In an era marked by rapid technological advancements and global interconnectedness, the imperative for sustainable development has never been clearer or more urgent. The global community, under the aegis of international accords like the Paris Agreement and the United Nations’ Sustainable Development Goals (SDGs), has acknowledged the necessity of a sustainable approach to economic growth.
In this context, it is crucial to deliberate on how competition policy can serve as a catalyst for sustainability development, thus ensuring not only fair markets, but also the longevity and health of our economy, society, and planet.
Convergence of interests
At first glance, the objectives of competition policy — to prevent anti-competitive practices, to ensure consumer welfare, and to foster an environment conducive to innovation — may appear to run parallel to the goals of sustainable development. However, upon closer examination, one finds that these objectives are not only intersecting, but are also mutually reinforcing. Sustainable development calls for responsible business practices that incorporate the long-term welfare of consumers and the environment which, in turn, can be enhanced by a robust competition policy.
Competition & Sustainability
Competition can be a key ally in the pursuit of sustainability by serving as a powerful mechanism in promoting sustainability across various sectors. When markets work correctly, and when informed consumers demand sustainability, competition encourages firms to develop and adopt practices that not only benefit the environment, but also drive economic growth and social well-being.
By encouraging innovation, efficiency, and development of new technologies, competition can generate an ecosystem which can lead to more sustainable practices. In the contemporary marketplace, competition is not just a contest over who can sell the most products or services; it’s increasingly about who can produce and operate the most sustainably. Competitive dynamics are proving to be a crucial driver in promoting environmental stewardship, social responsibility, and economic longevity, the three key pillars of sustainability.
Thus, competition policy can drive the development of new, more efficient, and greener technologies. It can accelerate the transition to a circular economy where waste is minimised, and resources are reused, thereby, promoting the SDGs’ aim to “ensure sustainable consumption and production patterns”.
Moreover, competitive markets can democratise the access to sustainable goods and services. As competition reduces costs and improves quality, sustainable products become more accessible, challenging the notion that going green is a luxury only a few can afford. This alignment of market dynamics with environmental goals can be a powerful engine for broadening the consumer base for sustainable products, thus creating a virtuous cycle of demand and supply for sustainability.
Ensuring a just transition
As we move towards greener business practices, it is imperative to ensure that this transition is just and inclusive. There is a risk that stringent environmental regulations or sustainability-driven market changes could disproportionately affect small and medium enterprises (SMEs) or certain consumer groups. Competition policy must be vigilant to ensure that the evolution towards sustainability does not lead to market monopolisation by a few large players who can afford to invest in sustainable practices, thus disadvantaging SMEs or leading to increased prices that harm lower-income consumers.
Global collaboration
The global nature of both competition and environmental challenges necessitates international cooperation. Harmonising competition policies with a focus on sustainability can prevent a regulatory race to the bottom and ensure that firms cannot exploit more lenient jurisdictions to engage in unsustainable practices.
Through forums like the International Competition Network (ICN) and the Organization for Economic Cooperation and Development (OECD), competition authorities can collaborate to develop best practices and unified approaches to sustainability and competition policy.
Future-proofing competition law
Competition law and policy can be designed to incentivise firms to adopt sustainable practices. This could include acknowledging sustainability efforts in the assessment of market power and anti-competitive behaviour, or even considering environmental benefits as a factor in merger evaluations. Such a stance would send a strong message to the market: sustainability and competitiveness are complementary, not contradictory.
Nations, with their unique challenges and opportunities, must future-proof their competition laws and policies to accommodate the imperatives of sustainability. This could mean incorporating explicit references to sustainability within their respective Competition Acts, thus giving the agencies a clear mandate to factor in sustainability considerations in their decisions. If the legal and policy framework already allows flexibility to the agencies, albeit without explicit mandate, they must waste no time in recalibrating their competition assessment protocols and approaches, to account for sustainability in competition assessment.
The challenge for competition authorities, however, will remain to discern when collaboration between businesses can be allowed to achieve sustainability goals. The sharing of best practices, joint research ventures, and setting industry standards for environmental performance can be critical for sustainable development. Yet, these collaborations need to be carefully scrutinised to ensure they do not mask anti-competitive agreements that could undermine market competition and consumer interests.
Indian competition law exhibits a degree of future-proofing through its flexible and broad principles that can accommodate evolving market conditions and business practices.
By potentially allowing for the integration of sustainability frameworks, it aligns with modern conceptions of economic development that place a premium on environmental and social considerations, alongside traditional economic metrics. However, the actual manifestation of these principles in practice requires careful navigation to ensure that the law continues to be relevant and effective in a rapidly changing world.
New reality
The quest for sustainable development is reshaping global priorities, and competition enforcement and policy must adapt to this new reality. By integrating sustainability considerations into competition assessments, fostering innovation, incentivising sustainable practices, and engaging in international dialogue, competition authorities can ensure that markets not only function efficiently, but also contribute to the health of our planet and society.
As the world stands at the cusp of this new age “green revolution” engendered by sustainability considerations, competition policy must not only protect the market, but also guide it towards a sustainable future. The competition agencies, in their commitment to fostering a competitive and fair marketplace, recognise their role in this transition and must ensure that competition and sustainability development go hand-in-hand. This commitment will be crucial as nations strive to achieve not just economic growth, but growth that is inclusive, sustainable, and resilient for generations to come.