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Friday, 25 January 2013

Environmental concerns, non-economic objectives and washing machines

Having just marked a whole bunch of essays where students discussed the role, if any, of non-competition concerns in Article 101(3) TFEU analysis, which involved a discussion of the CECED decision by the Commission, I thought the following link was of interest: http://greedgreengrains.blogspot.co.uk/2012/12/do-consumers-benefit-from-energy.html It tells the story of what happened when the US Department of Energy increased standards for washing machines in 2007. The short version is that sales of less efficient washers reduced, although their prices increased and sales of more efficient washing machines increased significantly. The big point, however, is that the prices of the more efficient washing machines fell sharply around the time of the policy change. To quote: "… the price declines of the efficient washers was larger the price increases of the less efficient washers. And while overall quality of washers increased, average prices declined. Thus, not counting public and private benefits from energy saving, it seems pretty clear that consumers gained substantially from the policy change."

This is interesting because the CECED decision is often discussed as a case where the environmental objectives, energy efficiency, overruled or were at least of equal importance to the economic benefits to consumers, which were said to be less energy consumption and therefore cheaper bills. The analysis of the US case suggests that actually, and unexpectedly, there was no necessity to discuss environmental benefits – there were concrete economic benefits for consumers. It is politically useful to show competition law marching in step with environmental policy, but that is another issue.

My thanks to the Twitterfeed of Mark Thoma: @MarkThoma

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