Green agreements guidance issued by UK’s Competition and Markets Authority
The UK’s Competition and Markets Authority (CMA) has issued new guidance that explains how competition law applies to environmental sustainability agreements between firms operating at the same level of the supply chain, to help them act on climate change and environmental sustainability.
The CMA said businesses wanted more clarity about what is, and what is not, legal when working together towards environmental sustainability goals.
According to the CMA, the guidance sets out the key principles that apply, along with practical examples that businesses can use to inform and shape their own decisions when working with other companies on environmental sustainability initiatives. It explains that the CMA does not expect to take enforcement action against agreements that are in line with the guidance.
Sarah Cardell, CMA chief executive, said: “We know that tackling climate change and promoting environmental sustainability matters, and supporting businesses to do this is a priority for the CMA. So, we have developed the Green Agreements Guidance for all companies who are considering collaborating so they can understand how to agree green goals without breaking the law.”
She added: “The guidance goes further than before – it gives firms greater certainty about when agreements that genuinely contribute to addressing climate change will be exempt from competition law. Our open-door policy means we can work with companies to give them tailored informal guidance on how they can work together to boost the green economy.”
In an update on the guidance, law firm Eversheds Sutherland said the CMA was providing guidance to help businesses understand how they can collaborate on environmental sustainability without breaking the law. “Unusually, the CMA is also offering to provide comfort, or answer questions, where the guidance does not deal with the specific issue, promising not to fine parties or disqualify directors if its recommendations are followed but it later chooses to investigate or take enforcement action,” said Eversheds Sutherland.
The law firm said: “The guidance is a positive step in the right direction and, combined with the new open door policy, should help businesses achieve a greater degree of legal certainty when assessing their green collaborations under UK competition law, as well as offering certain helpful protections against enforcement. The CMA’s guidance therefore goes a long way to providing guidance in this area.”
But it added: “However, for those agreements that reach beyond the boundaries of the UK, businesses will still need to navigate the divergent, and in many cases less permissive, approaches of other competition authorities globally. While some competition authorities around the world, such as the European Commission, the Dutch Competition Authority, the Japanese Fair Trade Commission and the Competition and Consumer Commission of Singapore, have issued guidance in this area, the absence of a one-stop shop means that international businesses will face ongoing uncertainty as to the legality of their green collaboration initiatives under competition law.”
