The application of competition law and policy to environmental agreements in an oligopolistic market

An environmental agreement in an oligopolistic market may violate the competition rules, as described in Articles 81 and 82 of the Treaty. Ordinarily, some collusion among firms is necessary for an environmental agreement to be successful. This collusion may be acceptable when it relates to the development of technologies or processes, as opposed to the classic hypothesis of collusion regarding prices or the division of the market. One must also consider the goals of competition policy. Thus, factors such as tangible benefits to the consumer or a substantial technological advance (for example, an environmental agreement that brings firms together to conduct R&D) could outweigh potential anti-competitive effects of the agreement. Accordingly, while an environmental agreement can act as an entry barrier to a market, it can also lead to the development of new technologies. This paper presents the general aspects of competition law and policy and then discusses how competition law and policy can be applied to environmental agreements in an oligopolistic market. This paper argues that while competition policy can sometimes be relaxed with regard to environmental agreements in a competitive market, it should remain strict when applied to agreements in an oligopolistic market, as this type of market structure so often leads to anti-competitive behaviour.