INTRODUCTION

The concept of sustainable development, far from being a late 20^th century invention, emerged as early as 1713 when the Saxon mining administrator Hans Carl von Carlowitz published his seminal work Sylvicultura oeconomica. Confronted with widespread timber shortages that threatened both the mining industry and state finances, von Carlowitz formulated the foundational principle of nachhaltende Nutzung (“sustainable use”): forests must be managed so that “there is a continuous, steady and lasting utilisation”, in his words, cutting no more wood each year than can regrow, thereby preserving natural wealth indefinitely for ongoing economic benefit. The intergenerational responsibility to protect the environment was later enshrined in the 1972 Stockholm Declaration, and in 1987 the WCED (Brundtland Commission) provided the landmark definition of sustainable development. Sustainable, it said, is development ‘that meets the needs of the present without compromising the ability of future generations to meet their own needs.’ Although this definition is widely used, it’s lack of specificity leaves the “how” of sustainability largely up for interpretation. According to Robert Ayres, weak sustainability, rooted in the Brundtland Commission’s definition allows natural capital to be replaced by human-made capital as long as overall capital stock does not decline. It dangerously overestimates substitutability and overlooks the catastrophic consequences of exhausting non-renewables, biodiversity, and planetary capacity.

This essay elaborates on how competition law has often been regarded as a barrier preventing competitors from collaborating to meaningfully advance the Sustainable Development Goals (SDGs). While outright cartel agreements are correctly outlawed, cooperation that does not constitute hardcore infringement may be permitted if it passes an efficiency or rule-of-reason test, with net positive effects for consumers. To put this in the words of Commissioner Vestager, businesses should "take responsibility, not just for the quality of their products, but for their effect on the world around them".

COMPETITION LAW, MARKET POWER, AND THE SUSTAINBILITY CRISIS

Competition law protects the freedom of companies to compete and the freedom of consumers to choose. It defines the outer limits of what is necessary for markets to function. The weak sustainability logic embedded in today’s capitalism where market players with substantial market power are marked by a disregard for sustainability objectives, is what has precipitated the present crises. When air and water purifiers have become non-negotiable necessities amid Delhi’s growing environmental crisis, keeping them affordable must trump anti-competitive profit-making. The very existence of this environmental catastrophe is proof that the market economy has overreached and actively undermined sustainable goals. The representatives of the degrowth movement believe that a sustainable way of life depends on abandoning the present economic system, because the profit imperative of firms and the competitive logic of markets are fundamentally agnostic to climate protection and genuine sustainability. The degrowth perspective holds that the prevailing corporate and state strategies predominantly focus on maintaining the myth of decoupling through engaging with weak leverage points that perpetuate techno-optimism and market hegemony rather than challenge systemic growth imperatives such as competition, profit-making, accumulation and productivity. 

Switching to sustainable production forces a company to bear significant new expenses which translate into elevated prices and a competitive handicap in the marketplace. In such situations where environmental ambitions exceed the capacity of individual companies, and where acting first is highly disadvantageous, also called the “first mover disadvantage”, competitor collaboration is very essential. In this context, antitrust laws should carve out safe harbors for sustainability-driven cooperation among competitors. Paradoxically, the fear of violating the same laws discourages exactly the kind of joint action needed for systemic change. Competition regulators themselves are in a perplexing situation trying to develop methods for accommodating such agreements and technical cooperation, performing the complex balancing act of analysing the advantages arising out of such cooperation and anti-trust concerns emerging from the same. A case in point is the German Bundeskartellamt’s ruling against an industry-wide milk surcharge intended to finance better farming practices. The authority treated it as impermissible price-fixing disadvantageous to the consumers rather than acceptable sustainability coordination. Recently, the Trump administration also eased the Corporate Average Fuel Economy (CAFE) standards, reversing rules that compelled automakers to upgrade to costly engineering changes and fuel-saving technologies, making them expensive for consumers. This, although frees the market from anti-competitive burdens, abandons long-terms environmental sustainability. 

The idea that the environment and economics must be kept in completely separate boxes is artificial. In response to such critique, it must be noted that synergies between environmental protection and other areas of law occur more frequently than the antagonist would want to concede. There are in fact clear evidence that environmental issues are treated in other areas such as international law (climate treaties), trade law (carbon border taxes), investment law (investor-state disputes increasingly involving environmental defences) and humanitarian law (protection of environment during armed conflict). Then why should competition be an exception to it? 

GLOBAL EXPERIMENTS: STATE-LED TRANSITIONS AND THE POSSIBILITY OF GREEN COLLABORATION

Thus far, the role of sustainability has been a part of discourses in isolated contexts, appearing either as a shield to justify restrictions on competition or as an enforcement lever through competition law to enforce sustainability goals. Competition law has traditionally placed an emphasis on economic objectives, presuming that other legal disciplines are better equipped to address “supplementary” non-economic public interest objectives. For competition law to evolve effectively in the face of climate and biodiversity emergencies, sustainability should not be seen as something to be “balanced” against consumer welfare, but as a core component of the economic and competitive process itself. It demands recognizing the biosphere as the ultimate enabler of competition, and that meaningful consumer choices cannot be exercised on a collapsing planet, therefore integrating ecological constraints and resilience directly into the definition of competitive harm, consumer benefit, and the public interest under competition rules. 

From state-led industrial policy to judicial flexibility: practical precedents for greening economic rules

Regimes regularly deviate from or adapt economic rules to accommodate environmentally friendly schemes. As demonstrated by China, that realized early on that a shift from fossil-fuel to electric propulsion in transport is essential for any serious sustainability transition. China through a decade of deliberate state-led policy, purchased subsidies, urban regulatory privileges for NEVs, managed foreign investment, and enforced EV quotas and turned itself into the world’s largest market for electric-vehicles, setting a new benchmark for green mobility transitions. Recent policies like the U.S. Infrastructure Law or the Inflation Reduction Act and the EU Green Deal mark a visible shift toward government orchestrated industrial strategies and more expansionary fiscal approaches to sustainability transitions. Further, in the case of Vindkraft, the EU approved Sweden’s green electricity scheme even though it had the potential to offend the rules on the free movement of goods. 

The European Union, in 1994, issued an individual exemption under Article 101(3) TFEU for a horizontal cooperation agreement that, despite its anti-competitive aspects, generated substantial environmental gains. The Philips-Osram joint venture involved manufacturing lead glass, which emits lead-oxide particles highly toxic to the environment and human health. Overcoming this environmental harm necessitated the installation of expensive and effective filtration systems. The parties’ agreement aimed at lowering total energy usage and enhancing the feasibility of energy-reduction and waste-emission control initiatives. The Commission ruled that consumers obtained a fair share of the benefit, as the agreement substantially diminished negative environmental externalities and thus served the interests of society at large. Even if these initiatives ultimately fall short of redirecting production and investment away from pure profit maximization toward genuine sustainability objectives, they inevitably prompt reflection on both the possibilities and the limitations of employing markets as tools of planning while maintaining competition.

Resistance, retreat, and the case for progressive interpretation

Despite favourable precedents, critics across the world have repeatedly argued that merging competition and sustainability considerations leads to market failure and have exerted considerable influence on policymaking. An example of the same is that of the European Commission’s Horizontal Guidelines in 2001 which explicitly stated that environmental benefits justify agreements between competition and therefore are an exception to competition law. However, due to the criticism it received, the Commission removed that provision and the 2010 version no longer mentions environmental protection as a legitimate factor. As Kingston has persuasively argued, any rigid attempt to draw a clear dividing line between competition law and environmental protection would be inefficient, unrealistic, and contrary to good governance, ultimately undermining the effectiveness and legitimacy of the law itself. This has lent weight to increasing demands for broader accommodation of environmental factors in antitrust proceedings. Vedder has carefully mapped the interface between voluntary agreements and competition policy, while making a measured argument for sustainability within the narrower boundaries of EU law. Kingston, likewise focusing on the EU, has sharply criticised the troubling absence of environmental policy factors in the 2010 Horizontal Cooperation Guidelines. Article 101 of the Treaty on the Functioning of European Union that protects competition within EU’s internal market, needs to be interpreted progressively to accommodate sustainability efficiencies enshrined in the Treaties, while permitting innovative, yet rigorous, methodologies for quantifying those efficiencies “as accurately and reasonably as possible” on the basis of verifiable evidence.

REVISITING INDIA’S COMPETITION ACT FOR SUSTAINABILITY AGREEMENTS

At the COP26 Summit in Glasgow, India announced ambitious climate commitments, pledging to reach net-zero emissions by 2070 and to meet 50 per cent of its energy needs from renewable sources by 2030. To achieve these targets and the broader Sustainable Development Goals, the government is reviewing and strengthening its environmental laws, while simultaneously motivating the corporate sector to step up. In 2018, the Ministry of Corporate Affairs, in partnership with the Indian Institute of Corporate Affairs, issued the National Guidelines on Responsible Business Conduct (NGRBC), which updated the earlier National Voluntary Guidelines and now urges businesses to practice sustainability throughout their operations and value chains, encouraging collaboration with suppliers, vendors, distributors, partners, and other stakeholders. Achieving such far-reaching, system-wide sustainability objectives, however, frequently requires cooperation between competitors themselves, an area strictly governed by Section 3 of the Competition Act, 2002.

Current barriers and the case for reform under the Competition Act, 2002

Section 3 of the Competition Act, 2002 governs horizontal agreements, banning any arrangement on production, supply, distribution, or pricing that causes or is likely to cause an appreciable adverse effect on competition (AAEC) in India. The aim of the Act is to exempt joint ventures from this presumption of illegality provided they generate verifiable efficiencies in production, distribution, storage, with the onus of proof lying on the parties that their cooperation delivers measurable efficiencies in production. Section 19(3) of the Act empowers the CCI to consider factors such as consumer benefits, enhanced production and distribution, and the promotion of technical or economic progress, which theoretically provide space to accommodate sustainability benefits. Horizontal sustainability agreements typically include joint commitments to phase out environmentally harmful products, industry-wide adoption of binding ecological standards, or pooled resources to accelerate sustainable objectives. However, the absence of such agreements in practice in India, underscores the chilling effect of perceived enforcement risks. Antitrust should serve as a shield against anti-competitive agreements and not act as a barrier to genuine sustainability agreements that could effectively promote the innovations of eco-friendly products. A new statutory test is needed to separate genuine Sustainability Agreements from cartels. First, non-JV agreements should no longer be treated as per se illegal; instead, after clearing the prima facie stage, the CCI must simultaneously apply the per se rule and the Rule of Reason to uncover the agreement’s real intent. Second, the CCI should actively examine the agreement for robust ring-fencing clauses and information-exchange protocols that strictly limit shared data to what is indispensable for the collaboration’s purpose, any excess information that allows more accurate prediction of competitor behaviour or reduces market uncertainty renders the agreement per se illegal. Having passed the per se test, agreements would then face the UK-style four-point Rule of Reason framework: demonstrable efficiencies, no less restrictive alternatives, beneficial to consumers, and not eliminative of competition. Consequently, agreements driven by genuine sustainability goals could be safely regarded as legal and not as violations of competition principles. Such agreements are essential since individual companies rarely possess enough market power to shift buyer preferences towards sustainable alternatives, making collaborative agreements among competitors theoretically vital. 

The Central Government can elevate sustainability within competition policy by also resorting to Section 54 of the Competition Act, which authorizes it to exempt the Act or any of its provisions for a defined period. Under Section 54(a), the government can grant exemptions when a thorough environmental-impact analysis demonstrates that the project’s measures deliver broad societal benefits, while Section 54(b) allows the government to fulfill its commitment made at the Paris Summit 2015 by exempting the Act’s provisions to fulfill any obligation assumed by India under a treaty, agreement, or convention with other countries.

Under this reformed approach, agreements pursuing environmental goals would qualify for exemption from the general prohibitions whenever they demonstrably advance sustainable development objectives. In the legal regime answers lie in nuanced greys, not stark black-and-white distinctions. Broadening the scope of exemption in India and making provision for beneficial collaboration, will promote industries to adhere to ESG norms. The United Kingdom has moved in the same direction: where the Competition and Markets Authority has produced the Green Agreements Guidance explaining the treatment of “sustainability agreements” under competition law and recognising that, in certain circumstances, collaboration between competitors must be safeguarded within the competition framework for the sake of environmental sustainability. To promote cooperation aimed at mitigating climate change, such agreements may be exempted, provided the standard-setting process is open to every competitor in the affected markets, who can then participate and join the agreement. The aim is to facilitate beneficial collaboration without making any compromise on the price fixing or limiting production capacity in the market, through policy initiatives and decision-making. 

ENVIRONMENTAL JUSTICE AS THE NORMATIVE CORE OF GREEN COMPETITION POLICY

How can environmental protection issues in competition law be reframed as matters of environmental justice? Framing ecological protection within competition law through an environmental justice lens requires widening investigations to cover groups beyond competitors and buyers, as a narrow focus offers scant grounds for safeguarding those indirectly suffering from environmental fallout As illustrated by plastic trade, where gains are divided among producers and users but hazards like waste pollution fall on society at large, this model fosters clear inequities, especially since major harm contributors often oppose risk-reduction strategies. This highlights the imperative to account for present non-consumers and posterity, invalidating claims to ignore them when externalities exist, and instead fostering justified initiatives that balance inequities responsibly while tempering scrutiny of authentic corporate actions. Rather than amending the provisions, competition law can be construed in light of the intertwined aims of market competition and environmental protection, thereby integrating societal factors. 

Prior to the development of the concept of environmental justice, environmental protection was pursued through arcane principles such as the precautionary principle, prevention principle, sustainability principle, and the ‘polluter pays’ principle (PPSP principles). Although environmental justice centres on a separate axis, equity and distributional fairness, claims framed in its terms frequently coincide with one or more of these older PPSP principles. Take the case of a market-dominant factory dumping toxic waste on an indigenous settlement: instead of relying exclusively on the relatively indeterminate concept of environmental injustice, the argument is far stronger when recast in PPSP terms, the firm violates the polluter-pays principle by externalising costs, contravenes the precautionary principle through irreversible damage to vulnerable groups, and offends sustainability by depleting the livelihood resources of marginalised populations. Various economists have also argued for a ‘big green state’, ‘massive green public investment’, ‘a progressive carbon tax’, or perhaps more mildly, for ‘green industrial policy’ and a ‘mission economy’ in energy transitions. By systematically mapping environmental-justice grievances onto these long-recognised principles, a much more practical pathway for competition law to absorb and act upon concerns about both environmental degradation and social disadvantage can be created.

Law does not merely regulate markets from the outside, it is the precondition for any large-scale economic planning, including the planning that routinely happens inside market-based corporations. The point is not to praise markets in the abstract but to acknowledge that their existence and operation are thoroughly political, resting on the prior distribution of legally backed entitlements and powers. Market can and does function as an instrument of planning for the purpose of achieving politically set objectives, including those associated with sustainability transitions. The redefined state role needs to adopt a near-ordoliberal framework, where markets, rather than direct state control, are deliberately shaped through regulation, competition, and innovation incentives to drive sustainability and green industrial transformation. This approach uses market mechanisms, like supporting technological innovation, infrastructure, and tax incentives, to align economic growth with climate action and the transition to low-carbon industries. The state through law has the capacity to rearrange rules and institutions to address socio-economic crises, including the existential threat of climate change. 

CONCLUSION

Today, more than half of the world’s largest economic entities are corporations rather than nation-states. Companies possess the scale, expertise, capital, adaptability, and organisational capacity that no other institutions currently match to tackle the planet’s most pressing challenges. Commerce must take the lead in forging a sustainable production-consumption paradigm while applying sound market principles. Yet many of society’s most important outcomes defy monetisation, and wealth accumulation is not equivalent to genuine progress. Companies, governments, and communities that conscientiously pursue the three principles of Natural Capitalism - boosting resource efficiency, designing out waste via circularity, and rebuilding natural systems, will secure decisive strategic advantages. The urgent task ahead is to ensure competition frameworks globally are interpreted and enforced in ways that actively support properly structured, genuinely efficiency-boosting cooperation vital for sustainability.

The pursuit of environmental justice within the competition laws cannot be understood and applied in a monolithic sense. Hence, individual competition cases need to be decided based on ‘variable justice’. There is obviously scope for sustainability objectives to be taken into account in State aid policy, both by withholding support from environmentally harmful activities and by actively channelling financial support to businesses and projects that demonstrably strengthen sustainability. Therefore, competition law should not remain restricted to efficiency and consumer welfare, but also aim to pursue complex equality, offering a high-end goal that accommodates both efficiency and fairness concerns.

Notes & References

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4. Jarnail Singh v Madhav KRG Ltd and Punjab Pollution Control Board (National Green Tribunal, 10 January 2017)

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24. ‘National Statement by Prime Minister Shri Narendra Modi at COP26 Summit in Glasgow’ (MEA Media Center, 2 November 2021)

25. Ministry of Corporate Affairs, National Guidelines on Responsible Business Conduct (Government of India 2019)

26. Competition Act 2002, s 3

27. Competition Act 2002, s 19(3)

28. Prateek Yadav and Madhav Tripathi, ‘Antitrust and Climate Change: How Competition Enforcement Prevents Sustainability Collaboration’ (CBFL Blog, 7 March 2023) < https://www.cbflnludelhi.in/post/antitrust-and-climate-change-how-competition-enforcement-prevents-sustainability-collaboration> accessed 4 December 2025

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30. Competition Act 2002, s 54

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42. Ioannis Lianos, ‘Competition Law as a Form of Social Regulation’ (2020) 65(1) The Antitrust Bulletin 3

    
    

About the Author

Ayushi Singh is a Second Year Student at Chanakya National Law University, Patna.