Global Value Chains, Competition Law and Sustainability in a post-coronavirus world

The Covid-19 pandemic highlights major flaws of the capitalist system. Disruptions of Global Value Chains (GVCs) have challenged access to essential products such as medical equipment, medicines and food. Overnight a wave of trade protectionism took the form of export barriers and calls for the nationalization of GVCs. Dependence on China was to blame, but bottlenecks are caused by rising market concentration that takes place even at the national level. The meat shortage in the United States is a paradigmatic example. Lessons from the current crisis require novel political solutions with a view to a sustainable future. A better understanding of power and law in an interconnected economy paves the way for this transition. Even before the Covid-19 crisis, innovative systems of private governance have emerged. Sustainability-marketed products are a reality that is here to stay, pushed by growing consumer awareness of the connections between public health, deforestation and animal farming. However, while some degree of market concentration allows powerful firms to grant extraterritorial reach for their private sustainability standards, concentration is also responsible for supply disruptions. Against this background, competition law has gained ground among academics aiming at connecting business regulations with the sustainability agenda. Research, however, is only in its early stages. On the one hand, the traditional exclusively economic approach of competition law threatens to limit private sector engagement with environmental and social externalities of their activities. On the other hand, competition law is well-placed to offer intrasystemic solutions to the uneven distribution of costs and benefits in GVCs. Political scientists have been arguing that green accumulation takes place by squeezing value out of suppliers – smallholder farmers in particular. Costs are pushed downstream, while value is captured upstream. Fairness and equality are foundational concepts of competition policy that could offer new perspectives to debates on just sustainable transition. This research contributes to the discussion by assessing the underlying power dynamics in the GVC structures of the Brazilian agrifood exports. Looking specifically into market concentration and value distribution, this study combines a GVC power-theoretical approach to private governance with an analysis of the competition policy systems surrounding selected value chains. The lack of an international competition regime means that national systems overlap when it comes to long and complex GVCs, resulting in the intervention of multiple jurisdictions. As a leading exporter of primary commodities that has China and the European Union as main end-markets, the Brazilian case-study allows for taking into account power asymmetries both at the micro (GVCs) as well as the macro (Global North-South dichotomy) levels. The goal is to shed new light into the role of competition policy and the normative implications of private governance. The challenges unveiled by this pandemic point out that the diversification of GVCs is crucial for a resilient global system. A lasting and just sustainable transition also requires overcoming pervasive anticompetitive practices. Without assessing the distributional effects of private governance there is a risk of, under the mantle of sustainability, locking-in uneven patterns of development and exacerbating global inequalities.