Non-competitive interests are no competition for "Market Europe": does EU competition law hamper civil society's political rights?

Abstract

In the recent decade, private firms have increasingly undertaken quasi-governmental activities. This is true for cooperation between international corporations, but also for various national initiatives of inter-firm cooperation. Firms thus seem to have assumed quasi-political responsibilities and have, for example, played a role in environmental protection, protection of animal welfare and combatting low wages throughout the world. This is, of course, not a separate movement. Increasingly national governments, regional unions, the OECD, and even the United Nations are engaged in the debate on the role of firms in society and have called for public engagement and Responsible Business Conduct (RBC) of private firms. In analysing this shift some have even argued that business firms have simply become ‘political actors’. Though this phenomenon is, in itself, interesting for the bEU-citizen workpackage on political rights, it is a specific issue resulting from this shift that we focus on: such (semi-) political action, especially when coordinated between different firms, may well land into competition trouble. European competition law – as one of the cornerstones of internal market law – protects the process of competition, the market mechanism, the free flow of goods and services and ultimately enhances (consumer)welfare through growth and innovation. Therefore competition law prohibits firms from entering into cartel-agreements (and it places a check on economic dominance by articulating the special responsibility of dominant undertakings). The developments relating to firms taking quasi-political responsibility result in a tension between, on the one hand, the aims of competition law, and, on the other hand, inter-firm agreements that pursue a more ‘political’ goal (we will call these RBC-initiatives). These goals are generally intrinsically excluded from European competition law’s remit. For example, sustainability agreements, agreements enhancing animal welfare and agreements relating to providing fair wages to factory workers outside tthe EU are all scrutinized under European competition law. Some of these agreements have been held incompatible with competition law’s rules. The main problem here is that the interests these RBC-initiatives pursue are difficult to express in the (economic) terms used to scrutinize agreements under competition law. We will use the shorthand of ‘the competition law problem’ for this incapacity of European competition law to incorporate a balancing of different interests – the RBC-related interests versus the interests of the market (and yes, we are aware that this label leaves out the nuances and the shades). In the competition law discourse the RBC-interest pursued are generally labelled public or non-competition interests, this in contrast to the economic interests or competition interests that are protected by competition law. Apart from the notion that firms become (quasi-) political actors themselves, it is relevant for the discussion on political rights that very often NGOs and lobby groups play an active role in putting these interests on the agenda. Heftier RBC-initiatives often come into being as a result of pressure and involvement from civil society. Also, governments themselves may be involved. It can be a conscious choice not to legislate but to ask for self-regulation by businesses, or to enter into agreements with industry on specific standards, for example on human rights protection or noxious emissions. The competition law problem thus relates to the exercise of political rights. These or not clearly defined rights like (European) citizen’s voting rights or standing rights, but political rights in the sense of a broad category of capacities to participate in political decision-making processes. Participation can take many forms: firms can participate in rulemaking either with or without the involvement of government; citizens participate in pressure-groups and other forms of civil society and thus influence the political debate. This political process encompasses the metaphorical arena where the different values and public interests are debated and given weight. A balancing between competition interests and non-competition interests is in this sense inherently political as well. There are several lenses to use in an analysis of the interplay between the competition law problem and political rights. A first lens focuses, more abstract, on the generally acknowledged tension between the economic focus of the European internal market, protected by European competition law and the social sphere and non-economic elements of society. This fits the narrative of the European Union’s integration project leading to a ‘social deficit’ by placing more emphasis on economic integration than on embedding this agenda in the social structures of the member states (paragraph 3). A second lens focuses on the position of firms as political actors when engaging in RBC-initiatives: paragraph 4 will focus on different perspectives, including the ethics of the firm, where the firm can be expected to behave as a politically responsible actor and the notion of corporate citizenship. Third, the lens of the relationship between the Member states and the EU will be used to focus on the possibility that the national political debate may reach a different outcome in interest-balancing than the European level would allow (paragraph 5). However, before delving deeper into these perspectives, we will provide a short background to the competition law problem.