Sustainability and Antitrust in Greece

I. Introduction

The urgency of addressing environmental challenges has led to a growing focus on the intersection of sustainability and competition law in legal discourse. The achievement of sustainability targets often requires cooperation between undertakings, through agreements or concerted practices. However, such initiatives may potentially lead to antitrust risks and concerns that are not always obvious to the undertakings involved. The crucial question is when such agreements should be exempted or excluded, even, from antitrust scrutiny according to the European Union and Greek competition law.

At European Union level, the European Green Deal has been constituted as a fundamental element of the sustainability agenda of the Union, as it aims at making Europe the first climate – neutral continent by 2050. The EU has also signed the Paris Agreement which was adopted at the UN Climate Change Conference (COP21) in Paris, France, on 12 December 2015 and the UN Sustainable Development Agenda (“Agenda 2030”). Greece is also bound to execute the European Green Deal. The Green Deal promising goal has led the EU executive to reassess its competition policy perception, especially by updating recently the Guidelines on Horizontal Cooperation Agreements (“Horizontal Guidelines”) and on Vertical Restraints, as well as the Vertical Block Exemption Regulation. Under these guidelines, it is now clearer how to assess sustainability agreements and how they interrelate with the maintenance of effective competition in the market.

At national level, the Greek legislation, and especially Law 3959/2011 as in force (“Greek Competition Act”), in alignment with EU legislation, prohibits: agreements and practices which restrict competition (Article 1 Greek Competition Act), the invitation to conclude a prohibited collusion and the announcement of future pricing intent with regard to products and services between competitors (Article 1A Greek Competition Act) and the abuse of a dominant position (Article 2 Greek Competition Act). Nonetheless, exemptions can be made for agreements or practices which align with overall public policy objectives, such as the protection of the environment on the basis of Article 1 (3) Greek Competition Act [equivalent to Article 101 (3) of the Treaty on the Functioning of the European Union (“TFEU”)]. In this context, it appears that the Hellenic Competition Commission (“HCC”) is driving towards an innovative path in depicting ways to assess sustainability initiatives. The Staff Discussion Paper on Sustainability and Competition (“Staff Discussion Paper”) made in July 2020 by the HCC, describes the embodiment of sustainable objectives into the objective of competition laws. This paper makes a clear statement towards the recognition of the significance of sustainability into market practices.

In order to present the interaction between sustainability and antitrust legislation in Greece, the present article, first, analyses the legal framework that governs the exemption/ exclusion of sustainability agreements from antitrust law, with an emphasis on exemptions which relate to public policy objectives, the doctrine of objective necessity and the role of standardization agreements in promoting sustainable practices (see below under “Section II”); the second part of the present article provides an overview of the innovative tools which have been adopted by the HCC for the assessment of the compatibility of sustainability agreements with competition law practices (see below under “Section III”); finally, the third part presents the ex-ante and ex post evaluation of sustainability agreements through a presentation of its relevant cases practices (see below under “Section IV”).

The analysis of the relevant legal provisions, case – studies and regulatory developments, highlights that antitrust law in Greece (with the appropriate tools) can support businesses in their efforts to pursue sustainable development, while not compromising the preservation of free competition.

II. Exclusion of Sustainability Agreements Practices from the Scope of Antitrust Legislation

The following sections present all possible exceptions from antitrust scrutiny, deriving from the regulatory context that is in place in Greece, in combination with the findings of the Staff Discussion Paper (made by the HCC in July 2020) as well as the EC Horizontal Guidelines. It is preliminary noted that the Staff Discussion Paper makes “suggestions” and presents “possible approaches” to address sustainability concerns; however, its findings are consistent with the EC Horizontal Guidelines, as well as the Guidelines on Vertical Restraints and the Vertical Block Exemption Regulation.

Exclusion mandated by regulation and purely environmental protection activities

Under article 101 TFEU/Article 1 of the Greek Competition Act, certain agreements can be excluded from antitrust scrutiny. National or European regulations can require the execution of sustainability agreements for the purposes of achieving environmental and climate goals. For instance, the European Green Deal sets binding environmental goals to be achieved by businesses and in this respect, requires that the said businesses proceed to collaboration agreements to achieve the said goals. The Staff Discussion Paper made by the HCC, highlights and encourages the above. According to the HCC, when sustainability agreements are necessary for the accomplishment of public interest goals relating to climate change, such agreements can be justified under competition law. Specifically, the HCC emphasizes that sustainability measures imposed by regulatory frameworks should be viewed in the context of broader public policy goals, potentially excusing their impact on competition. The same is depicted in the EC’s Guidelines.

Further, as regards purely environmental protection activities, the HCC notes that sustainability agreements which focus exclusively on environmental protection may be exempted from competition law enforcement if the cooperation is necessary for the achievement of such environmental goals. According to the HCC, such agreements should be evaluated on the basis of their environmental benefits, and they should not exceed what is necessary for the execution of the intended environmental goals. This is reinforced by the European Commission, which accepts a less strict assessment of such agreements where they aim at environmental protection and align with the overall policy objectives of the Union.

Exclusion of ancillary restraints or of objectively necessary practices

Another key reason for exclusion both for EU competition law as well as Greek competition law, is when sustainability agreements are considered as ancillary restraints, necessary for the effectiveness of a broader regulatory framework.

Ancillary restraints usually constitute agreements that corollate directly with the main objective of a legitimate contract. This objective could include, for example, the sale of sustainable technologies or products. In particular, according to the HCC, agreements which are ancillary to the main aim of meeting regulatory obligations, or meeting sustainability objectives, may fall outside the scope of Article 101 TFEU/Article 1 of the Greek Competition Act.

Further, according to the objective necessity doctrine, certain practices may be excluded from competition law assessment, when they are considered objectively necessary for the achievement of one specific goal. According to the HCC, this is particularly important when individual action would not be sufficient for the accomplishment of public sustainability goals, such as reduction of carbon emissions or the development of technologies which are friendly to the environment. Similarly, the EC Horizontal Guidelines emphasize that undertakings can justify their cooperation under the objective necessity doctrine, on the condition that such cooperation is proportionate and necessary for the achievement of public policy goals.

Standardization agreements

In the context of sustainability, standardization can play an important role. For instance, agreements between companies for setting common standards for products or manufacturing methods which are friendly to the environment, may be seen as contributing to technical evolution, which in turn benefits its consumers, society and the environment. If such agreements aim at securing quality, security and/or environmental sustainability of a product, they can be considered as contributing to public policy objectives long-term.

According to the HCC standardization agreements can play a significant part in sustainable development, especially when contributing to the adoption of more sustainable practices, such as energy efficiency or waste reduction. Despite that, the HCC rings a bell to companies that intend to implement such practices. Such agreements should not be excessively restrictive and must adhere to proportionality when it comes to achieving the environmental benefits that they aim to achieve.

III. Exception of Sustainability Agreements

The granting of an exception to a sustainability agreement under Article 101(3) TFEU/Article 1(3) of the Greek Competition Act would follow the usual analysis, slightly specialized (see below sections under “3.2” and “3.3”), while special procedural tools have been proposed to respond to sustainability considerations (see below under “3.4”).

Substantive tools: specialization of exception conditions under Article 101(3) TFEU/Article 1(3) Greek Competition Act

Under Article 101(3) TFEU/Article 1(3) of the Greek Competition Act an agreement/ practice that falls within the scope of Article 101(1)/Article 1(1) of the Greek Competition Act is exempted from the prohibition if it (i) contributes to improving the production or distribution of goods or to promoting technical or economic progress, (ii) allows consumers a fair share of the resulting benefit, (iii) does not impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives; and (iv) does not afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.

As national case law has not yet contributed to the interpretation of these conditions with regard to sustainability, they are considered in relation to the case law of the EU courts and the Staff Discussion Paper. As these sources indicate, the aforementioned conditions may be slightly shaped in a different manner when sustainability elements are taken into consideration, as follows:

(i) Regarding the first condition, it should be noted that the European Commission in the past has taken into consideration environmental concerns. This broader approach has also been endorsed by EU courts. As is applicable during the examination of this condition, there should be a causal link between the agreement and the efficiencies that sustainability generates. Also, the benefits that the efficiencies offer should be considered for all users. Therefore, it is essential to find the proper tools that will allow us to assess sustainability benefits.

(ii) One issue that arises under the condition of “fair share of resulting benefits to consumers” is how to define the scope of consumers. From the EC Horizontal Guidelines and the EU case law it appears that the emphasis is on consumers of the products in the relevant market and not on the individuals of the particular consumer group. Moreover, the notion of “fair share” for users is interpreted widely, therefore sustainability concerns can be taken into consideration, without being limited to financial benefits only.

As per the first two conditions, apart from the Staff Discussion Paper, the HCC jointly commissioned with the Netherlands Authority for Consumers and Markets (“ACM”) a technical report (“Technical Report”). The aim was to use tools derived from environmental economics, in order to understand the type of quantitative assessment that could allow the identification of broader social benefits, including environmental sustainability elements.

Specifically, the Technical Report presented various methods that could be used for valuation. Such methods include:

- Methods for environmental valuation using case-specific data, based on market choices (e.g. analysis of preferences based on actual purchases of environmentally friendly products) or hypothetical choices/stated preferences;

- Valuation methods for the estimation and aggregation of case-specific impact (e.g. estimate welfare through the impact on life expectancy);

- Valuation using data from existing studies and databases (e.g. adjusting willingness to pay to various demographics or using environmental prices concerning all health-related costs from the emission of a substance in a country);

- Valuation derived from stated policy objectives (e.g. use of CO2 prices from the EU Emissions Trading System).

Finally, as the Technical Report notes, any effects of restrictions of competition that lead to reduction of consumer surplus should be taken into account during the measurement of sustainability benefits.

(iii) Thirdly, the agreement shall not be more restrictive than necessary. The indispensability requirement is not affected significantly during the assessment of a sustainability agreement. The company is obliged to demonstrate that the sustainability agreement is necessary to achieve the proposed benefits, i.e. that the envisaged goals would not be achieved sufficiently without the agreement.

(iv) the last condition, of not eliminating the competition in the relevant market, is also not affected significantly. Sustainability benefits should not lead to elimination of competition regardless of the extent of the efficiencies that are generated. However, as the HCC points out in its Staff Discussion Paper, problematic cases could arise, e.g. a binding inter-company agreement implementing the United Nations Sustainable Development Goals and covering the whole industry could pose a problem if the companies are not allowed to compete on other parameters of competition.

Regarding vertical agreements, an indicative example where sustainability may appear and be considered for an exception is, in the context of single branding, when a supplier may employ non-compete obligations in order to address a hold-up problem for investments that pursue sustainability objectives. For example, an energy supplier wishes to proceed to a long-term investment for a renewable energy plant, on the condition that sufficient buyers will commit to purchasing energy for a longer period. The Commission finds such vertical agreements to be pro-competitive and thus they may benefit from Article 101(3) TFEU exception, if the supplier’s investment has a long depreciation period that exceeds the 5 years.

In the past, the HCC has not granted exceptions under Article 1(3) of the Greek Competition Act based on sustainability criteria. The HCC had adopted a restrictive interpretation of the conditions for the granting of an exception, such as in the case of Decision 512/VI/2010 with regard to quality-related efficiency gains that would justify the imposition of minimum fees by the Technical Chamber of Greece. However, in these cases the HCC has considered positively broader elements, such as granting an exception for an exclusive supply agreement of the Public Company of Electricity, based on the direct benefits that consumers would enjoy from security in energy supply (Decision 457/V/2009). Additionally, in another instance the HCC cleared with commitments the acquisition of Piraeus Port Authority SA by COSCO on the basis of the benefit for the public sector that arises from economic benefits (Decision 627/V/2016). Taking into consideration the above-mentioned developments this is now expected the HCC practice to be further developed.

Procedural tools: comfort letter and HCC Sandbox

Apart from the aforementioned substantive tools that may assist undertakings in quantifying sustainability benefits, the HCC has introduced procedural tools as well, to facilitate the assessment of the permissibility of an intended activity prior to its implementation.

First, following in the footsteps of the European Commission, the Greek legislator has also introduced the provision of “comfort letters” in January 2022 (Law 4886/2022). Comfort letters may be issued either because the conditions of 101(1) TFEU/Article 1(1) of the Greek Competition Act are not met, or because the conditions of 101(3) TFEU/Article 1(3) of the Greek Competition Act are met. Comfort letters are considered as a useful tool for the assessment of business plans by undertakings that wish to achieve sustainable development targets. This initiative again takes into consideration the small size of most Greek undertakings and their need to acquire financial resources, while maintaining compliance with competition law.

The conditions for the granting of a comfort letter are as follows: (i) overriding public interest, (ii) actual uncertainty due to a novel or difficult to solve problem of competition law (e.g. practices that have not previously been examined by the HCC, the European Commission and EU or national courts), and (iii) the agreement/practice is of significant importance for the companies and the national economy.

The procedure is considered quite simplified, as it consists of an opinion issued by the General Directorate of Competition and the subsequent issue of a letter of the HCC President within 20 days from the submission of the opinion. However, the comfort letter is not binding for the HCC, which may reexamine in the future the previous comfort letter. In addition, the comfort letter is valid as long as the factual background on the basis of which the letter was issued has not changed.

In this context, it is useful to note that the notion of public interest covers goals of sustainable development dealing with the needs of current generations without endangering the future ones, the environment, society and economy. The United Nations Sustainable Development Goals are also taken into account. The HCC has also stated that it would be willing to examine the following as sustainable development goals: (i) protection of the environment and limiting climate change through reduction of CO2 emissions; (ii) achieving technological innovation by targeting sustainable development goals (e.g. smart cities); and (iii) defending and reinforcing the green transition of SMEs.

Second, the HCC has introduced the Sandbox, i.e. a platform that allows undertakings to send to the HCC initiatives that contribute to sustainable development. The HCC can assess the effects of these initiatives on competition and sustainable development. In case of a positive opinion, the HCC can issue comfort letters and allow the implementation of the initiative for a specific period of time and under the HCC’s surveillance, if concerns still arise. The HCC may also request market testing or impose further obligations, similarly to a commitments process.

The aim of the HCC is to allow small and medium companies (“SMEs”), which are often found in the Greek market, to implement ideas that they otherwise would not be able to but may lead to their economic development and the green growth of the economy. Moreover, the HCC acknowledges that the cost of an ex post intervention would be higher and could hinder further development.

The Sandbox covers both multilateral and unilateral conducts across horizontal or vertical levels. It will target initially specific sectors, such as energy, recycling/waste administration, industrial production of consumer goods, production and/or distribution of food, pharmaceutical products, healthcare etc. The assessment will be based on the applicable legal framework, as well as various Key Performance Indicators that concern sustainable development.

The HCC provides indicative examples, such as a practice where the six biggest super-markets decide to set standards for food producers that will adopt measures regarding the management and avoidance of food waste may be considered positively.

IV. When Sustainability Agreements Fall Under the Scope of Antitrust and Merger Control Provisions

Following the overview of the applicable competition law rules, this Section will focus on the enforcement side and particularly on specific cases where the HCC has taken into consideration sustainability.

When the HCC acts ex post: concerted agreements/practices, merger control and sustainability

Sustainability agreements clearly shall not constitute a vehicle for anti-competitive agreements/practices; sustainability agreements may still fall under the scope of application of Article 101(1) TFEU/Article 1 of the Greek Competition Act. In this context, the HCC under its inquiry and sanctioning powers (incl. requests for the provision of information and initiation of investigations, as well as the imposition of fines or remedies/commitments on a subsequent level, if an infringement is found) may tackle any doubts that arise ex post from a problematic sustainability agreement or practice.

Indicatively, in Decision No. 741/2021 the HCC found that ELTEPE, a company holding the sole license, as provided by the Greek State, for the management of waste lubricant oils, had foreclosed its competitors in the market for the operation of alternative systems of administration of waste lubricant oils. The HCC found that ELTEPE abused its dominant position (and de facto monopoly) through the inclusion of exclusivity clauses in contracts with companies of its own group, which hindered third companies from having access to oil supply resources, which they could use as raw material in the operation of their own facilities.

In this decision the HCC highlighted that, sustainability arguments can be brought forth as a defense for an Article 102 TFEU/Article 2 of the Greek Competition Act infringement; however, sustainability benefits should be analyzed as efficiencies that could set off the social cost of any anticompetitive effects. Moreover, the HCC stated that a sustainability defense could be justified in cases (i) where a dominant undertaking’s conduct can improve any sustainability issues and (ii) if there are no other less restrictive alternative solutions. In any event, this would be in line with the Greek Constitution and the State’s obligation to protect the environment or the State’s obligation to plan the country’s financial activities with the aim to secure the financial development of all sectors.

Nevertheless, ELTEPE’s argument that the clauses in question aimed at protecting the environment and ensuring the environmental targets of the country, was rejected. Specifically, the HCC found that ELTEPE did not provide sufficient evidence regarding the benefits for consumers and the increase in the efficiency in the administration of such oils. Eventually the HCC imposed a fine amounting to €111,600 on ELTEPE with regard to said infringement of Article 102 TFEU/Article 2 of the Greek Competition Act.

Finally, although the HCC does not seem to have substantially considered sustainability in the context of merger control, there has been a brief reference in a recent case (Decision No. 861/2024). However, the publication of the HCC’s decision is still pending.

Prevention of potential restrictions: the HCC Sector Inquiry regarding waste collection/recycling

The HCC can also prevent ex ante problematic behavior by identifying it early on, when proceeding to sector inquiries in sectors of the economy (article 40 of the Greek Competition Act).

In July 2021 the HCC launched a Sector Inquiry into the Waste Management and Recycling Sectors in specific categories of waste. The HCC acknowledged this sector inquiry was made inter alia with regard to the protection of the environment, tackling climate change, as well as the introduction of a production model in a circular economy and sustainable development.

The HCC aimed to clarify the following competition issues in the relevant sector: (i) bargaining power in each ecosystem of alternative management; (ii) structural links between players on a vertical and horizontal level; (iii) regulatory inconsistencies and barriers; (iv) other barriers to entry; (v) the development of coordinated or non-coordinated effects; (vi) the justification of certain practices based on effectiveness and public interest objectives, such as sustainable development; and (vii) the contribution of the existing market structure to the respective markets.

The HCC published on 23.07.2024 the Interim Report of said sector inquiry, that includes inter alia the following findings:

(a) the identification of several recycling channels, which included end-of-life vehicles, secondhand vehicle tires, waste of lubricant oils, battery and related waste, packaging waste, electrical/electronic equipment waste and waste from various construction sites. Each of these channels requires a license, to allow the creation of a System of Alternative Management. In this context, the HCC found that there are: (i) barriers to entry, e.g. difficulties to obtain and maintain the license, know-how requirements and ambiguous legislation; (ii) market power and concentration level, e.g. in some channels only one provider is active, contrary to other channels; (iii) potential effects on competition, e.g. in cases where only one provider is found, the substantial market power may lead to non-price abuse of dominance (refusal to cooperate with another provider or imposition of exclusive supply terms), or may lead to providers gaining unfair advantages due to the insufficient monitoring of the main providers.

(b) Another sector where the HCC found issues was waste recycling for ships. The provider that is responsible for the management of a port’s waste may impose exclusive cooperation terms on other providers for several years (average 7-10 years). Although the applicable legislation allows for a limitation of the number of providers that are active per port, the HCC is suspicious that this right is being exploited in Greece, in order to reinforce exclusive cooperations with specific providers, thus excluding competitors from this market. This exclusivity may also have a subsequent effect on price, quality of services, less investments in new technologies, insufficient provision of services to ships and difficulty controlling the providers’ activities.

V. Closing Remarks

The introduction of the updated EC Horizontal Guidelines has further shown the need for national competition authorities to consider sustainability as part of their competition law assessments. The HCC has been one of most active authorities that undertook related actions, in order to encourage and facilitate the adaptation and practical implementation of sustainability, such as with the Sandbox, while also the Greek legislator quickly introduced the possibility of issuance of comfort letter.

However, on an enforcement level, as shown above, HCC has only started to take into consideration sustainability as a way to justify a potentially anticompetitive conduct, in contrast to its previous narrower position. Nevertheless, even in these few cases positive elements can be found that indicate the HCC’s intention to truly consider goals of sustainable development. This is definitely a space to watch, as the HCC will be expected to increase its activities in this area.