Sven Giegold

Green Action Plan: Towards a European competition policy based on the Green Deal

Dear friends, dear interested,

In order to achieve our climate protection goals, all key policy areas must play their part. In the EU, this also includes competition policy. It makes a huge difference whether state aid is used for the expansion of an airport or for the green transformation of industry. But under the current competition rules, environmental protection hardly plays a role. This must change urgently. The EU Commission has also recognised this and is currently working on a fundamental reform of EU competition policy and state aid rules in the spirit of the Green Deal. Against this background, I have drawn up a Green Action Plan for a sustainable competition policy, which I would now like to present to you in its final version. I look forward to receiving your feedback.

This action plan has come a long way. In February this year, I presented the key points in a panel discussion with Competition Commissioner Margrethe Vestager. The final touches were put on the Action Plan on Tuesday 13 July at a webinar with experts from the Commission, civil society and academia. Over the past months, we have received a lot of valuable feedback, for which I would like to express my gratitude once again. For all those who would like to watch the one-hour expert discussion (again), here is the link to the recording of the webinar.

EU competition policy essentially comprises four sub-areas: Firstly, antitrust law, which is concerned with preventing price agreements between companies or the exploitation of a dominant market position. In the area of merger control, distortions of competition are to be prevented before they arise: if there is a danger that the merger of two companies will be bad for competition, then the EU Commission can prevent this merger or only approve it subject to conditions. State aid, in turn, must not distort competition and trade between member states. The big question is which aspects are taken into account when it comes to the compatibility of state aid with the European Single Market. I advocate that competition rules must not run counter to statutory climate and biodiversity objectives, more on this in a moment. Finally, the fourth strand covers the so-called “services of general interest”. These are basic services such as health care, public transport or the postal service, but also the judiciary or social services, to which competition rules apply only to a very limited extent, if at all.

The Action Plan focuses to a large extent on the issue of state aid, because the use of taxpayers’ money has an important environmental-social steering effect. Whether we use taxpayers’ money to support the construction of a new pipeline for fossil gas or citizen-owned wind turbines will determine our energy supply for decades. According to Commission figures, state aid across all EU member states totalled €135 billion in 2019 (excluding aid to agriculture, fisheries and railways). That is why it is so important to take a new direction now. The following principles should therefore be firmly anchored in the EU Commission’s new competition rules:

1. EU competition policy must be in line with the Union’s climate goals. The urgently needed protection and preservation of biodiversity must also be taken into account. In other words, competition policy must under no circumstances have harmful effects on the climate and the environment. Ideally, it will allow us to achieve our climate goals faster and at lower cost to society. Our political ambition should be not to spend another cent of taxpayers’ money on predictable stranded assets. All state aid must be screened for its environmental impact. Environmentally harmful subsidies must no longer be allowed in our European single market: The purpose of the European Single Market is to ensure prosperity and sustainable development. But climate change and the loss of biodiversity caused by our economic activities threaten our prosperity. We need to change course here as soon as possible.
2. Socially and ecologically fair prices must be the goal.
a. On the one hand, this means: climate-damaging subsidies for fossil energies and their infrastructures must come to an end. Climate science tells us very clearly how quickly we must reduce our greenhouse gas emissions. We have no more time for investments in so-called bridge technologies like gas. State aid to support the coal phase-out must be demonstrated to be the most cost-effective way to achieve environmental goals, again taking into account all costs and non-priced-in impacts, as well as the evolution of the CO2 price.
b. On the other hand, this means that competition policy must support the emergence of fair prices. This means that state aid must not counteract the emissions trading system. Furthermore, there is room here for so-called “carbon contracts for difference”. This allows member states to enter into specific forms of cooperation in order to reimburse companies with sustainable business models for any additional costs that cannot be realised on the market. In this way, structural barriers to the green transformation can be overcome.

3. The foreseeable impact of mergers and acquisitions on public goods must be taken into account: Merger control should actively include environmental concerns: Acquisitions like Bayer/Monsanto must not be accepted by the Commission in the future, given the foreseeable negative impacts on the environment and public health.

4. Citizens, businesses and civil society must be involved in competition policy.

a. The Green Deal promises to put citizens at the centre of the energy transition. In order to keep this promise, energy cooperatives must be supported in the best possible way. They must not be subject to the same requirements as large companies: Energy cooperatives for renewables must be exempt from tendering procedures, especially if they operate comparatively small energy production plants.
b. If companies join forces to set minimum standards with regard to environmental and social conditions in third countries, they should be allowed to do so. So far, antitrust law sets too narrow limits here. The environmental and social benefits of companies jointly setting minimum standards should be given greater weight here.
c. Civil society must have its say: Citizens and non-governmental organisations must be able to appeal against state aid decisions if there is a justified suspicion that they violate environmental law.

5. The digital age must become greener, and here too EU competition policy can play an important role: Large digital companies are de facto infrastructure providers in our digitalised societies. Of course, open and fair competition should be encouraged wherever possible. However, network effects are regularly so important that the benefits for consumers are best covered by monopolies or oligopolies. That is why we need permanent supervision of these infrastructures by an EU digital supervisor. This permanent supervision should also have an environmental dimension. We cannot ignore the fact that some of these systems run on algorithms that consume excessive amounts of energy and electronic resources. Highly used algorithms and their data sets should also comply with the objectives of the Green Deal.

EU competition policy for our common future.

The good news is: we do not have to choose between the competitiveness of our economy and the protection of our livelihoods. On the contrary: fair and open competition is a powerful tool for the green transformation. The ecological transformation of our economy is central to our well-being and prosperity in the future. For this, we need prices that are socially and ecologically just. Only on the basis of prices that come close to the real costs of an economic activity for nature and society can competition be truly fair. Achieving this fairness with the necessary support of competition policy should be our political aspiration!

The entire competition paper can be read here.

Unfortunately, the role of the European Parliament in shaping competition policy has been very limited so far. The admissibility of state aid, for example, is governed by a series of guidelines issued by the EU Commission. The drafting of these guidelines is the sole responsibility of the Commission. When it comes to legislation in the field of competition, the European Parliament is usually only involved in the consultation procedure. The Commission and the Council have the upper hand in this procedure, because although the Parliament must be asked for its opinion, the Parliament’s position must only be taken note of, i.e. it is not binding.

In its annual reports on competition policy, the European Parliament has repeatedly called for its say to be extended. In order to introduce the normal legislative procedure in the field of competition policy, the EU Treaties need to be amended. I am committed to this, because we need full parliamentary co-determination for these important directional decisions.

Until then, one of the things we can do is to participate in the Commission’s public consultations on the revision of the State Aid Guidelines. The revision of the State Aid Guidelines on climate, environment and energy are particularly relevant to the Green Deal. The public consultation on the revision of these guidelines is currently underway. Individuals, organisations and companies can still submit their contributions until 2 August at this link. I will be submitting the Action Plan there and will also continue to press for the implementation of these points in discussions with Commissioners. So that taxpayers’ money flows into our future!

With green European greetings

Sven Giegold

The action plan “European Competition Policy Ready for the Green Deal” can be downloaded here:

Link to our webinar Europe Calling “Reforming EU Competition Policy for the Green Deal” of 13 July:

Online event of the European Commission “Competition policy contributing to the EU Green Deal’ in February 2021′, contribution on green competition policy from minute 12:55:

Commission report on state aid in the EU in 2019: