Aligning Indian Competition Law with Global Sustainability Goals

By – Chandan Kumar and Tannishtha Chatterjee

Table of Contents

Introduction

The discourse on sustainability has, over the years, evolved from being a fringe
concern of environmentalists to a mainstream agenda for global governance. Today,
sustainability considerations are being embedded not just in policy circles or corporate
boardrooms but also within regulatory frameworks across jurisdictions. As India
commits itself to the United Nations Sustainable Development Goals (“SDGs”), it
becomes imperative to evaluate how various legal systems, including competition law in India, interact with these global objectives.

India’s competition law, codified in the Competition Act, 2002, is primarily designed to preserve market fairness, prevent abuse of dominance, and protect consumer welfare. However, it remains largely silent on non-economic considerations such as environmental impact, climate change, and long-term resource conservation. As a result, a disjunction is slowly emerging between the law’s core economic logic and the broader sustainability imperatives driving modern policy and commercial conduct. This is particularly relevant in the power and energy sector where sustainability is no longer a side agenda.

This article seeks to explore the foundational overlap between competition law and sustainability goals, in order to build a case for why India must start reimagining its competition framework in light of contemporary global developments.

Reframing Competition Law in the Age of Sustainability

Sustainability, in essence, is about continuity and stewardship. It refers to the responsible use of resources to meet present needs without impairing the ability of future generations to meet theirs. This concept now operates not merely as an environmental idea but as a composite lens encompassing environmental, social, and economic dimensions.

What the SDGs Really Mean for Business

To give operational clarity to this concept, the United Nations adopted the
Sustainable Development Goals in 2015. SDGs are a set of 17 global goals supported by 169 targets which include commitments to eradicate poverty, achieve gender equality, promote sustainable industry and infrastructure, and tackle climate change, among others. For the purposes of this article, the relevant ones are SDG 8 (Decent work and economic growth), SDG 9 (Industry, innovation, and infrastructure), SDG 12 (Responsible consumption and production), SDG 13 (Climate action), and SDG 16 (Strong institutions and access to justice).

It is imperative to recognize that the Sustainable Development Goals are not just aspirational checklists for governments. They influence business conduct, consumer preferences, and, by extension, market structure.

When Green Goals Disrupt Market Logic

In sectors like power and renewable energy, where clean and green energy transitions involve collective challenges such as grid balancing, open access, battery storage, and green hydrogen, the lines between sustainability and competition begin to blur.

Core Principles of India’s Competition Law

At its core, competition law in India is about preserving the freedom of the market. It is designed to prevent anti-competitive conduct such as collusion, cartelization, abuse of dominance, and mergers that may distort market structures. The overarching objective is to promote consumer welfare, market efficiency, and innovation.

The Economic Backbone of the Competition Act

The Competition Act, 2002 (“the Act”) replaced the Monopolies and Restrictive Trade Practices (MRTP) regime and aligned India’s competition regulation with modern economic theory. It prohibits anti-competitive agreements under Section 3, abuse of dominant position under Section 4, and regulates combinations under Sections 5 and 6. The Competition Commission of India (“CCI”) is the statutory body tasked with enforcement and policy advocacy.

However, traditional competition law analysis in India, much like in other jurisdictions, has predominantly focused on effect of pricing and market shares, often to the exclusion of broader policy concerns, such as environmental impact.

The consumer, in this view, is often defined in purely economic terms: one who benefits from lower prices and increased choice. This leaves little room to factor in long-term social benefits, such as environmental sustainability, into enforcement decisions.

Why ‘Consumer Welfare’ May No Longer Be Enough

Yet, the contemporary economy presents new challenges. Consumers increasingly prefer sustainable products. Investors look at ESG (Environmental, Social, Governance) scores before allocating capital and industries are under pressure to decarbonize and innovate responsibly. In such a context, the exclusive focus on short-term market effects may no longer be adequate.

Where Sustainability and Competition Law Collide

The interface between sustainability and competition law arises most clearly in the context of cooperative behavior among competitors. While competition law typically frowns upon horizontal coordination, seeing it as a threat to competition, certain kinds of cooperation may in fact be necessary to meet sustainability objectives.

Green Agreements or Cartels in Disguise?

For example, if a group of competing manufacturers agree to phase out a harmful material (such as single-use plastic) or to collectively adopt greener logistics technologies, they may incur higher costs and reduce price competition in the short term. Under conventional analysis, such agreements could be viewed as cartel-like or anti-competitive.

However, if such collaborations lead to systemic environmental benefits, long-term cost savings, or innovation that benefits consumers, should they still be prohibited? This is where the idea of “sustainability agreements” enters the conversation.

These are voluntary arrangements among entities, often competitors, that aim to further environmental or social objectives. They may include joint research initiatives, technology sharing, standard-setting for sustainable practices, or coordinated shifts in production models. The challenge lies in distinguishing between genuine sustainability efforts and greenwashing or disguised collusion.

How Should Law Distinguish Between Innovation and Collusion?

From a legal standpoint, the question is whether the benefits of such cooperation can be assessed and recognized within the existing competition framework. Can a sustainability-related agreement be justified under the competition law? Is there a public interest exception that can be applied? What is the evidentiary threshold for demonstrating sustainability benefits to consumers?

Although the Competition Act, 2002, does not explicitly provide answers to these questions, it may be possible to create a more flexible interpretation through guidelines, advocacy, or limited safe harbors, as has been done in some international jurisdictions.

Sustainability Agreements Under the Indian Competition Act

Why Section 3’s Structure Stifles Collaboration

The Act currently lacks explicit provisions to exempt sustainability agreements from scrutiny, and the Competition (Amendment) Act, 2023 has not addressed this gap.

Section 3 of the Act prohibits horizontal agreements that cause or are likely to cause an appreciable adverse effect on competition (“AAEC”) but offers an exception for joint ventures (JVs) that enhance efficiencies in production, supply, distribution, etc. However, the presumption of illegality under Section 3, borrowed from the U.S. Sherman Act, presents a significant barrier. Although “efficiencies” could be interpreted broadly to include environmental benefits (e.g., CO₂-reducing technology), the CCI’s interpretation has largely focused on commercial efficiencies.

Lessons from Efficiency-Centered Precedents

This was evident in Zee-Star, where the Competition Commission of India acknowledged distribution efficiencies, cost reductions, and piracy control, and in Association of Third-Party Administrators v. General Insurers (Public Sector) Association of India, where efficiency claims regarding loss mitigation and improved customer service were considered. Similarly, in the HIPTA JV case, Competition Commission of India recognized consumer benefits through efficiency enhancements in public sector insurance.

A major limitation is that the current JV exemption applies only to structured joint ventures and not to broader cooperative arrangements. Unlike Article 101(3) Treaty on the Functioning of the European Union (“TFEU”), which allows any agreement contributing to technical or economic progress while benefiting consumers, India’s provision is narrower. Moreover, Section 19(3) of the Act restricts the consideration of consumer benefits to those accruing to current consumers, excluding potential benefits for future generations which will be problematic in sustainability contexts.

Merger Review Offers More Flexibility Than Agreements

However, under Section 20(4), when assessing combinations, the Competition Commission of India has greater flexibility to weigh innovation and long-term benefits. In Andhra Pradesh Gas Distribution Corporation Ltd., the CCI approved a JV involving the state government, Engie, and Shell, noting the greenfield project’s potential to enhance natural gas infrastructure and efficiency in Liquefied Natural Gas (LNG) supply. This case highlighted the broader leeway in merger control as opposed to the rigid framework for agreements under Section 3. Therefore, structured as a combination, such JVs can be assessed more favorably than if they were merely agreements.

The lack of explicit Competition Commission of India guidelines on sustainable collaborations is another issue. Proactive green activities are currently discouraged by the requirement that businesses independently assess possible anti-competitive risks.

Can COVID-Era Precedents Guide Green Flexibility?

However, optimism can be found in the CCI’s “Advisory to Businesses in Time of COVID-19” issued on 19.04.2020. In order to enable the essential coordination during the epidemic, the Competition Commission of India temporarily loosened enforcement. This flexibility was further demonstrated in the Suo Moto Railway Vendors cartel case and In Re Cartelisation in Industrial and Automotive Bearings, when leniency was granted because of financial difficulties. These cases show the CCI’s willingness to allow situational flexibility within the Act, even though they have little to do with sustainability. 

Therefore, there is room for interpretation and modification even though the current legislative framework does not specifically support sustainable agreements. In order to give business confidence and prevent a chilling impact on collaboration motivated by sustainability, a proactive law modification is necessary rather than a gradual case-by-case progression—especially if competition law in India is to stay aligned with sustainability imperatives.

What Global Jurisdictions Are Doing Differently

Austria: Climate Protection as a Legal Defense

One of the leading organizations in incorporating sustainability into competition law is the Austrian Federal Competition Authority (AFCA). The Cartel Act, 2005 was modified by Austria in September 2021 to incorporate sustainability factors when evaluating agreements that would otherwise be considered anti-competitive. In the past, these agreements were exempt if they benefited customers and enhanced production or distribution. Now, the amendment specifically lists contributions to a climate-neutral and environmentally sustainable economy as a legitimate defense.

Legislative materials that accompany it provide the criterion for assessing the benefits of sustainability, including ecosystem restoration, climate protection, and circular economy techniques. These advantages might not only benefit current markets but also benefit future generations. A significant step toward bringing competition law into line with environmental objectives, even though the amendment’s actual implementation may be complicated. There appears to be a clear path for businesses to start incorporating sustainability into their operations. 

 United Kingdom: Legal Certainty for Green Cooperation

In addition to starting public consultations on a number of competition regulatory topics, the UK’s Competition and Markets Authority (CMA) published an information sheet on sustainability agreements and competition law on 27.01.2021.  According to the CMA, sustainability agreements are partnerships between companies (including trade organization and industry-wide programs) with the intention of accomplishing environmental objectives such waste reduction and energy efficiency.

The primary goals of the CMA are:

• ensuring sustainable development is not impeded by competition law.
• keeping companies from shunning legal sustainability projects out of concern that they would violate competition laws.

The CMA offers a framework flowchart to assist companies in structuring sustainability agreements that adhere to competition law.  Agreements that provide benefits to consumers, even if they may be restrictive, are eligible for exclusions under the UK’s Competition Act 1998. Further, courts have upheld contracts with justifiable goals, enabling them to escape the purview of competition law.

The CMA acknowledges in merger control that mergers that promote sustainability may result in efficiency or benefits for consumers that outweigh any possible anti-competitive implications.  These situations, however, call for a thorough, case-by-case examination.

European Union: Integrating Green Goals Into Policy Guidance

In light of the European Green Deal, a blueprint for transforming environmental and climate challenges into opportunities across all policy areas, the European Commission has carried out public consultations and a conference to evaluate how EU competition laws can support environmental and climate policies.

The European Commission (“EC”) recently released a policy brief supporting Europe’s green ambitions, addressing key challenges in aligning competition policy with sustainability goals. The brief highlights several concerns:

1. Green policies will only be effective if markets respond to incentives without distorting competition;
2. The EC must consider the varied conditions across member states to ensure a fair and socially acceptable green transition;
3. Uncertainty around how antitrust rules apply to sustainability goals may deter businesses from investing in green initiatives;
4. In merger control, stakeholders emphasized maintaining innovation-focused assessments to prevent loss of green innovation.

The EC affirmed that it would continue enforcing existing laws under Articles 101 and 102 of the TFEU and the European Merger Regulation. Rather than legislative overhaul, sustainability considerations will be integrated into updated guidance on horizontal and vertical agreements, outlining a roadmap for promoting green goals within the current competition law framework.

Policy Roadmap for India: Making Room for Green Goals

The Competition Commission of India should think about taking a proactive and enabling stance in order to harmonise India’s competition law with the Sustainable Development Goals. It can start by evaluating mergers and partnerships that support environmental sustainability, like low-carbon emission technologies, green innovation, and circular economy projects, favourably while making sure that any anti-competitive impacts are minimal. To help enterprises pursue sustainable practices with confidence and without worrying about legal ramifications, the CCI can also provide written or informal assistance on how sustainability agreements can adhere to competition law. This shift can also be aided by the creation of sector-specific or case-by-case advice frameworks, like in Japan.

The Competition Commission of India may investigate a regulatory sandbox approach to promote innovation, which would enable companies to try partnerships with a sustainability focus under its watchful eye without facing immediate enforcement action. Simultaneously, the Commission ought to think about toughening sanctions for anti-competitive behaviour that disrupts sustainability initiatives, such greenwashing or impeding the development of green technologies. It will be crucial to engage various sectors with financial and environmental authorities, following the example of the French authority’s working group.

Ultimately, in order to support India’s larger climate goals and maintain a resilient and competitive economy, the CCI must take the lead in incorporating sustainability into competition legislation.

Conclusion

Sustainability is becoming a key part of how businesses and markets work—something that competition law in India can no longer afford to ignore. As India works towards its climate-change and development goals, competition law should not stand in the way of genuine efforts to protect the environment. It is to be understood that the integration of sustainability into the competition law framework does not mean diluting the rigor of anti-trust enforcement; rather, it calls for a calibrated, forward-looking approach that recognizes the complex trade-offs inherent in green transitions.

Although India’s current competition law does not directly address sustainability, there is room to interpret and improve it. Drawing from international experience, the Competition Commission of India can begin by issuing clear guidance on sustainability agreements, adopting a more enabling stance on green collaborations, and encouraging innovation through flexible enforcement tools. By making space for sustainability within competition law, India can ensure that its markets grow responsibly, benefiting both consumers and the planet.

FAQs

References

1. World Commission on Environment and Development, Brundtland Report (1987)
2. The 17 Goals, Department of Economic and Social Affairs, United Nations, https://sdgs.un.org/goals.
3. https://sdgs.un.org/goals/goal8
4. https://sdgs.un.org/goals/goal9
5. https://sdgs.un.org/goals/goal12
6. https://sdgs.un.org/goals/goal13
7. https://sdgs.un.org/goals/goal16
8. Preamble, The Competition Act, 2002
9. The Competition Act, 2002, Act No. 12 of 2003
10. https://www.concorrencia.pt/sites/default/files/documentos/consultas-publicas/Best%20Practices%20on%20Sustainability%20Agreements%20-%20Draft%20for%20public%20consultation.pdf
11. Combination Registration No. C-2022/04/923
12. CCI, case No. 49/2010
13. CCI, case No. 107/2013
14. Andhra Pradesh Gas Distribution Corporation Limited/GDF Suez Energy International Global Developments B.V./Shell Gas B.V./GAIL (India) Limited, case No. C-2015/10/333
15. https://www.cci.gov.in/sites/default/files/whats_newdocument/Advisory.pdf
16. Suo Motu case No. 07 (02) of 2014
17. Viktoria H.S.E. Robertson, ‘The New Sustainability Exemption in Austrian Competition Law’ (2021) Journal of European Competition Law & Practice
18. https://www.gov.uk/government/publications/environmental-sustainability-agreements-and-competition-law/sustainability-agreements-and-competition-law
19. A European Green Deal’ (European Commission, 2019)

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