Law & Governance. Beyond the PublicPrivate Law Divide?, Utrecht: Eleven International Publishing 2013, p. 81-104. 57 R. Claassen & A. Gerbrandy, ‘Rethinking European Competition Law. From a Consumer Welfare to a Capability Approach’, Utrecht Law Review (12) 2016, 1, p. 13. 58 Advocate General Fennelly states: ‘Social solidarity envisages the inherently uncommercial act of involuntary subsidization of one social group by another’ (ECLI:EU:C:1997:55, pt. 29). This definition seems to be somewhat different from the political philosophy definition. 59 Generally see: J. Habermas, Between Facts and Norms. Contributions to a Discourse Theory of Law and Democracy, Cambridge, MA: MIT Press 1996. 60 M. Dougan & E. Spaventa, ‘“Wish You Weren’t Here…”, New Models of Social Solidarity in the European Union’, in: M. Dougan & E. Spaventa (eds.), Social Welfare and EU Law, Oxford: Hart 2005, p. 181-218.

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Solidarity, as the foundation for excluding sustainability initiatives from the application of competition law, would necessitate a firmer grounding in a normative theory of justice than I have accounted for here. Rutger Claassen and I have, also in relation to the question of non-economic interests in competition law, published some first thoughts on this issue by exploring the applicability of the capability approach as justice-theory to competition law problems. But, whether that is separate from solidarity, or whether solidarity can be incorporated in such a theory of justice, we have not explored.61 In this lecture I will limit myself to two further remarks. Firstly, consider geographical borders. The key question here is whether the fairness of a higher wage for the work of the (generally not very affluent) Indian worker, to be paid by the (generally wealthy) T-shirt-buying consumer in the EU should have a place in competition law. If we think that allowing (or prohibiting) such a competition-distorting agreement should not depend on the question of how much the consumer is willing to pay – because the market is a too narrow normative basis for such questions62 – then the classical notion of solidarity might present an alternative foundation for such an exception. One might suggest that geographical borders, in a globalized marketplace, do not constitute a very relevant element to limit solidarity considerations.63 61 R. Claassen & A. Gerbrandy, ‘Rethinking European Competition Law. From a Consumer Welfare to a Capability Approach’, Utrecht Law Review (12) 2016, 1, p. 1-15. 62 This is not to deny that the market mechanism itself, or its foundations, cannot have a normative meaning, see e.g. B. Amable, ‘Morals and Politics in the Ideology of Neo-liberalism’, Socio-Economic Review (9) 2010, 1, p. 3-30. 63 This is not to say that this solves all problems: how far does solidarity stretch? In other words, how much of my welfare should I give up in solidarity with my fellow human beings on the other side of the world? Welfare transfers within geographical borders already being problematical, this question will probably not be answered by saying ‘well, until we all have equal wealth’.

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Secondly, consider subject-related borders. To be more precise: imagine how the notion of solidarity would function in relation to the black-tailed godwit. Although there are philosophical grounds for solidarity with animals (we are just human animals after all),64 I – even, or maybe because of, having grown up in the rural north of the Netherlands – am much more doubtful here about the role of solidarity. I might feel a moral obligation to care for the cow-herd in my fields and I might feel sympathy for the plight of the black-tailed godwit, but that does not necessarily mean I conceive of these animals as my equals,65 or as them having equal rights to solidarity-bound obligations as being part of my ‘group’. Here, the essence of solidarity lies, I would suggest, not so much in the equality of human and godwit, but between me and future humans. Protecting the blacktailed godwit – which, of course, functions also as a stand-in for many environmental protection measures – is part of protecting the ecosystem. Protecting the ecosystem is necessary for future generations to be able to thrive (as stated in the Brundtland report), and thus, the protection of the black-tailed godwit is an expression of solidarity between generations.66 Now the problem that immediately surfaces is the question of time-limits to solidarity.67 How far in the future should we, and can we reasonably expect to, look? Science fiction, apart from providing pleasant 64 This means that animals have rights, see e.g. M.C. Nussbaum, Frontiers of Justice, Cambridge, MA: Harvard University Press 2006. 65 And I am certainly aware of the ‘so long and thanks for all the fish’ inscription of dolphins saving the our world; see Douglas Adams, The Hitchhiker’s Guide to the Galaxy, 1984. 66 See again: G.H. Brundtland, Our Common Future: The World Commission on Environment and Development, New York: Oxford University Press 1987. 67 See e.g. P.M. Martens, ‘Sustainability: Science or Fiction?’, Sustainability: Science, Practice & Policy (2) 2006, 1, p. 36-41; see also R.B. Norgaard & R.B. Howarth, ‘Sustainability and Discounting the Future’, in: R. Costanza (ed.), Ecological Economics: The Science and Management of Sustainability, New York: Columbia University Press 1991, p. 88-101.

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reading hours, also shows some startling and bewildering visions of the (very) far future, and in that light ‘solidarity’ becomes a somewhat alien concept. However, when discussing the normative foundation for allowing companies to collaborate to protect the ecosystem (resulting in lowering consumer welfare and thus raising competition law questions) the idea of ‘ecological stewardship’ can be useful to consider.68 That notion is related to solidarity and might be shaped into having further ramifications. It would result in us having at the very least a moral obligation towards the black-tailed godwit. The central idea will be familiar to those brought up with the Christian notion of stewardship, in which the world is given only for safe-keeping. There is, therefore, a theological foundation for this belief, but also in the secular world, this notion might capture the normative foundation for the preservation of the ecosystem for future generations. To return to my competition law argument, clearly, some legaltechnical fancywork is necessary to fit the solidarity-based case law of the Court to sustainability initiatives.69 For example, the Court has only accepted competition law not to be applicable where government is involved in (the governance of) the scheme. Therein is found the rationale for the public interest setting aside competition law: it provides legitimacy to the private actors’ action. However, precisely this condition should be reconsidered in the light of the changed balance between the public and the private, between State and market. The requirement of gov68 See e.g. from R. Scruton, Green Philosophy. How to Think Seriously about the Planet?, London: Atlantic Books 2012. 69 For example: the Court has applied this exception to entities that are only engaged in solidarity-based activities. The companies involved in sustainability initiatives, at very least, also are engaged in ‘normal’ market activities. This can be worked around by focusing on activities and separately assessing these. That fits well with the functional approach of undertakings.

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ernment involvement fits the classical division of tasks between the State and market. But, as pointed out above, such a division of tasks is not necessarily fitting today’s reality. I return again to the role of civil society and companies in (also) shaping and protecting the public interest: accepting that legitimacy can also be obtained by involving civil society, or that it can be based on the ethical duties of companies, as long as public oversight is possible, provides reasons for discarding this one of the Court’s requirement.70 We are now also close to the ‘polderplusroute’, a concept brought forward by my colleague Rein Wesseling.71 The idea here was that the (so-called) ‘useful effect doctrine’ can also be used as a shield against the application of competition law to sustainability initiatives.72 This idea has been taken up by the Dutch Minister of Economic Affairs and has been shaped into a legislative proposal. The proposal puts forward that market-initiated sustainability initiatives can be referred to the Minister (before there is an actual agreement). The Minister will provide 70 Conceptually, this is getting close to the idea of corporate citizenship. See e.g. A. Carroll, ‘The Pyramid of Corporate Social Responsibility. Towards the Moral Management of Organizational Stakeholders’, Business Horizons (34) 1991, 4, p. 39-48; A. Carroll, ‘The Four Faces of Corporate Citizenship’, Business and Society Review (100-101) 1998, 1, p. 1-7; D. Windsor, ‘The Future of Corporate Social Responsibility’, International Journal of Organizational Analysis (9) 2001, 3, p. 225-256; D. Birch, ‘Corporate Citizenship – Rethinking Business beyond Social Responsibility’, in: J. Andriof & M. McIntosh (eds.), Perspectives on Corporate Citizenship, Sheffield: Greenleaf 2001, p. 53-65; J.  Moon, A.  Crane  & D. Matten ‘Can Corporations be Citizens? Corporate Citizenship as a Metaphor for Business Participation in Society’, Business Ethic Quarterly (15) 2005, 3, p. 419-453. See also the related notion of ‘global citizenship’: D.J. Wood & J.M. Logsdon, ‘Business Citizenship: From Individuals to Organizations’, Business Ethics Quarterly (3) 2001, 3 (special issue), p. 59-94. 71 R. Wesseling, ‘“Polder-Plus”-model: oplossing “Kip van Morgen” ligt niet bij ACM maar bij minister’, M&M 2015, 6, p. 220-221. 72 See Court of Justice 16 November 1977, ECLI:EU:C:1977:185 (INNO/ATAB) and Court of Justice 3 December 1987, ECLI:EU:C:1987:524 (BNIC/Aubert).

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a public-interest test and decide on whether the initiative will be made binding on all market parties by ministerial decree. Thus, the government remains ultimately responsible for shaping the public interest. Obviously, there is a fine line between a State supporting a cartel – which is prohibited by European competition law – and legitimately providing a State character to a sustainability initiative.73 I would be repeating myself in pointing again towards the legitimizing role of civil society in having such an initiative approved by the Minister. It is important to stress that many of the legal routes discussed in this section already exist. No Treaty amendment is necessary. The case law of the Court of Justice may be case-specific, but it does offer support for the argument that the Treaty-context provides the basis for the re-interpretation of the balance between non-economic interests and competition interests. Obviously, recognition by the Court of Justice that a sustainable society is also a constitutional value of the EU is important, but it must be stressed that such recognition is not at all a necessary condition for a broader application of these routes. A weighing of the interests at stake – market interests and non-economic interests – is already covered by the Treaty. Such a weighing is not easy, and should, of course, be made explicit. It can be shaped by using familiar legal-balancing mechanisms, such as can be found in the free movement rules, in Article 106 (2) TFEU, or even in balancing clashing fundamental rights. It is not that judging conflicting values is unfamiliar to legal reasoning.74 More revolutionary would be to shape the ethical obligations for companies 73 See also A. Gerbrandy, World Competition 2017. 74 This means that quantification of negative and positive effects is not necessary. Some would say that this is a good thing as leading to an actual, and meaningful, weighing of interests. Incommensurability of interests is not camouflaged

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into legal duties, for example by moulding them as obligations of European corporate citizenship.75 That requires, admittedly, some – a lot, really – legal flexibility, but it would provide a legal basis for collective sustainability agreements and would change by abstract arithmetic. On the other hand: non-quantification might more easily lead to ‘greenwashing’ of anti-competitive agreements. There is also the danger of subjective or political decision-making. Personally, I have always taken quantification as a tool to be used in a competition analysis, never a goalas-such. Quantification has the great advantage of making a decision-making procedure more transparent: having a sound understanding of costs and benefits is always useful. It should, however, be used as input into a weighing process, not necessarily be seen as the overriding factor. To maybe alleviate the fear of some economists, who sometimes seem to have not much faith in the logical reasoning powers of lawyers: a weighing process is not a free-forall MMA-fight. There are rules and reasons. See e.g. R. Alexy, ‘Constitutional Rights, Balancing, and Rationality’, Ratio Juris (16) 2003, 2, p. 131-140. Proportionality can be an important tool, see e.g. M. Klatt & M. Meister, The Constitutional Structure of Proportionality, Oxford: Oxford University Press 2012. Also, if the involvement of civil society is taken seriously, some form of weighing – in the public domain – has already taken place. This weighing in the public domain can play a role in the review of the ‘governance’ structure of sustainability initiatives: see J. Mulder, Social Legitimacy in the Internal Market – A Dialogue of Mutual Responsiveness (diss. Florence), Florence: European University Institute 2016; also published as J. Mulder, Social Legitimacy in the Internal Market – A Dialogue of Mutual Responsiveness, Oxford: Hart 2018. See more generally on quantification: H.S. Richardson, ‘The Stupidity of the CostBenefit Standard’, Journal of Legal Studies (29) 2000, 2, p. 971-1003; C. Rose, ‘Environmental Faust Succumbs to Temptations of Economic Mephistopheles. Or, Value by Any Other Name is Preference’, Michigan Law Review (87) 1989, 6, p. 1631-1711; and on willingness to pay: M. Adler, ‘Welfare Polls: A Synthesis’, New York University Law Review (81) 2006, 6, p. 1875-1970; D. LewinsohnZamir, ‘Consumer Preferences, Citizen preferences, and the Provision of Public Goods’, Yale Law Journal (108) 1998, 2, p. 377-406. 75 See above on the concept of corporate citizenship. The link with European citizenship goes by way of market citizenship (see on the latter e.g. N.N. Shuibhne, ‘The Resilience of EU Market Citizenship’, Common Market Law Review (47) 2010, 6, p. 1597-1628); and ‘social citizenship’ (T. Faist, ‘Social Citizenship in the European Union: Nested Membership’, Journal of Common Market Studies (39) 2001, 1, p. 37-58). Citizenship duties are discussed by R. Bellamy, ‘DutyFree Europe? What’s Wrong with Kochenov’s Account of EU Citizenship Rights?’, European Law Journal (21) 2015, 4, p. 558-565; and N.N. Shuibhne, ‘Limits Rising, Duties Ascending: The Changing Legal Shape of Union Citizenship’, Common Market Law Review (52) 2015, 4, p. 889-937.

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drastically the competition law assessments of sustainability initiatives.76

76 This flexibility might make use of the concept of transnational responsibility (L. Enneking, Foreign Direct Liability and beyond. Exploring the Role of Tort Law in Promoting International Corporate Social Responsibility and Accountability (diss. Utrecht), Den Haag: Eleven International Publishing 2012), using research relating to the relationship between the market-organization and collective action (e.g. D. Spar & D. Yoffie, ‘A Race to the Bottom or Governance from the Top?’, in: J.A. Hart & A. Prakash (eds.), Coping with Globalization, London: Routledge 2000, p. 30-51; D. Mügge, ‘Private-Public Puzzles. Inter-firm Competition and Transnational Private Regulation’, New Political Economy (11) 2006, 2, p. 177-200; D. Baron, ‘Morally Motivated SelfRegulation’, American Economic Review (100) 2010, 4, p. 1299-1329), and linking market circumstances to ethical obligations (as do: D. van der Ven & R. Jeurissen, ‘Competing Responsibly’, Business Ethics Quarterly (15) 2005, 2, p. 299-317).

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Final Remarks

Not all sustainability initiatives will fit the framework outlined above. But, in this essay, not all legal routes have been fully explored.77 My expectation is that Article 101 (3) TFEU will remain relevant, though other routes could be more feasible when appropriate cases arise. It is interesting to, again, note that the Minister of Economic Affairs attempted to change not only the interpretation of Article 101 (3) TFEU, but also to change the perception of competition law more fundamentally, including in ‘Brussels’. The European Commission’s D-G Competition seems to have not yet embarked upon such an exploration: its interpretation fits the market logic of the past century. In the meantime, however, society has changed. Here, I would finally venture upon the terrain of Asimov and other authors of science fiction (though without claiming equality of penmanship).78 This is what competition law could look like a decade from now:

77 See for example on services of general economic interests: K. Lenaerts, ‘Defining the Concept of “Services of General Interest” in Light of the “Checks and Balances” Set Out in the EU Treaties’, Jurisprudence (19) 2012, 4, p. 12471267, ; see also A. Gerbrandy, ‘Solving a Sustainability-Deficit in Competition Law’, World Competition (40) 2017, 4, p.539-562. 78 Talking about penmanship…: in this last footnote, I take the liberty to mention some books that might (also) be interesting for lawyers: Alistair Reynolds’s books (especially the Revelation Space-saga, because of the plethora of government structures that form the backdrop to this worlds-spanning hard science fiction space opera); Neal Stephenson’s books (because of the interplay between technology and societal organization, especially in The Diamond Age; Or, A  Young Lady’s Illustrated Primer (Bantham Books 1995) and Anathem (William Morrow & Company 2008)), and – from a slightly different, genre-

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1. The next version of the Dutch Policy Guidelines on the application of the exception includes a much wider scope of benefits and is based on a fundamental reconceptualization of the foundations of competition law; 2. In 2020, the Court of Justice rules (again) on the raison d’être of European competition law: it now relies on concepts such as solidarity and a fair, as well as just society, and grounds this judgement on a constitutional embedding of competition law in the EU; 3. In its judgement, the Court of Justice provides a careful and insightful balancing between the value of the competitive process now and the interests of future generations; 4. The Court also includes a thoughtful consideration of the role that the civil society may play in the process of defining the public interest; 5. The European Commission will have then been struggling with this topic for a while, but will now have to change its enforcement policy as a consequence of the pioneering judgement of the Court of Justice; 6. As a result, European competition law also takes globalization into account: sustainability efforts elsewhere, of which the costs can justifiably be borne by European consumers, can be accepted; 7. The Treaty amendments of 2025 include the notion of European corporate citizenship duties, and refer to obligations of social corporate responsibility; 8. All this is a welcome change from much of the 20th century, where the Netherlands was long known as a backwater when it came to competition law matters. The Netherlands, defying author – because of the mild satire and eloquent critique on (amongst many other things) corruption resulting from (market) power, almost everything by the late Terry Pratchett.

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including its at-first-hesitant-but-gaining-in-confidence competition authority, has played a visionary role in reshaping the competition law regime, both in the EU and abroad.

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