WWW.FRONTIER-ECONOMICS.COM - HOW SHOULD COMPETITION POLICY HELP SAVE THE PLANET?

1 See for example, guidelines issued by the European Commission, the UK Competition and Markets Authority and Austria’s BWB 2 See for example, the EC Guidelines on the application of Article 101(3) TFEU, which state that ‘[t]he aim of the Community competition rules is to protect competition on the market as a means of enhancing consumer welfare and of ensuring an efficient allocation of resources. [...] Prevention The second way of shifting the economy into the sustainable zone is preventative: by limiting the quantities of a product or service produced, we can directly prevent damage to the environment and the depreciation of natural capital. [...] The price or quantity would be calibrated to limit consumption of the product or service to the sustainable level, the level at which resource use and emissions are equal to the Earth’s rate of regeneration and absorption. [...] The magnitude of this cost is determined by: ■ the reduction in quantity produced of the good or service which is necessary to achieve in order to reach the efficient market outcome; and ■ again, the price elasticity of demand. [...] When presented with a proposed agreement that is mitigative in nature, competition authorities should pay close attention to the changes in production process being proposed, including the costs of any investments required, the likelihood of these measures proving successful in boosting the sustainability of the market (compared more direct preventative measures) and the need for the businesses co.