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Collective climate action for insurers: Can you be cooperative and competition compliant?

April 2023
Paul Henty


Recently, two leading insurers have announced their intention to withdraw from the NetZero Insurance Alliance (“NZIA”), an alliance of insurers aimed at reducing carbon emissions. One of the insurers cited concerns relating to competition law compliance as the reason for leaving.

The developments raise concerns as to whether it is possible for businesses to work together to fight climate change or promote other sustainability related goals. The Cooperation between competitors can indeed be unlawful if it results in anticompetitive collusion or a reduction in choice for consumers.  However, recent indications from competition regulators point towards a willingness to allow competitors to work together to achieve goals related to sustainability and lowering emissions.

Political Context

In December 2022, Republicans in the US House of Representatives launched an “investigation” into major climate groups, alleging that they are violating antitrust laws. In a letter sent to executives of the Steering Committee for Climate Action 100+, Republicans led by Ohio Rep. Jim Jordan demanded a wide range of documents that illustrate the coalition’s network of influence.

While the Committee may have had Climate Action 100+ in its sights rather than the NZIA, the two organizations share similar aims. It is possible that those leaving the NZIA were concerned about the possibility of an investigation by the Committee, which has the power to subpoena organizations or individuals in the US and require them to give evidence.

Collective boycott

One allegation raised by the House Republicans is that of “companies agreeing to work together to punish disfavoured views or industries”. It is effectively accusing suppliers of boycotting targeted customers or classes of customers, namely those who are involved in the production of non-renewable energy sources.

There are previous cases in the US, UK, and EU which illustrate that orchestrated boycotts can breach competition law. For example, in the UK, the Office of Fair Trading fined a group of recruitment agencies specializing in the supply of workers to construction companies.

Similarly, in 2015, the UK regulator fined the Consultant Eye Surgeons Partnership, a trade association of eye consultants, who acted as a vehicle to coordinate the negotiating position for eye surgeons when negotiating with insurers and hospitals. However, many competition regulators have made it clear that they are unlikely to enforce these rules against sustainability arrangements.

The CMA and EU Commission have both published draft guidance emphasizing the benefits that sustainability agreements can bring, recognizing that such benefits outweigh the detriment to competition.   These guidelines await formal adoption but are widely expected to be approved.

These guidelines recognise that when deciding whether sustainability agreements are on balance beneficial (applying the exemption test in S 9 of the Competition Act 1998 and Art 101(3) TFEU), advantages will accrue to society as a whole in the form of a cleaner environment and more efficient use of limited resources.  Regulators will take those wider benefits into account, rather than just considering the perspective of buyers of the goods or services affected by the relevant agreement.

For insurers and the NZIA the guidance appears to offer specific words of comfort around any boycott of fossil fuels.  It expressly cites “agreements not to provide support such as financing or insurance to fossil fuel producers” as an example of when coordination between competitors to promote sustainability may be legitimate.

When sustainability initiatives become uncompetitive

This is not to say that all sustainability initiatives will always be acceptable.  Indeed, cooperation under the veneer of pursuing environmental objectives can mask cartel activity.

In 2021, for example, the European Commission found that Daimler, BMW, and the Volkswagen Group (Volkswagen, Audi and Porsche) had violated EU antitrust regulations by colluding on technical development related to nitrogen oxide cleaning. The Commission imposed a total fine of €875,189,000.

The car manufacturers were found to possess technology that could have reduced harmful emissions beyond what was legally required under EU emission standards, but they avoided competing to use the technology’s full potential to clean better than what is required by law. The manufacturers held regular technical meetings and colluded for over five years to avoid competition on cleaning better than what is legally required, despite the relevant technology being available.   EU Competition Commissioner Vestager described the case as being “about how legitimate technical cooperation went wrong.”

On 15 March 2022, the EU Commission conducted unannounced inspections at companies and associations involved in the automotive sector in several EU Member States, including Toyota, Renault, Opel, and the European Automobile Manufacturers’ Association (ACEA). The inspections were conducted in coordination with the UK Competition and Markets Authority (CMA), which launched a parallel investigation on the same day.  While the case is ongoing, there are clear concerns around sustainability, with the two regulators considering possible anti-competitive collusion in relation to the recycling of end-of-life vehicles. This case marks the first example of the Commission and CMA coordinating their dawn raid activities since Brexit.  It also serves as a warning that where pro-sustainability initiatives lose their way, they may quickly come under scrutiny from competition regulators.


The recent developments regarding the the recent withdrawal of two leading insurers from the NZIA alliance due to concerns about compliance with competition law have raised concerns about the ability of businesses to work together to fight climate change or promote sustainability related goals.

Cooperation between competitors can be unlawful if it results in anti-competitive collusion or a reduction in choice for consumers. However, regulators’ recently published draft guidance unlikely to enforce the rules against such arrangements. It is essential for businesses to understand the legal framework when working together to promote sustainability initiatives without infringing competition law.

The withdrawals also illustrate another unfortunate fact.  Pro-environmental cooperation between rivals may not occur without an alignment between regulators.  Businesses operating at scale will wish to be compliant across all jurisdictions.  If even one of those jurisdictions displays hostility towards their working together, that may bar effective coordinated action between the corporations that are best placed to prevent environmental harm.   Effectively adapting competition policy to the needs of climate action in some respects will progress only at the speed of the slowest mover.

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