Middle East and Africa

Horizontal Agreements in the Environmental Context: In 2020, the OECD issued a paper that discusses whether competition policy should be influenced by sustainability. The 2020 paper follows the OECD's 2010 paper, which considers, from national perspectives, the interaction between horizontal agreements with environmental goals and competition law policies.

The 2020 paper also analyses the substantive application of competition law to sustainability issues by exploring the extent to which competition law can be interpreted in a way that fosters or limits sustainability initiatives. In addition, Australia and New Zealand, Germany, Greece, Lithuania and the Netherlands have submitted contributions to this discussion. The OECD's 2020 paper provides a thorough introduction to the state of play of sustainability in the context of competition law. It encourages agencies to be clear about their objectives and priorities in order to provide clarity on how sustainability fits into competition law, with formal and informal guidance emphasised. It also examines approval procedures, sandboxing, admissible evidence, capacity, fining, and international co-operation as possible measures to further sustainable goals. In December 2021, the OECD roundtable assessed these issues again and published a follow-up paper specifically on environmental considerations in competition enforcement. Additionally, the 2022 OECD Competition Open Day addressed, inter alia, Green Innovation. In December 2022, OECD Global Forum on Competition will discuss the goals of competition policy including the question on whether "competition law and policy needs to adapt as a policy instrument to better accommodate socio-economic trends such as the rising importance of sustainability".

Antitrust Rules: Israel allows for an approval procedure where public interest, including environmental considerations, can be taken into account when deciding on restrictive arrangements (see the contribution of Israel to the OECD paper on Horizontal Agreements in the Environmental Context). In such cases, practice indicates that the positive effect on the environment must be significantly greater than the damage resulting from an anti-competitive agreement.

Position of the Israel Antitrust Authority: The Israel Antitrust Authority ("IAA") has also acted as an unofficial advisor in the legislative process for the regulation of the market for the collection of beverage containers, where it expressed a view that environmental legislation should be structured in a manner that promotes competition.

The IAA has refused to grant an exemption from the approval of a restrictive arrangement submitted by the Association of Food Industries of the Israel Manufacturers Association, in which they sought to coordinate the price of the deposit of beverage containers, and in particular those of 1.5 litres and up. The Association was concerned that a minimum deposit of ILS .30 per bottle, which is determined by the Environmental Protection Minister with the approval of the Knesset Economics Committee, was insufficient to meet the collection targets set under law. The IAA denied the request and determined that granting the exemption would allow the association to set a deposit while considering the profit considerations of the association members, which could place a greater burden on and harm consumers, leading to an increase in prices and in beverage collection costs. In addition, coordinating high deposit fees may serve large manufacturers but detriment the interests of small manufacturers. (See OECD Annual Report on Competition Policy Developments in Israel 2021)

Public interest provision in South African Competition Law: South Africa was one of the first countries to adopt a public interest provision in its competition law in 1998. Public interest considerations will feature during the assessment of mergers and can also come into play in exemption applications; however, the factors considered in each context differ slightly.

In the aftermath of apartheid, the regulator created an exemption from the horizontal prohibited practices provisions of the Competition Act for inter alia "firms controlled or owned by historically disadvantaged persons ("HDPs") to become competitive". However, South African law does not currently expressly provide for a similar exemption in respect of sustainability. Thus, firms cannot rely on the benefits that their collaboration on sustainability initiatives would generate a basis for an exemption. Such conduct would still be assessed under section 4 of the Competition Act (i.e. horizontal restrictive practices, which notably include several per se prohibitions).

In the context of merger control (where public interest considerations are most frequently encountered), the Competition Act sets out five public interest grounds. The Competition Act requires the competition authorities, on a stand-alone basis, to consider whether the transaction can or cannot be justified on substantial public interest grounds. Thus, it is possible that a pro-competitive transaction could be prohibited if it is found that the transaction would have a substantial negative effect on the public interest. Conversely, a transaction that harms competition can be approved if it is determined that it will have a sufficiently positive public interest effect.

Environmental sustainability as a factor in merger control reviews: Even though the law does not expressly refer to environmental sustainability, the South African competition authorities have seemingly interpreted one of the five public interest factors, namely the "Effect on particular sector or region" to include environmental sustainability goals. By way of example, in the Competition Tribunal's decision in the Air Liquide merger and Sunside acquisitions, environmental sustainability goals were looked upon favourably from a public interest perspective.

The Air Liquide merger concerned an acquisition by Air Liquide Group (a supplier and producer of industrial and specialty gases) of 16 air separation units owned by Sasol South Africa Ltd. The air separation units separate atmospheric air into nitrogen and oxygen and are used to produce both industrial and speciality gases. The merger was approved subject to the commitment to substantially reduce the carbon emissions associated with air separation units within ten years of the merger implementation date. This should be done by initiating, amongst other reduction strategies, a renewable energy procurement process aimed at procuring an aggregate amount of up to 900 MW of renewable energy.

The Sunside acquisitions merger concerned the acquisition by the Heineken Group, through Sunside acquisitions, of a controlling interest in NBL Investment Holdings and the flavoured alcoholic beverages, wine and spirits operations of Distell in South Africa, Namibia and select markets across sub-Saharan Africa. The merger was approved subject to competition and public interest-related conditions. This included for companies to continue to accelerate the sustainability efforts of Distell and Heineken South Africa inter alia to protect the environment. As such, Sunside Acquisitions committed to implementing (amongst others) a carbon neutrality initiative, aiming for net zero emissions in production by 2030 and carbon neutrality across the value chain by 2040.

Concepts such as environmental sustainability have only recently entered the South African competition law lexicon and are thus largely untested. However, it is anticipated that these considerations may become more prominent in the future. For the time being though, they are likely to play a significant role in unique cases only such as the Air Liquide and Sunside Acquisitions mergers.

Guidelines on the Assessment of Public Interest Provisions in Merger Regulation: The Guidelines list "impact on regional sustainability" as one of the factors to consider when the Competition Commission assesses the likely effect of a merger on a particular industrial sector or region. The definition of "sustainability" for these purposes is typically considered from an economic perspective only, although in the recent decisions (see above), the Competition Tribunal considered in its analysis the impact of the merger on the environment and imposed conditions to mitigate such impact.

Notably, the revised draft public interest guidelines from 2023 state that the Competition Commission will consider the effect of the merger on inter alia environmental sustainability when it assesses the likely effect of the merger on a particular industrial sector or region. The draft guidelines list "the effect of the merger on the environment (e.g. pollution, increased carbon emissions, etc.)" as one of the factors to consider as part of this assessment.