French Competition Authority publishes first informal guidance in the animal nutrition sector following Sustainability Notice

On 27 May 2024, the French Competition Authority (FCA) published a notice to help companies align their sustainability initiatives with competition rules (Notice). This Notice establishes a procedural framework to provide informal guidance on the compatibility of sustainability initiatives with competition rules.

On 2 July 2024, the FCA published its first informal guidance, outlining how it will implement this new framework. This is a welcomed move in a context where there were uncertainties about the level of publicity that would be given to the FCA’s informal guidance. The Notice grants companies full flexibility, stating that publication on the FCA’s website requires the applicant’s express consent.

Summary of the informal guidance adopted by the head of the investigation unit (Rapporteur Général)

Origin of the request: Two professional organisations representing companies active in the animal nutrition sector. 

Request details: The organisations sought to determine if their draft methodological guide for measuring the environmental footprint of animal nutrition products, particularly their greenhouse gas emissions, complies with competition laws.

Admissibility of the request: The Rapporteur Général focused on two criteria when accepting the request: (i) the issue had not been previously assessed; and (ii) it was difficult to self-assess the project’s compliance with competition rules.

Legal framework: The project was assessed under the new chapter on sustainability agreements in the European Commission’s Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal cooperation agreements (Horizontal Guidelines). The assessment focused on the six conditions set by the Horizontal Guidelines necessary for benefiting from the safe harbour provision.

Key takeaways of the assessment: 

• Information exchange: The FCA emphasised that safe harbour conditions require that working groups do not exchange commercially sensitive information beyond what is objectively necessary and proportionate to develop, implement, adopt, and modify the guide.
• Voluntary and inclusive nature: The guide’s voluntary, non-exclusive nature, the potential for companies to deviate from it, including by going beyond, as well as access for non-member companies are crucial elements for the competitive assessment and should be clearly stated in the final version of the guide.
• Scope of the methodology: The guide’s strategic focus is on the greenhouse gas footprint, particularly carbon emissions. The Rapporteur Général flags the risks of discouraging manufacturers from measuring and reporting on other environmental aspects to their clients. The FCA therefore suggests that the guide states that users can take additional greenhouse gas measurements beyond those suggested and measure other environmental elements to avoid discouraging broader environmental reporting.
• Scientific robustness: Ensuring the methodology and data are scientifically sound is crucial for compliance with competition rules. Particular attention must be given to how the methodology is designed, including the underlying principles of the calculation and the scope of the footprint sources (minimising the exclusion of sources). The Rapporteur Général recommends a shift towards manufacturer-specific qualitative data instead of sector average data, and ensuring third-party verification of the data is undertaken.

The Rapporteur Général concluded that, if the project is adopted in the terms submitted for informal guidance, including planned modifications and recommendations expressed in the guidance, there would be no grounds to open an investigation or ask the FCA to start proceedings against it.

The first informal guidance by the FCA follows similar informal guidance published in 2022 in Germany for sugar producers and in the Netherlands in the carbon capture and storage sector. Although the European Commission has not yet issued similar guidance, both Commissioner Margrethe Vestager and Director General Olivier Guersent have clearly indicated a willingness to discuss sustainability initiatives with businesses.