The greening of the EC agrochemical market: Regulation and competition

Alain Nadaï

Business Strategy and the Environment, 1994, vol. 3, issue 2, 34-42

Abstract: This paper analyses the process of harmonisation of national pesticides regulations in the EC. One of the outcomes of this process was, in 1991, the adoption of an EC regulation which includes new environmental requirements for pesticides to be sold on the EC market. This regulatory process shows an example of trade‐off between competition policy and environmental policy. After having described the competition in the agrochemical sector, the paper examines this trade‐off in two ways. Firstly, the behaviour of industrial interest groups throughout the process and their influence in the devising of the regulation is considered. Secondly, the impact of competitive issues on the implementation of part of the 1991 regulation (i.e. the re‐registration of old pesticides commercialised in the EC) is analysed. This case study confirms some general results of the regulatory capture theory but it also points out some limits of these theories: firms seemed to be much more sensitive to negative pay‐offs than to positive ones when deciding to become involved in this regulatory process. A second insight brought up by this case study concerns the link between competition policy and environmental policy and its influence on the efficiency of the latter. Environment‐competition trade‐off in the agrochemical sector confronts the regulator, when it adopts environmental policy, with two risks: a risk of changing the structure of the industry (from a differentiated and innovative one to a commodity one) if the regulator does not provide sufficient pay‐offs for environmental R&D costs, or a risk of allowing part of the industry to increase monopoly rents. Both risks would affect environmental efficiency, either by reducing the innovation in the sector or by over‐protecting ‘greener’ pesticides from competition on price.

Date: 1994
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