A hint of how their cooperation might work could be seen last month when 181 chief executives who are members of the Business Roundtable signed on to a new “Statement on the Purpose of a Corporation.” The statement’s community-minded goals included a vow to “protect the environment by embracing sustainable practices across our businesses.”
Such coordinated efforts could make a vital difference in the fight against climate change, yet just a few weeks after the Business Roundtable’s announcement came evidence of how difficult pursuing that goal could be under an administration hostile to climate concerns.
The Justice Department has launched an antitrust investigation of four automakers — Ford, Honda, Volkswagen and BMW of North America — over an alliance they struck with the state of California to maintain higher fuel-efficiency standards than those the Trump administration is seeking.
As an antitrust lawyer for several decades and a former government official in charge of promoting competition in the communications industry, I can see how antitrust law could be tortured into a weapon wielded against joint corporate good deeds. That’s why companies need to act now to prevent such abuse.
In the case of the agreement regarding the California emissions standard, a prosecutor or plaintiffs’ lawyer could contend that the automakers’ efforts to keep fuel efficiency higher than necessary by a new government standard would raise prices to consumers. The lawyers might further argue that such an agreement would deter a low-cost, high-emissions entrant from entering the market.
If the automakers were found to have agreed to, in effect, raise prices or prevent competitive entry, they might be in trouble on antitrust grounds. They might not even be permitted to defend themselves by maintaining that they were trying to help avert a global environmental disaster or save countless lives by restricting the number of cancer-causing particulates injected into the atmosphere.
Under normal circumstances, this clash between questionable legal theory and real-world necessity could be avoided through an exercise of prosecutorial discretion. But this is the Trump administration. The White House’s indifference to combating climate change can be seen in its commitment to expanding coal’s market share, to scuttling the Paris agreement on global warming and to reversing the Obama administration’s requirement for more-efficient automobile engines. Prosecutorial discretion in the California case is unlikely.
Major U.S. companies need protection from antitrust law so that they can feel free to work together in the fight against climate change, without fear of prosecution by the Trump administration or any future administration that shares its benighted environmental views.
Firms such as those in the Fortune 500 should jointly take at least three steps to achieve this end.
First, petition Congress to pass a law immunizing all joint action taken to adopt energy-reducing practices and curtail greenhouse-gas emissions. Under the First Amendment-based Noerr-Pennington doctrine — the result of two Supreme Court cases in the 1960s — firms can cooperate to seek the passage of laws without violating the antitrust law’s proscription on anticompetitive agreement. If President Trump vetoes the bill, revive it under a friendlier administration — the battle against global warming will be waged for decades.
Second, the companies should pool resources to fund research into energy efficiency and greenhouse-gas-reduction technologies that they agree to give away free to anyone who wants them. Doing so would be a cost indirectly imposed on consumers and shareholders. That could be a potential antitrust concern in other areas, but joint research to produce commonly available technologies does not violate the antitrust laws. It is also common practice and, in this context, a necessity.
Third, firms should argue to courts that collective action to save the planet is a good defense against any antitrust complaint. A virtue of U.S. antitrust law is that its core statute, the 1890 Sherman Antitrust Act, finds its interpretation principally in judicial rulings and not in statute. Courts thus have the power to declare that the imperative of winning the battle against climate change bars public or private antitrust action against collaborating firms. As soon as business can find the right test case, it should collectively seek a definitive ruling from the highest court.
Far from being scared off by the Trump administration’s apparent intention to use antitrust laws against them, U.S. companies should know that the legal system would be on their side if, say, they agreed to impose carbon taxes on themselves or to move their entire global supply chains to renewable energy. Let the collaboration begin.