Print this page

Sustainability Sandbox

Public consultation: Proposal for the creation of a sandbox for sustainability and competition in the Greek market

  • Update

For the conclusions of the Public Consultation please follow the link here.

 

1. Introductory

Sustainable development is currently a top public interest objective governing all areas of social and economic life. Competition policy, which defends and promotes competitive conditions in the economy in multifaceted ways, must be adapted towards the creation of solutions that promote sustainable development; it can therefore act in a complementary way to other initiatives; but it can also facilitate business initiatives aimed at the green transformation of the economy.

The present proposal for the creation of a “sandbox” for sustainable development (sustainability) and competition in the Greek market, forms part of policies for the promotion and strengthening of competition by the Hellenic Competition Commission (HCC). It follows an extensive international discussion; through the publication in July 2020 of a working text on sustainability and competition law; the organization in September 2020 of an international conference on the same subject; the publication in February 2021 of a joint technical study with the Netherlands Authority for Consumers and Markets (ACM); and the participation of the Hellenic Competition Commission as a coordinator (jointly with the ACM) in the working group on this issue set up by the European Competition Network (more information here). The HCC also sent the original sandbox proposal for comments to expert economists, competition academics, leading professionals in the field of competition and sustainable development, as well as consumer organizations.

The sandbox is a supervised environment where undertakings can undertake initiatives that contribute significantly to the goals of sustainable development while not significantly impeding competition. In this context, the proposal’s effects on both competition and sustainable development are assessed by the HCC in order to enhance legal certainty and reduce regulatory risk for investments in line with the broader public interest goals for sustainable development. An additional problem justifying such intervention by the HCC arises from the presence of imperfect financial markets, which either do not provide the required investments in view of their narrowness or, due to regulatory risk, and thus require additional guarantees. In this environment small and medium-sized enterprises would have found it increasingly difficult to attract investment for the green transformation of their activities. Hence, the sustainable development competition law sandbox forms part of the HCC’s efforts to enhance the dynamic efficiency of the economy and innovation.

If the HCC considers that the business proposal may contribute positively to the public interest, then the proposal can be implemented in the market under the HCC’s supervision for a certain period, in case specific competition law problems that require some form of monitoring may be identified. Therefore, this environment does not make it possible to avoid the application of competition rules in the market, nor can it be used for anti-competitive practices that simply contain some reference or a low contribution to sustainable development without overcoming the damage to competition caused (e.g. “green-washing” practices). On the contrary, it makes it possible to fully evaluate practices which make a significant contribution to the public interest by enhancing sustainable development.

The creation by the HCC of a supervised space for experimentation (i.e. the sandbox) for the promotion of innovative business initiatives in favour of sustainable development, inevitably includes the concept of introducing into the Greek market commercial logics and actions that had not previously been the subject of (or processed under) competition law. It also introduces the culture of promoting innovative business proposals and solutions (instead of taking a one-dimensional, law enforcement perspective), with a clear view to promote competition for sustainable development. The purpose of the HCC is to contribute to the green transformation of the Greek economy according to the principles of competition and to the creation of a new economic model which, ab initio, will avoid the creation of monopolistic situations which would be particularly difficult to limit in later phases of green growth, because of market tipping. It also integrates HCC’s commitment for openness in ecosystems. The cost to the HCC and to businesses of an ex post repressive policy, in the case where these anticompetitive structures and platforms are in place, would be particularly high and could create disincentives for green entrepreneurship.

Due to the innovative nature of the project for competition policy and competition enforcement, there is no direct comparison with other proposals/actions in other jurisdictions, in order to draw useful conclusions and take into account information. However, the operation of sandboxes is widespread in the financial technology (fintech) markets [see most recently the creation of a protected regulatory environment (sandbox) at the Bank of Greece]. Therefore, the proposal concerns a project that is innovative and which will undergoe a sui generis development and evaluation.

The sandbox will engage various industrial sectors, such as technology, environment and energy, recycling/waste management, healthcare, but also other sectors which – in the first phase – will aim to promote the environmental objectives of sustainable development. At a later stage, these initiatives may also cover all other goals set by the 2030 Agenda for Sustainable Development.
The proposal could complement other initiatives/actions for sustainable development taken at a wider public policy level.

The presentation of the proposal concerns the main points of the interaction between competition and sustainable development, the purpose of creating the sandbox, the general operating framework of the sandbox and the implementation framework for the project.


2. Sustainability and Competition

Sustainable development has entered our daily lives as an urgent challenge that requires drastic solutions to ensure better environmental conditions. The United Nations Agenda 2030 is the general common framework of all mankind for sustainable development, setting seventeen (17) Sustainable Development Goals (SDGs). Furthermore, the Paris Agreement sets targets for strengthening the global response to the threat of climate change in the context of sustainable development.

The goal of sustainable development aims to meet the needs of today's generations without compromising the self-sufficiency of future generations. It thus constitutes a holistic approach as it contains aspects, extensions and outcomes concerning the environment, society and the economy which are interrelated and mutually reinforcing. As the European Commission states, SDGs are a combination of the above elements/dimensions (environment, society, economy), setting goals for:

  • human dignity
  • regional and global stability
  • ensuring the "health" of our planet
  • fair and resilient societies
  • prosperous economies.

[See EU approach to sustainable development https://ec.europa.eu/info/strategy/international-strategies/sustainable-development-goals/eu-approach-sustainable-development_el ]

The EU states its commitment in achieving sustainable development and implementing the United Nations Agenda 2030. The Sustainable Development Goals are taken into account in all 10 priorities of the European Commission. [See. EU holistic approach to sustainable development https://ec.europa.eu/info/strategy/international-strategies/sustainable-development-goals/eu-holistic-approach-sustainable-development_el ]
In the European Green Deal, the EU states that “The EU will continue to lead international efforts and wants to build alliances with the like-minded. It also recognises the need to maintain its security of supply and competitiveness even when others are unwilling to act… The policy response must be bold and comprehensive and seek to maximise benefits for health, quality of life, resilience and competitiveness. It will require intense coordination to exploit the available synergies across all policy areas”. [See COM (2019) 640 final, The European Green Deal https://eur-lex.europa.eu/legal-content/EL/TXT/HTML/?uri=CELEX:52019DC0640&from=EN ]

The sandbox proposal forms part of this endeavour. The aim is to increase legal certainty regarding the application of competition law for undertakings willing to invest in green transformation, to create new green products, to set green standards for the production of products, services, energy, etc., by facilitating their development through this initiative, for instance in order to raise funds from financial markets.

The challenge for the Greek economy, which is evident also from other actions (see Circular Economy), is to create a modern industrial production base on the basis of sustainable development. In this context, the Greek economy can assimilate and create technologies in order to eliminate the technological gap that exists with other countries and economies, and also to contribute to the redesign of the world economy along green standards.


3. Sandbox for sustainable development and competition

The creation of a sandbox for sustainable development and competition primarily concerns the creation of a mechanism for the submission (to the HCC) of business proposals aimed at creating or enhancing the conditions for sustainable development and which, in order to materialize, necessitate greater legal certainty in relation to competition law enforcement. For proposals submitted on the basis of specific specifications and guidelines, the HCC may – in certain cases – issue a “no-enforcement action letter” to interested parties (following relevant analysis and evaluation). On the basis of that issuance, participants will be able to implement their proposal under the supervision of the HCC within a specific time frame. The operation of the no-action letter presents analogies with the mechanism used by the European Commission for accepting cooperation for reasons of public health due to the pandemic (see e.g. “Matchmaking Event” (25/03/2021) COMP/E-1/GV/BV/nb (2021/034137) regarding the production of pandemic vaccines).

The proposal mainly concerns multilateral behavior (agreement, decision, etc.), either between competitors (horizontal) or within a supply chain (vertical). Nonetheless, in some cases, it may also concern unilateral behaviour. The sandbox will initially operate within targeted industries, such as energy, recycling/waste management, industrial production of consumer products, production and/or distribution of food, pharmaceuticals, healthcare, etc.

The evaluation process of the proposal that is submitted to the HCC will take into account the existing competition law framework (paragraph 1 of article 1 of Law 3959/2011 and / or 101 TFEU and / or paragraph 3 of article 1 of Law 3959/2011 and / or 101 TFEU, the various Guidelines that have been issued, etc.) and in particular the relevant case law that has developed regarding the evaluation and inclusion of broader public interest reasons. This legal framework will be evaluated together with a number of criteria and Key Performance Indicators (KPIs) which are based on and are related to sustainable development. The criteria are designed and structured on a set of objectives and conditions employing the methods analyzed in the HCC’s Technical Report for Sustainable Development.

There would be various “levels” in relation to the practices that will be evaluated and particularly serious limitations where evaluating the effects of their implementation in the market would require the contribution of consumers and/or other relevant stakeholders.

The no-action letter would be subject to a limited monitoring by the HCC and, depending on the possible anti-competitive effects, would be put to market testing but also subject to specific obligations, especially in order to avoid other anti-competitive practices. Therefore, the acknowledgment given on the basis of the evaluations conducted in the context of the sandbox would be subject to compliance with the specific obligations set in order to avoid practices that harm competition – this will look closely to the process of commitments before the HCC (without the potential infringement decision).

The companies will exit the supervised sandbox area when the implementation of the proposal is completed on the basis of the directions given from the HCC.
The following are indicative examples of practices and how these may be evaluated in the sandbox. The examples do not prejudge the final evaluation in similar practices, nor do they limit the possibility – of applying – for inclusion in the sandbox of proposals that arise in other markets or relate to other types of projects than those mentioned.

 

Example 1: Two domestic washing machine manufacturers A and B are applying to the sandbox with the project to produce a new technological category of “green washing machines” which are less energy consuming. The request is made since, in order to achieve their aim, the companies consider that they should stop the production of washing machines that do not follow these green standards in order to reduce the risk of parasitism/free riding in their joint effort for the green transformation of their production. There are various (old and new technology) imports of washing machines on the market. The companies also agree to share customers for their new washing machines (A will sell to household customers / B will sell to professional customers) for reasons of better product promotion.

--> The main proposal may be positively evaluated (despite the limitation/reduction of production) as it ensures the provision of a new and innovative generation of washing machines that promote sustainable development due to energy or water use limitations. However, the additional vertical constraint (customer sharing) may be negatively assessed at first glance as incompatible / disproportionate to its contribution to sustainable development.

 

Example 2: The two largest companies producing plastic products for professional use in catering, agree to tie the sale of their products with new innovative recycling services that will reward/premium with discounts, so that they can extend the life cycle of the materials they use. The service may result in 50% reuse of plastic products.

--> The practice has significant anti-competitive implications (product-tying agreement, the tying itself, and possibly the discount reward scheme). On the other hand, the practice can bring about significant changes in the market, enhance the after-use life cycle of products (circular economy) and bring positive results in the fight against environmental pollution from plastics. The evaluation will take into account the relevant cost-benefit analyses both from the point of view of competition and from the point of view of sustainable development. Probably, a strict time limit for the implementation of the proposal (in order to consolidate the technologically advanced recycling service but also to ensure the possibility of third parties entering to the market and open the ecosystem) will provide a balanced perspective in the sandbox.

 

Example 3: A group of small and medium-sized enterprises creates a cluster with which they aim to share some production assets (e.g., new special machines) with a smaller environmental footprint.

--> This agreement may not be reviewed from the point of view of Article 101 TFEU, which does not apply to small and medium-sized enterprises with a turnover and market share that is below specific limits. However, it may be examined from the point of view of article 1 of Law 3959/2011. The production sharing agreement does not appear to have a significant impact on competition due to the promotion of sustainable development technologies by parties that would not otherwise have this possibility.

 

Example 4: All dairy industries together with packaging suppliers, have set a general goal of promoting the use of recycled packaging materials (cardboard and plastic) to a significant proportion in the production of milk and juice packaging. Under the agreement the largest percentage of the materials from which each package will be produced will constitute recycled materials (e.g., 75%). The packaging suppliers also agreed with the dairy industries to exclusively produce packages that meet the agreed standards, while the dairy industries agreed with each other to use only such packages from now on, without however limiting these purchases to specific undertakings. However, the parties acknowledge that the new recycling technology is expected to bring about a relative increase in the price of packaging materials for some period.

--> The evaluation within the sandbox may positively take into account that such – systemic – cooperation can bring about significant positive results to sustainable development. Although acceptance of this proposal may initially increase production costs due to the development of new technology; however, packaging and costs are a small part of the product’s total cost (which is also expected to fall in the future). With this investment the dynamic efficiency of these companies will be enhanced, for the benefit of consumers.

 

Example 5: A manufacturers association considers that it should aim to use mostly materials (e.g., 50%) produced from recyclable materials and for this purpose sets various standards (qualitative and quantitative (standard-setting)) for the use of similar materials in production process involving all its members.

--> The imposition of such standards can be seen as enhancing sustainable development and strengthening the circular economy. Although the imposition of standards and interference in the production process has potential to contain anti-competitive elements and impose restrictions to competition (production, commercial freedom), this practice may nevertheless be evaluated positively within the sandbox but following the weighing of the possible negative effects on competition with positive effects to competition and sustainable development. It may also lead to the imposition of an open ecosystem condition.

 

Example 6: The 6 largest supermarkets decide to create a “green standard” (standard-setting) for food producers who will take appropriate measures to handle and avoid food waste. According to the standard, 75% of this waste should be returned in the production process in any form.

--> According to the analysis above (see Example 5), the imposition of such standards can be considered to enhance sustainable development and the circular economy. Hence, the practice may be evaluated positively following some further assessment.

 

4. Purpose of the proposal

The purpose of the proposal for the operation of the sandbox for sustainable development (sustainability) is the creation in the Greek market of a supervised, space to attract innovative business proposals that contribute to sustainable development. Once the evaluation criteria are met, the HCC will be able to acknowledge that the specific business plans/models do not raise competition concerns through a new and fast process of submitting and evaluating these commercial transactions, and of monitoring their implementation.

The exercise would involve some process of balancing where, ultimately, the promotion of an outcome of wider public interest will be supported; this outcome includes business innovation itself as a step towards the ultimate goal of achieving sustainable development. This reasoning is compatible with competition law according to the relevant case law in terms of the inclusion of a superior public interest legitimate reason in implementing competition law provisions, in particular Article 1 of Law 3959/2011 and/or Art. 101 TFEU. One should also take into account the inherent importance of the competitive process for the faster and more efficient achievement of sustainable development goals. This weighting is therefore limited to the difficult cases (“hard cases”) in which some restriction of competition may be necessary to achieve the goals of sustainable development.

The design for the creation and operation of the sandbox takes into account various elements related to both the legal and economic analysis from the point of view of competition law; the analysis from the point of view of the criteria for sustainable development; the technological means to be used; the objectives for the achievement of sustainable development; the internal process, the staffing and operation of the HCC (operational capabilities); the real conditions in the Greek market and its potential for innovation.

The design of the sandbox configuration (project implementation and operation technology, rules and requested information, selection of participants, evaluation and analysis of proposals, etc.) will aim at the more efficient information management and lower administrative costs, both for the undertakings and for the HCC. The degree of involvement of the HCC will be that of monitoring (in the first phase through a screening process and in a second phase, if necessary due to the possible anti-competitive effects, through a thorough qualitative and quantitative assessment).

It is noted that there is no similar effort in other EU countries (or elsewhere) and the operation of such a sandbox can also contribute to the creation of added value for Greek companies and the Greek market (green model). In addition, the sandbox can be connected to other initiatives planned by various public bodies (e.g. actions for the circular economy), complementing and creating a public (eco-) system of actions and services offered for the green transformation of the Greek economy.


5. Sandbox operation

The sandbox will operate as a digital platform connected to the HCC website. The platform will provide a secure messaging space which will be the main means of communication between the parties and the HCC, thus ensuring the transparency of the cooperation. All information requested will be submitted to the platform by the parties. The “sustainability advocates”, to be appointed by the HCC will support the submission and further elaboration of proposals for business initiatives for green development.

The platform’s frontend page will each time display the industry/market for which the sandbox would be opened. Specific sectors of the economy will be selected each year to save administrative resources; but the possibility will also exist to submit proposals in other sectors. The frontend page will display the guidelines and information for the proposal’s cycle (submission process, evaluation, etc.).

Design-wise, the operation of the sandbox consists of 2 spaces:

  1. what the interested parties (frontend) and sustainability advocates see (if this service is chosen by the interested parties)
  2. what the team of operators / evaluators (backend) is working on.

The platform environment requires the user to provide the necessary information regarding the proposal and competition and sustainable development issues, which will be processed in the subsequent evaluation process. General Guidelines will be provided for the use of the platform. The frontend list lists the requested information, while the backend list lists topics that are evaluated for the corresponding information.

FRONTEND

BACKEND

* Possibility of exploratory contacts before the application

*Evaluation

1.    Activities of Parties (markets, regions, shareholders, relations with other companies, industry conditions, market structure, etc.)

Analysis of jurisdictional issues of the HCC

2.    Proposal presentation (target/aim)

Targeting assessment in relation to other HCC actions

3.    Positive feedback

-        Sustainable development (sustainability)

          -    Paris Agreement for climatechange

          -    (17 SDGs) etc.

-        Economic benefit

-        Correlation of benefit to existing purposes of national or European legislation

-  Evaluation of information based on the HCC’s KPIs for sustainable development.

-  Impact assessment / evaluation (quantitative, qualitative (e.g. in relation to spill-over in the market)

4.    Problem and impact to competition

-      Reason(s) for the proposal and documentation that the same positive result cannot be achieved (to the same degree) without cooperation between the companies 

-      What is the problem expected to be created to the conditions of competition?

-      What is the impact and the results?

Evaluation according to competition policy and law.

5.    Implementation schedule

Evaluation of practice at systemic level and over time

6.    Analysis of the results of the proposal’s implementation (market structure, possible behavioral issues)

Evaluation of reports and analyses / market simulation

 

There may be an initial contact stage (blue) with the interested parties to discuss initial suggestions/thoughts and clarify the evaluation framework. In this way, a “first contact” is established that will help the interested parties (as well as the HCC) in the organizational planning for the submission of the proposal. Therefore, the requirements remain at a “low” administrative burden level at such an initial stage but, at the same time, the processing and evaluation mechanism starts.

The next stage (green) is where the first official contact of the parties with the HCC takes place, where the first assessment of the project is made; its objectives; the market/industry concerned, etc. Similar to the above, the information requested at this stage is of a basic level.

The main stage (orange) concerns the main process of collecting studies/analyses and conducting the evaluation by the HCC. Detailed guidelines related to this stage (e.g. KPIs) are being developed and will be published.

Obviously, for the creation of such proposals there will be a process of exchange of information between the participants among themselves and also with the HCC. However, the information exchanged should only be related to the business initiative examined. If the information that is exchanged is considered to raise competition issues, then these will be thoroughly examined/assessed at this stage. Exchanges of information outside of the proposal will be dealt as usual.


6. Timetable

The proposal will follow the present time frame for mergers’ analysis


7. Sustainability forum

The creation of a sustainability forum is envisaged at a second stage, where interested parties can participate in discussions with each other (in the presence of the HCC) on issues that may be of interest to promote sustainable development, but also to incorporate the principles of competition in business initiatives.


8. Results

As mentioned above, the result of the evaluation of a proposal within the sandbox may be:

  •  the non-application of article 1 or 2 of Law 3959/2011 due to the absence of a restriction of competition,
  • the provision of a no-enforcement action letter by the HCC or possibly,
  • if deemed necessary, a positive decision regarding the exclusion of the proposal under paragraph 3 of article 1 of Law 3959/2011, following relevant amendments to the legislative framework of the HCC. Otherwise, the provision of such an exception will be refused.

In case of a positive decision, a guide “map” will be given to avoid problematic behaviors / structures to competition as well as guidance on competition issues that may arise. If appropriate, specific obligations of the undertakings that will participate in the business initiative will be mentioned, which will take the form of preconditions for the continuous implementation of the no-enforcement action letter. However, if significant problems arise at this stage for which there was no information and/or forecast, the overall approach can be re-evaluated.

In addition, for the application and implementation of the proposal there will be subsequent monitoring. “State-of-play” meetings may also be organized in order to discuss the progress of the business initiative at regular intervals (depending on the time frame which will be put forward for the implementation of the proposal).

9. Required actions

The next steps in implementing the sandbox creation proposal are:

  • Public consultation and process/evaluation of the responses,
  • Final settings and evaluations of legal issues regarding the operation of the sandbox,
  • Creating Key Performance Indicators,
  • Creating a framework for evaluating proposals,
  • Staffing of evaluators within the HCC,
  • Liaison with competent bodies / stakeholders,
  • Creating the platform,
  • First cycle of examination proposals (Autumn 2021).

Public consultation - Conclusions

The HCC’s public consultation regarding the proposal for the initiation of a Sustainability Sandbox in the Greek market has ended. We would like to thank all those that have contributed to the consultation process. Links to the publicly available contributions are provided below. 

1. Hellenic Confederation of Professionals, Craftsmen & Merchants (GSEVEE) (in Greek)

2. ABA Antitrust Law Section – Cover Letter (in English),  ABA Antitrust Law Section - Report (in English)

The next steps in implementing the sandbox creation proposal are:  

  • Final settings and evaluations of legal issues regarding the operation of the sandbox, 
  • Creating Key Performance Indicators, 
  • Creating a framework for evaluating proposals, 
  • Staffing of evaluators within the HCC, 
  • Liaison with competent bodies / stakeholders, 
  • Creating the platform, 
  • First cycle of examination proposals (Autumn 2021). 

Communication:

If you have any questions regarding the sandbox, please contact us at This email address is being protected from spambots. You need JavaScript enabled to view it. or you can contact us at +30 210 – 8809113.

According to Article 41(2) Law 3959/2011, as in force (without prejudice to Article 37 (2) of the Code of Criminal Procedure) officials of the Directorate-General for Competition are required to keep confidential the confidential information of undertakings, associations of undertakings or other natural or legal persons, which they receive on the occasion of the service (such as sales, prices, trade policies etc.). See also the relevant provisions in the HCC Rules of Procedure and the HCC Communication on privacy.

The Personal Data sent to the HCC will be used exclusively for the promotion, support and implementation of HCC responsibilities. Whenever HCC collects and uses Personal Data, it does so in the context of the implementation of the main public mission and its purposes, that is, to be able to answer your questions and contact you about anything else related to HCC activities. The HCC will not disclose to any third party and will not use your Personal Data in collaboration with it, unless it has your clear consent. More information can be found here.