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World Economic Forum

Combatting climate change and driving digitalization without falling foul of antitrust rules

Combatting climate change and driving digital transformation of traditional industries are two key challenges of our times. Many industries are working hard to achieve the Paris Agreement climate goals, but with simultaneous population and economic growth and hence increasing demand for certain products, that is becoming ever more challenging. For example, due to global population growth and expansion of the middle class, it is expected that demand for chemicals and materials will quadruple by 2050. No company can address these challenges alone, industry-wide approaches and collaborations are required, and some have already been initiated, such as the World Economic Forum's initiative on Collaborative Innovation for Low-Carbon Emitting Technologies in the Chemical Industry. The same is true for transforming traditional industries to meet the challenges and expectations of the digital age, such as in the area of autonomous driving. Advanced driver assistance and ultimately autonomous driving will reduce accidents and hence save more lives, lead to less pollution from traffic, increase the value of the time spent in a vehicle, etc. Coming up with joint standards for data usage and software integration will be critical to the advent of autonomous driving and OEMs, suppliers and software companies will need to work together to bring advanced driving solutions to the market as quickly as possible.

While joint initiatives by companies active in the same industry are much needed, any collaboration between rivals needs to take into account the antitrust rules. "Green labels" are becoming important distinguishing factors in customers' perceptions, and deciding to invest in one technology or to follow one specific standard always has the flip side of not investing in or following another. The European Commission is currently pursuing German automotive OEMs, arguing that by agreeing on the size of AdBlue tanks and delaying the introduction of ‘Otto' particle filters, they have not lawfully agreed on legitimate technical standards to achieve certain environmental goals, but reduced innovation competition between them. This view blurs the lines between legitimate technical standard setting and hard core cartel conduct, and leaves companies in great doubt as to the boundaries of industry-wide collaborations to set standards and advance specific promising but costly technologies, e.g., in an effort to combat climate change and advance digital transformation. 

If rivals agree one advancing one technology, are they at the same time (unlawfully?) excluding or delaying the introduction of other technologies? By discussing with competitors that a company prefers to push one type of production technology or R&D, is it (unlawfully?) disclosing part of its competitive strategy? Should there be safe harbors for industry collaborations with the objective of reducing carbon emissions or advancing digital transformation, and should market shares of the collaborating rivals be irrelevant in such cases? Clearer guidance from the international community of antitrust enforcers is called for here. An ICN working group would seem like a good option, and the European Commission's upcoming review of the Horizontal Block Exemption Regulations and Guidelines should also endeavour to provide clearer guidance on such collaborations.

For further information on the chemicals initiative please visit the World Economic Forum's website

 

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