The pitfalls of not considering Competition Law when thinking about Transnational Sustainbility Governance

Competition law regimes are generally aimed at limiting cartel activities with the goal of maintaining market competition and enhancing consumer welfare. Competition law thus prohibits agreements between companies that negatively impact price, production or innovation. As supply chains are often transnational, inter-firm agreements that relate to sustainability goals have effects in many countries and may run counter to cartel prohibition. In the EU and in the USA (through different legal mechanisms), inter-firm agreements can nonetheless be allowed when the benefits to consumer welfare outweigh the possible negative effects, but this is difficult to apply to non-economic or long-term effects.
Competition law regimes are thus a part of the complex mechanisms governing sustainability transitions. But currently competition law regimes can have a limiting effect: their primary aim is not one of fostering sustainability and the two discourse are separate. This means that competition law may hinder inter-firm sustainability agreements and thus limit the effectiveness of transnational sustainability initiatives. To obtain a more seamless web of sustainability governance, some form of accommodation, or balancing, needs to be achieved. In this paper, I will focus on European competition law and show the differences in underlying values and principles, how inter-firm sustainability agreements can limit competiton, and how balancing could be shaped.