Competition law and ESG haven’t always played well together. While some jurisdictions have new rules for ESG cooperation between companies, the US has not published new guidance on the issue. Lina Khan, head of the Federal Trade Commission (FTC), has gone on record in front of Congress saying that ESG benefits of cooperation agreements have no bearing on how the agency interprets antitrust law. At the same time, we haven’t seen enforcement against ESG cooperative initiatives like climate pacts, despite saber-rattling from the anti-ESG camp. A recent article from Freshfields examined the state of global antitrust law and ESG, writing:
“Recent experience has made clear that regulators are taking a pragmatic approach towards sustainability agreements and, in some cases, are stretching traditional legal concepts. Most cases reviewed by regulators in this space so far have been found consistent with existing antitrust rules on competitor collaboration and have therefore not needed to demonstrate eligibility for any relevant exemptions.”
While this quote is in the context of regulators globally, the concept is applicable to the US. The FTC has prosecutorial discretion, meaning that while some ESG agreements may hypothetically violate antitrust law, the FTC doesn’t have to prosecute every antitrust violation. In fact, the agency doesn’t have the resources to do that and antitrust enforcement in the US has been focused elsewhere (such as the recent enforcement action against Amazon). That isn’t to say that companies should ignore legal boundaries. State Attorneys General could always make good on their antitrust enforcement threats, and a different administration in the White House could set different policy objectives, potentially bringing ESG agreements into the political crosshairs.
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