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Clifford Chance

Clifford Chance

Antitrust/FDI Insights

More clarity on competitors working together towards sustainability goals

Sustainability is raising issues within competition law and various regulators in Europe are becoming increasingly vocal about enforcement policies in their own and other countries. Both in the daily press and in the recent Journal of Antitrust Enforcement, Martijn Snoep, the Chairman of The Netherlands Authority for Consumers and Markets (ACM) advocates far-reaching horizontal cooperation among competitors aimed at reaching sustainability goals.

According to Snoep, competition law should not stand in the way of collaboration between competitors that reduces negative environmental impacts, such as the emission of greenhouse gases. The ACM has been actively pushing this issue within the EU for some years already and has created guidelines for competing undertakings that want to team up to achieve sustainability goals. The guidelines indicate when such agreements are permitted and offer practical guidance for companies to assess in advance whether their proposed sustainability agreements are permissible. Critical factors are a counterfactual analysis and whether (end) consumers ultimately benefit (or at least obtain a fair share of the claimed benefits).


Competition law enforcement in respect of sustainability initiatives in the Netherlands

In 2022, the ACM approved the cooperation between competitors Shell and TotalEnergies in an informal opinion (in Dutch: informele zienswijze) about working on a project where CO2 is stored in empty gas fields. When applying the sustainability agreements guidelines, the ACM concluded that cooperation would restrict competition to a small extent between the two undertakings, but that the project's climate benefits were sufficiently important to outweigh the possible restriction.

Another example is where the ACM allowed garden centres to cut back on the use of illegal pesticides. The garden centre sector wants to collectively (temporarily) exclude cultivators of certain products containing substances that are toxic to humans, animals and the environment. The ACM has no issues with these arrangements as long as they are open, transparent and include a due process before a supplier is excluded.

The ACM also recently highlighted that undertakings should not be adverse to all forms of collaboration, as sustainability agreements do not have to restrict competition by definition. There can be agreements where undertakings join forces and realise sustainability objectives without violating competition law. Recently, soft-drink suppliers including Coca-Cola, Vrumona, Albert Heijn and Jumbo made arrangements regarding the discontinuation of plastic handles on all soft-drink and water multipacks. In its assessment, the ACM applied its draft guidelines regarding sustainability agreements and found that the agreement is unlikely to restrict competition or otherwise lead to consumer harm.

Competition and sustainability developments in Europe

On 10 January 2023, the Commission published draft guidelines on the application of Article 210a of the regulation on common organisation of agricultural markets (CMO Regulation). Article 210a CMO states that certain agreements relating to a predefined set of agricultural products (e.g., fruit and vegetables, diary and eggs) that pursue a sustainability objective do not fall under the cartel prohibition. Anti-competitive agreements in the agricultural sector that are indispensable for achieving sustainability standards are permitted, provided that a primary producer is involved in the agreement. Parties have until 24 April 2023 to comment on the Article 210a CMO draft guidelines. The guidelines are scheduled to enter into force by no later than 8 December 2023.

On 14 March 2022, the Competition and Markets Authority (CMA) in the United Kingdom published advice on how competition and consumer laws can help meet the UK's environmental goals. In practical terms, the CMA established a cross-organisational taskforce dedicated to sustainability issues, which in turn would provide further guidance on when sustainability agreements are unlikely to restrict competition. That draft guidance has recently been published and appears to be a welcome addition to the discussion on what flexibility there is under competition rules to take environmental benefits into account when considering exemptions for potentially restrictive agreements.

Conclusion and outlook

These attempts to provide in-depth guidance across Europe are welcome and help stakeholders to understand what they can and cannot do. Snoep advocates a shift away from an excessive focus on consumer welfare and short-term price effects. Under certain circumstances, it can be entirely fair that consumers ultimately pay for a short-term price increase for products that reduce the long-term risk of our planet becoming inhospitable for future generations, Snoep states. This cross-border trend of making competition laws more flexible provides momentum for anyone looking to partner with a competitor to work towards a more sustainable economy.

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