Companies in the hydrogen sector can find themselves in a difficult situation: cooperation between competitors may be efficient and key to implement the hydrogen strategy of the government, also in view of the significant investment costs related to the import and storage of hydrogen. However, such cooperation may risk violating competition laws as both the European and Dutch Competition laws prohibit cartel agreements. Structuring your cooperation well is therefore key. The cartel prohibition may not apply to sustainability partnerships that benefit from an exemption under the cartel prohibition. A carefully structured intended cooperation could also possibly avoid competition law hurdles. For example, the cartel prohibition does not apply to the so-called 'full-function' joint ventures.
#1. The ACM and European Commission have set a level playing field for green cooperation
Energy transition and sustainability is on top of the ACM's agenda. The ACM's draft guidelines on sustainability agreements highlight opportunities for sustainability agreements, and sets boundaries within which green collaboration maybe achieved between competitors. Not to be outdone by the ACM, in early 2022, the European Commission published its draft revised Horizontal Block Exemption Regulations and Horizontal Guidelines with a chapter dedicated to the assessment of sustainability agreements under competition law. While the ACM has been at the forefront to address the interplay between competition law and sustainability, even the National Competition Authorities of Greece, Austria and Hungary have taken initiatives in developing competition law guidance for sustainability agreements.
#2. Agreements that do not restrict competition are allowed
According to the ACM guidelines, sustainability agreements that do not affect competition based on key competition parameters like price, quality, service, diversity and distribution method do not fall under the cartel prohibition. In fact, sustainability agreements that aim at promoting product quality, product diversity, innovation or market introductions of new products will, in most cases, actually promote competition. In practice, the ACM is actively supporting collaborations between businesses that are aimed at promoting sustainability in the energy sector. For example, energy users have been allowed to purchase wind energy jointly and fix the electricity rate for green energy for several years. The ACM was of the opinion that such collaboration allows large and small companies to procure green energy straight from the producer. As such, they help realise climate goals and further promote the creation of wind farms.
#3. Agreements that restrict competition may be allowed if they offer benefits that offset the restrictions
The cartel exemption also applies to agreements that restrict competition but also offer benefits that offset the drawbacks of those agreements. For example, the ACM has already permitted competitors in the energy sector Shell and TotalEnergies to collaborate in the storage of CO2 as this initiative helps realise climate objectives and leads to the creation of a new market for CO2 storage in depleted gas fields. Since major investments were required to execute the project, the ACM was of the opinion that a cooperation is necessary for getting this initiative off the ground. The slight restriction of competition between competitors was not considered harmful. For the ACM, it was relevant that the benefits for customers of both companies (and for society as a whole) will exceed the negative effects of that restriction.
Cooperation is possible to help build the hydrogen sector – if you do it right
Future entrants in the hydrogen market should take comfort from the fact that the ACM has made it clear that it will not impose fines on agreements that were discussed with it before their implementation or when parties follow its draft sustainability guidelines in good faith. Despite the impetus of the Dutch government to launch the hydrogen market, the import and storage of hydrogen encompasses significant challenges, including financial and capacity constraints. It is at times difficult to be the first to enter an emerging market or to be profitable. Therefore, if you are looking to enter this market, it may be necessary and efficient to either cooperate or carefully structure your intended cooperation. The Shell/TotalEnergies case is a practical illustration of a sustainability in an upcoming market. Besides, the ACM is more than willing to discuss proposed sustainability initiatives. While businesses must keep in mind that the ACM will not tolerate the greenwashing of disguised cartels, there is room for competitors to cooperate in the pursuit of sustainability objectives.
Let's build a thriving hydrogen economy together
Dutch ports can pioneer as gateways to the European hydrogen market. From the regulated transport and import of hydrogen carriers, the development and financing of infrastructure and storage capacity to ensuring you can cooperate without falling under the cartel prohibition: our multidisciplinary hydrogen team can help you tackle challenges and seize opportunities. Only together, we can build a thriving hydrogen economy in the Netherlands, and beyond.