Competition authorities in the Netherlands and the UK have staked out their positions in what continues to be one of the hottest topics in European antitrust: the question of how competition policy and sustainability objectives should interact and especially the rules around green cooperation between competitors.
These issues are set to receive even greater attention through 2021, particularly in the run up to the 26th UN Climate Change Conference (COP26) in November and following the US’s recent return to the Paris agreement.
Guidance to encourage ‘good’ initiatives….
The Dutch competition authority (ACM) has been a real thought leader in this space, being the first to issue guidelines on sustainability agreements and competition law in summer 2020. Following a public consultation process, the ACM has now published revised guidelines (available here). Key updates include:
- additional clarity on which agreements will likely benefit from the ‘environmental damage agreement’ (EDA) classification. The revised guidelines maintain the distinction between EDAs and ‘other’ sustainability agreements and seek to clarify the EDA category in response to consultation feedback that this was an area of legal uncertainty. The distinction is important as a different legal test is applied to EDAs meaning that (unlike for other sustainability agreements) end-users need not be fully compensated for the harm caused by the restriction of competition;
- more guidance on how sustainability and efficiency benefits can be demonstrated in practice and which evidentiary methods can be used. Notably, the ACM has confirmed that – especially in the context of EDAs – benefits generated outside of the Netherlands can in principle be taken into account in an assessment; and
- a clear reiteration that companies that cooperate to combat the climate crisis and other sustainability goals will not face antitrust fines from the ACM if they follow the revised draft guidance during the ongoing EU-wide consultation period. The ACM has stressed that it is open to consult with companies that plan to enter into such agreements.
In the same week, the UK’s lead competition authority (CMA) also issued guidance (for the first time) to support businesses’ compliance with competition law when engaging in sustainability initiatives (available here). A CMA blogpost accompanying its guidance notes that “[w]e’re conscious that, although numerous competition law guidelines have been produced over the years, it may be difficult for businesses and NGOs to navigate the competition law framework, which could mean they abandon sustainability initiatives which are in fact unproblematic from a competition law perspective or which may benefit from an exemption. Equally, it is important to be aware of the consequences of breaking competition law and to understand what is and isn’t permitted”.
Unlike the ACM, the CMA has – for now at least – limited its guidance to the applicability of the existing competition law framework, but has indicated that it will consider whether further steps are needed as it engages with stakeholders. Its guidance is currently more conservative than the ACM’s, consisting of an “information sheet” that largely restates the existing analytical framework for assessing horizontal cooperation agreements with some limited application to environmental sustainability agreements (for example, referencing standard setting).
While there is little in the CMA’s materials that could be regarded as new, the fact the guidance has been issued at all is telling of the growing importance and topicality of this issue. It represents a useful resource for companies looking to launch new sustainability projects and should be welcomed.
… combined with a crackdown on fake ‘green’ claims
While the new guidelines are intended to help businesses steer good faith sustainability initiatives through existing competition laws, the ACM and CMA are simultaneously on the look-out for unscrupulous practices that may be conducted under the (fake) cloak of ‘greenness’. Both authorities have warned that they will investigate and take action against companies that put out false or misleading sustainability claims. The ACM has published separate guidance on the applicability of consumer protection laws to unfair trading practices including false or misleading sustainability claims; the CMA plans to do the same in summer 2021.
Looking ahead: a push for more policy coherence in 2021
The issuance of both sets of guidelines can be read as a collective recognition by the ACM and CMA of the need to address the ongoing debate around competition law and sustainability issues (at least on some level). However, their accompanying public statements also highlight how the views – and enforcement appetites – of national regulators differ on the best way to approach sustainability agreements in practice.
Within the EU, the importance of community-wide policy coherence was a common theme in the feedback the ACM received from companies responding to its consultation. Recognizing this major challenge for the international business community, the ACM has firmly put the ball in the EU’s court by stating that its guidelines are now ready for discussion at European level. The European Commission is hosting a highly anticipated sustainability conference this week (on 4 February) where the intersection between competition law and sustainability issues will be discussed in detail. It will be fascinating to see how the debate evolves in that conference and over the coming weeks, as competition authorities continue to grapple with these challenges and begin to stake out their positions more firmly in this space.
For more insights on the role of antitrust in driving sustainable economic growth, please see our 10 key themes for 2021 report or contact a member of our team directly.