To Cooperate or Not to Cooperate? Reconciling Corporate Sustainability with EU Competition Law

3rd Tower, 4th Floor 

The adoption of the Corporate Sustainability Due Diligence Directive (CSDD) requires in-scope companies to identify, prevent, and mitigate human rights and environmental harms across their operations and value chains. Meeting these obligations under the CSDD often necessitates collective action such as sector-wide emissions standards, joint R&D in low-carbon technologies, or coordinated supply-chain due diligence. Yet arguably, such collaboration agreements can fall within the ambit of Article 101 Treaty on the Functioning of the European Union (TFEU) which prohibits agreements that restrict competition in the EU's internal market. This regulatory tension places companies under conflicting pressures to cooperate in pursuit of sustainability while remaining wary of competition law enforcement.

Recent policy interventions, notably the European Commission's revised Horizontal Co-Operation Agreements Guidelines and the UK Competition and Markets Authority's Green Agreements Guidance aim to address this tension, and they signal a gradual shift towards recognising that sustainability benefits can constitute legitimate efficiencies under competition law. However, substantial uncertainty remains over the extent to which companies may coordinate their efforts to comply with CSDD-driven obligations without infringing EU competition rules.

Against this backdrop, this paper examines the evolving interaction between competition law and corporate sustainability, highlighting the friction between short-term competitive dynamics and the long-term public interest in sustainable development. It argues for a recalibration of EU competition law that embeds sustainability objectives more explicitly in the assessment of agreements' competitive effects, thereby enabling necessary collaboration to address environmental and other social challenges.