In most cases, a company can better its ESG performance by internal structuring. However, some situations may require a company to collaborate with its competitors to achieve broader ESG goals. Take the example of an airline that wishes to switch to a cleaner jet fuel. To offset the major costs that this will require, the airline (acting alone) will have to increase its airfare, and risk losing a competitive advantage vis-à-vis its competitors. To remedy this ‘first mover disadvantage’, the airline can collaborate with other airlines to adopt the cleaner fuel together, which will result in an increased airfare, spread across the board.
While this collaboration will be a step in the right direction towards a sustainable and environmentally conscious airline industry, it may raise alarm bells from a competition law perspective, inviting allegations of cartelization or anti-competitive behaviour from the Competition Commission of India (CCI).
Source: Barandbench
