Green Antitrust: Friendly Fire in the Fight against Climate Change

Abstract

The green antitrust movement aims to increase sustainability efforts by allowing restrictions of competition. Yet the economic evidence so far points to more, not less, competition as the right stimulus for inducing sustainability efforts. Incentives to produce more sustainably are stronger when firms compete than when they are allowed to make sustainability agreements. This is also true when firms are intrinsically motivated to promote sustainability. It is not good policy to relax the general competition rules in order to accommodate the rare genuine sustainability agreement. However well-intended, green antitrust risks damaging both competition and the environment. It will suppress the gathering market forces for companies to produce more sustainably, overburden competition authorities, invite abusive cartel greenwashing, and give the part of government that should promote sustainability further excuse to shun their responsibility for designing proper regulation.