If you can't sell clothes to anyone, then it may be more socially efficient to destroy them than (a) keep them in a warehouse or (b) ship them overseas. Both (a) and (b) can have substantial environmental costs. I don't think it should be hard to come up with other plausible cases. You're assuming there's only one reason companies do this. I don't deny that that's a possible reason. I also don't see why taxing that behaviour would not reduce it.
Or (c) lower the price to the market clearing price point and your clothes will be gone.
You're assuming there is such a price! Charity shops throw out the majority of clothes they are given: some things just will never sell.[1]
[1] https://theclothingbank.org.uk/what-happens-to-the-clothes-y...
Once once they are rejected by charities, they can be destroyed just like before this law. EU regulators are flawed humans, but you can be assured that any argument you can come up with in 10 minutes has been considered.
Fair enough, but now I would "solve for the equilibrium" and assume that any large clothing company will have a friendly charity to reject its clothes for it.
Those are used clothes. New clothes, especially from a brand that would use a shredder to have a little more exclusivity? I expect almost all to sell just fine.
Market clearing prices can be negative i.e. you have to pay someone to "buy" them. This regularly happens in commodities markets. In agriculture, for example, negative market clearing prices is why a lot of food ends up in a landfill instead of on store shelves.