Grey or Green Giants? Sustainability and (Exclusionary Abuse of) Dominance under Article 102 TFEU

The intersection of sustainability and competition law has gained increasing attention in recent years—particularly in the context of agreements, as evidenced by the new Horizontal Co-operation Guidelines from the European Commission,¹ but also in discussions around merger control.²

However, one area remains underexplored: the role of sustainability in the context of abuse of dominance. This includes both exploitative and exclusionary abuses.

As the European Commission is currently drafting final guidelines on the enforcement of Article 102 TFEU in the context of exclusionary abuse of dominance, the question arises: should the Commission consider sustainability more explicitly when assessing potential exclusionary abuses of dominance?

The current draft Guidelines on exclusionary abuse (hereafter, the ‘Draft Guidelines’) mention sustainability only once—and briefly—in a footnote.³ The lack of a dedicated section on the subject was noted during the public consultation, ending on 31 October 2024. During the consultation period, the Commission received around 15 (from 115) public responses that highlighted the need for further clarification on the subject of sustainability. Eight of those responses expanded on the issue in a number of paragraphs,⁴ and four of those dedicated a full section on the topic.⁵ Most of these focussed on how sustainability objectives could, or should, be considered as an objective justification for possible exclusionary conduct.

In this article, we set out the three ways in which sustainability considerations could play a role in the enforcement of exclusionary abuse of dominance under Article 102 TFEU.

• First, we consider whether non-sustainable behaviour is an indicator of dominance.
• Second, we assess whether sustainability-related conduct (or lack of) could itself constitute an exclusionary abuse of this dominance.
• Third, we assess whether dominant undertakings can use sustainability objectives as objective justifications for their exclusionary conduct.^{6, 7}

We also reflect on some of the critical economic concerns in each of these considerations, including concerns around the ‘greenwashing’ of exclusionary abuse.

Grey giants: non-sustainable conduct as a sign of dominance or exclusionary abuse

In the current Draft Guidelines, the Commission sets out the following three-step approach to the enforcement of Article 102 TFEU in cases of exclusionary abuse of dominance.  

• Step 1: is the undertaking dominant?
• Step 2: is the conduct liable to be abusive?
• Step 3: are there objective justifications to the conduct?

In Step 2, the Draft Guidelines recommend the cumulative two-limb test for showing whether conduct has the liability to be abusive, as developed in recent case law.⁸

• Limb 1: does the conduct depart from competition on the merits?⁹
• Limb 2: does the conduct have the capacity to produce exclusionary effects?

Taking this framework as given, there are two ways in which Article 102 TFEU has the potential to act as an offensive tool for addressing non-sustainable practices by dominant firms—in both Step 1 and Step 2. We consider both in turn.

Step 1: Non-sustainable behaviour as a direct measure of dominance?

The first step in the framework is to establish whether the undertaking is dominant. This requires conducting a dominance assessment, which under Article 102 TFEU involves evaluating whether the undertaking holds a ‘position of economic strength that enables it to behave independently of competitors, customers, and ultimately consumers’.¹⁰

Economic assessments commonly focus on the extent of market power as a key indicator of dominance. However, in some markets, sustainability may function as a dimension of quality that influences consumer choice, and hence, could also be factored into this analysis. For example, where consumers value sustainability and it is a competitive parameter, a dominant firm might be able to disregard sustainability standards due to a lack of competitive pressure from other firms. This suggests that non-sustainable practices could, in some cases, serve as an indication of dominance.

That being said, non-dominant firms in competitive markets might also fail to adopt sustainable practices. For example, it might also be the case that non-dominant firms in highly competitive markets lack the scale or resources to implement truly sustainable practices; or the competitive pressure incentivises them to cut corners on sustainability.

Therefore, we consider that it would not be appropriate to assume that non-sustainable practices necessarily indicate dominance. The relationship between sustainability and dominance must be considered on a case-by-case basis, taking into account the specific market dynamics, particularly whether sustainability is a competitive parameter that constrains firms’ behaviour.

Step 2: Non-sustainable behaviour as liable to be abusive?

The second step is to consider whether the conduct in question is liable to be abusive. In order to determine this, the law of the Union courts have established two specific legal tests, which need to be fulfilled. The first is whether the conduct departs from ‘competition on the merits’, and the second is whether the conduct has the capability to exclude.¹¹

Limb 1: Competition on the merits

The concept of competition on the merits is central to the assessment of exclusionary abuses. As the Draft Guidelines note, there is no need to show that the conduct is specifically enabled by the dominant position (i.e. that the conduct would not have occurred in a competitive market).¹² This opens the door for competition authorities to take action against non-sustainable practices that may distort market dynamics, even in the absence of direct evidence that the firm’s dominance enabled such behaviour.

While this approach is generally accepted, there remains an open question regarding exactly when non-sustainable behaviour should be classified as competition off the merits. In other words, when does the use of unsustainable practices move beyond legitimate competitive strategies to become an exclusionary tactic that harms the competitive process?

Under the Draft Guidelines, one relevant factor for determining whether conduct departs from competition on the merits is ‘whether the dominant undertaking violates rules in other areas of law (for instance, data protection law) and thereby affects a relevant parameter of competition, such as price, choice, quality or innovation’.¹³ A notable example is the German Bundeskartellamt case, where Meta was found to have abused its dominant position by violating GDPR rules on data processing.¹⁴ In that case, access to and processing of personal data was deemed a significant parameter of competition in digital markets. Applied to this context, behaviour that violates environmental laws may be considered competition off the merits if compliance with such laws impacts a relevant parameter of competition—such as where sustainability is a factor that influences consumer choice or affects market dynamics.

To determine whether the conduct departs from competition on the merits, one consideration is whether non-sustainable behaviour is to the detriment of consumers.¹⁵ Non-sustainable practices might not serve consumer interests in the broader sense, as they could have adverse effects, such as contributing to environmental harm. However, there is a trade-off to consider: non-sustainable practices can sometimes result in lower costs, which may benefit consumers within the relevant market by reducing prices.

Even in cases where such conduct appears to benefit consumers within the defined market, it may still represent a departure from competition on the merits if it negatively impacts consumers outside the market—such as through increased carbon emissions affecting society at large. However, this raises the question of whether competition assessments should account for such externalities.

The Commission’s approach to horizontal green agreements provides some guidance in this area. The Commission has indicated that agreements with a sustainability angle can be permissible if they deliver a ‘fair share’ of benefits to consumers, following the language in Article 101(3) TFEU.¹⁶ Crucially, there must be a substantial overlap between the consumers in the relevant market and those that are benefitting from the restriction. The Commission has generally not considered benefits to consumers outside the market (e.g. reduced carbon emissions affecting non-users) unless there is substantial overlap between these groups and the consumers in the relevant market.¹⁷

In the context of competition on the merits, the focus may therefore lie in identifying non-sustainable behaviour that is not in the interest of consumers. However, the scope of which consumers to consider—those strictly within the relevant market or also those outside it—remains an open question for Article 102 TFEU to address as well.

Limb 2: does the conduct have the capacity to exclude?

The second consideration is whether the non-sustainable behaviour has the capacity to create exclusionary effects. This could occur if the dominant firm’s non-sustainable practices provide it with a competitive advantage that leads to the exclusion of rivals—such as environmental harm, overconsumption of resources, or neglecting sustainability obligations—to gain an unfair competitive edge.

Such exclusionary effects are more likely if consumers do not respond to the non-sustainable behaviour by substituting away to competitors. In this scenario, consumers are effectively not internalising the negative externalities associated with the dominant firm’s practices—the environmental harm. By continuing to purchase from the dominant firm despite its non-sustainable behaviour, consumers may unintentionally reinforce the firm’s market position, creating barriers to entry or expansion for more sustainable competitors.

This raises broader questions about the role of consumer behaviour and whether competition law should account for externalities in assessing exclusionary effects. If consumers disregard the sustainability implications of their purchasing decisions, non-sustainable practices may undermine effective competition by entrenching the position of firms with less sustainable approaches.

Ultimately, the role of Article 102 TFEU in addressing non-sustainable practices requires careful consideration of when and how such practices can be deemed exclusionary. There is room for the upcoming guidelines to clarify these issues.

To further illustrate how non-sustainable conduct could be seen as an exclusionary abuse of dominance, see the illustrative example in Box 1 below.

Befriending green giants: sustainability as an objective justification

While Article 102 TFEU is typically used to address abuses of dominance, it could also potentially be used by dominant firms to defend against accusations of abuse, for example when their exclusionary conduct is associated with an objective to impose pro-sustainability-related practices or standards. However, this justification applies only to conduct that would otherwise be considered abusive under traditional competition law principles, rather than conduct aimed at distorting competition through sustainability claims (such as those discussed in the previous section). As a result, firms might argue—in the context of Step 3 of the proposed general framework on the enforcement of Article 102 TFEU in the case of exclusionary abuse—that such practices are objectively necessary or contribute to efficiencies that justify their behaviour.

In general, the Draft Guidelines set out the following two possible routes for objective justifications.

• Objective necessity defence: where the dominant undertaking is able to evidence that their behaviour was objectively necessary to achieve a certain aim. These defences are only acceptable where the exclusionary effects are proportionate to the necessary aim.¹⁹
• Efficiency defence: where the exclusionary effects are counterbalanced, or outweighed, by advantages in efficiency that benefit consumers.²⁰

We reflect on each in turn below.

Objective necessity defence: dominant firms as rule setters?

An objective necessity defence under Article 102 TFEU has parallels with what is known as the ‘ancillary restraints doctrine’ under Article 101 TFEU where—following case law, including Wouters²¹ and Meca-Medina²²—firms can resort to arguments of ‘necessity’ and ‘proportionality’ in achieving a ‘legitimate objective’ to justify competitive restraints.

In this context, a potential question arises: would a defence centred around sustainability count as a ‘legitimate aim’?

Legitimate aims in competition law have included instances where dominant undertaking’s choose not to supply a customer or consumer who is inconsistent with fair trade practices²³ and preventing doping in sports.²⁴ By analogy, environmental protection might also qualify as a legitimate aim, particularly given its increasing societal importance. However, clear case law on this is yet to emerge.

Efficiency defence: quantifying the benefits from exclusionary conduct

An efficiency defence may be invoked where a dominant undertaking demonstrates that the exclusionary effects of its conduct are counterbalanced or outweighed by advantages in efficiency that benefit consumers. The Draft Guidelines set out four cumulative conditions that must be fulfilled for such a defence to be successful.²⁵

1. Efficiency gains must counteract negative effects on competition and consumer interests in the affected markets. For sustainable practices, this could include efficiency gains such as reduced environmental harm, improved long-term resource availability, or innovation in greener technologies. However, the firm must provide evidence that these benefits directly counteract any harm to consumers in the affected market. In other words, out-of-market benefits such as global benefits from reduced greenhouse gas emissions would not count, unless they can somehow be attributed to the customers in the relevant market.²⁶
2. The undertaking must demonstrate that the gains in efficiency are directly attributable to the conduct under scrutiny. For example, if a firm implements and scales sustainable practices that would not be feasible absent the conduct, this link must be clearly established.
3. The firm must show that the exclusionary conduct is indispensable to achieve efficiency gains. This requires proving that less restrictive or exclusionary means were not reasonably available to realise similar sustainability benefits.
4. Finally, the conduct must not eliminate effective competition in the market. This means it cannot result in the removal of all or most sources of actual or potential competition.

In assessing an efficiency defence based on sustainability, the Commission would likely scrutinise whether the sustainability-related benefits translate into clear advantages for consumers within the relevant market. Sustainability benefits that primarily affect consumers outside the market (e.g. reduced carbon emissions benefiting society as a whole) may not satisfy the condition of providing a benefit to consumers within the affected market, unless there is substantial overlap between these groups.

Ultimately, the burden of proof lies with the dominant undertaking to demonstrate, to the requisite standard, that these conditions are fulfilled.

Can seemingly Green Giants be trusted?

While sustainability arguments may serve as a valid objective justification, permitting such a defence raises important considerations regarding potential conflicts of interest. Dominant firms may be incentivised to frame their exclusionary conduct as sustainability-driven while pursuing private incentives.

There may be concerns about the incentives of dominant firms to genuinely engage in practices that promote sustainability in a way that benefits consumers and the broader market. This could result in firms leveraging sustainability arguments to ‘greenwash’ exclusionary conduct that ultimately harms competition or stifles innovation from smaller competitors. However, this is not to suggest that all sustainability-driven initiatives by dominant firms are inherently harmful; each case should be carefully assessed to distinguish between legitimate sustainability efforts and conduct that may have exclusionary effects.

Similarly, while the Commission has clarified that arguments supporting an objective justification may involve public interest considerations, such as public health or safety,²⁷ it also emphasised that it is not the role of a dominant undertaking to take unilateral steps to eliminate products it perceives as dangerous or inferior. Specifically, as the Commission states in the Draft Guidelines, based on recent case law:²⁸

‘[…] [I]t is not the dominant undertaking’s task to take steps on its own initiative to eliminate products which, rightly or wrongly, it regards as dangerous or as inferior in quality to its own products, nor more generally to enforce other undertakings’ compliance with the law.’

Finally, there is a risk that such defences could crowd out more effective government action aimed at regulating sustainability. If dominant firms are allowed to justify exclusionary practices under the guise of objective justifications, it might undermine the need for comprehensive regulatory frameworks designed to achieve sustainability goals.

Competition law, in this sense, could inadvertently allow firms to use sustainability as a cover for anticompetitive behaviour, rather than genuinely driving environmental progress.

To make sure that the Green Giants are really friendly, and not just Grey Giants in disguise, it is important for authorities to probe—and indeed for dominant companies to show—that private and public interests are truly aligned.²⁹

Concluding remarks

As Article 102 TFEU evolves, sustainability remains an underexplored area. While the Commission’s Draft Guidelines on exclusionary abuses omit explicit references to sustainability, there is no reason (in theory) why sustainable considerations could not shape future assessments of dominance or abuse, or serve as objective justifications.

The coming years will likely illuminate whether ‘green’ giants emerge as champions of responsible market power, or if they will find themselves navigating the same legal scrutiny as their ‘grey’ counterparts.

This article has benefitted from valuable discussions with and input from Virginia González García, Tim Lubbers and Nicole Rosenboom. Errors and opinions remain our own.

¹ See European Commission (2023), ‘Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal co-operation agreements’, chapter 9;Oxera (2021), ‘When to give the green light to green agreements’, Agenda, 13 September; and Oxera (2024), ‘Sustainable Divergence between the UK and the EU—the Fair Share Principle in Practice’, Agenda, 22 October.

² See European Commission (2023), ‘Competition Policy Brief 09/2023 – EU Green Mergers & Acquisitions Deals – How Merger Control Contributes to a Sustainable Future’ and Oxera (2021), ‘The role of sustainability in merger control’, Agenda, 16 April.

³ European Commission (2024), ‘Draft Guidelines on the application of Article 102 of the Treaty on the Functioning of the European Union to abusive exclusionary conduct by dominant undertakings’,(‘Draft Guidelines’), fn. 4.

⁴ These include the submissions by: Asociación Española para la Defensa de la Competencia, Baker Mckenzie, American Bar Association, ICLE, Rupprecht, Beuc, ARTICLE 19 et al., and Enel Group. These can be viewed at: https://competition-policy.ec.europa.eu/public-consultations/2024-article-102-guidelines_en#consultation-documents, accessed 26 February 2025.

⁵ These include the submissions by: ERT, International Chamber of Commerce, Recht Voor and Jule Hallbach. These can be viewed at: https://competition-policy.ec.europa.eu/public-consultations/2024-article-102-guidelines_en#consultation-documents, accessed 26 February 2025.

⁶ Similar topics are discussed in Holmes, S. (2023), ‘A sustainable future: how can control of monopoly power play a part?’, European Competition Law Review; Holmes, S. (2024), ‘Sustainability and competition policy in Europe: recent developments’, Journal of European Competition Law & Practice. See also Lubbers, T. (2024), ‘Abuse of dominance and sustainability: Using article 102 TFEU as a sword against unsustainable conduct’, LLM Thesis Law & Economics, Utrecht University School of Law; as well as OECD (2024), ‘Abuse of Dominance and Sustainability’, 16 October.

⁷ In this article we focus on exclusionary abuses, as opposed to exploitative abuses, in line with the European Commission’s 2024 Draft Guidelines.

⁸ In concluding on this two-limb test, the Draft Guidelines rely on wording used in some of the recent case law, in particular: European Superleague Company SL v Fédération internationale de football association (FIFA) & Anr, C-333/21, judgment of the Court of Justice, 21 December 2023, paras 129–131; and Servizio Elettrico Nazionale & Others v Autorità Garante della Concorrenza e del Mercato & Others, C-377/20, judgment of the Court of Justice, 12 May 2022, paras 68 and 103. Similar wording is repeated in other recent judgments, including, in particular: Google and Alphabet v Commission, C-48/22 P, judgment of the Court of Justice, 10 September 2024, para. 266; and Commission v Intel Corporation Inc., C-240/22 P, judgment of the Court of Justice, 24 October 2024, para. 176.

⁹ We note that this requirement has been criticised for its lack of clear applicability in all cases when determining whether a specific practice is prohibited. However, this issue is not the focus of this paper. See, for example, Ibáñez Colomo, P., (2023), ‘Competition on the merits’, forthcoming in (2024) 61 Common Market Law Review.

¹⁰ Draft Guidelines, para. 18.

¹¹ As mentioned above, this article focuses on exclusionary behaviour only, as opposed to exploitative behaviour.

¹² Draft Guidelines, para. 74.

¹³ Draft Guidelines, para. 55(c).

¹⁴ Meta Platforms Inc. & Others v Bundeskartellamt (General terms of use of a social network), C-252/21, judgment of the Court of Justice, 4 July 2023, paras 47 and 51.

¹⁵ Draft Guidelines, para. 51.

¹⁶ Draft Guidelines, para. 36(c).

¹⁷ European Commission (2023), ‘Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal co-operation agreements’,paras 582–589.

¹⁸ Draft Guidelines, para. 55(c).

¹⁹ Draft Guidelines, para. 168.

²⁰ Draft Guidelines, para. 169.

²¹ Wouters & Others v Algemene Raad van de Nederlandse Orde van Advocaten, C-309/99, judgment of the Court of Justice, 19 February 2002.

²² Meca-Medina & Anr v Commission, C-519/04, judgment of the Court of Justice, 18 July 2006.

²³  Draft Guidelines, para. 168; and United Brands Company & Anr v Commission, Case 27/76, judgment of the Court, 14 February 1978, paras 182–187.

²⁴ Meca-Medina, C-519/04.

²⁵ Draft Guidelines, para. 169.

²⁶ However, as mentioned above, under the Commission’s horizontal guidelines, out-of-market benefits from reduced emissions can be considered under an efficiency defence under Article 101(3), so long as there is a substantial overlap between the consumers in the relevant market and those that are benefitting from the restriction. European Commission (2023), ‘Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal co-operation agreements’,paras 582–589.

²⁷ Draft Guidelines, para. 168.

²⁸ Draft Guidelines, para. 168; and European Superleague Company SL v Fédération internationale de football association (FIFA) & Anr, C-333/21, judgment of the Court of Justice, 21 December 2023, paras 201 and 202.

²⁹ For a similar reflection in the context of sustainability agreements, see Oxera (2021), ‘When to give the green light to green agreements’, Agenda, 13 September.