The UK antitrust authority CMA has published advice on how competition and consumer laws can help meet the UK's environmental and sustainability goals and has outlined plans for a Sustainability Taskforce. CMA has recommended a number of actions for the government to consider, including changes to consumer law which make it easier for shoppers to make sustainable choices.
The CMA has not seen sufficient evidence that competition law prevents firms from acting sustainably. For example, it is already possible for companies to work together to lessen the environmental impact of their sector, by pooling resources or expertise, without breaching competition rules. However, the CMA has found that more clarity about what is, and is not, legal would help firms work towards sustainability goals without worrying that they are breaking the law in the process. The CMA has expressed a view on the ongoing international debate around the circumstances in which agreements that restrict competition can qualify for exemption under competition law. These agreements between businesses could include working together to reduce waste or improve biodiversity. For an agreement to be exempt from competition law, the businesses’ customers should receive a ‘fair share’ of the resulting benefits, typically through lower prices or higher quality goods.
According to the UK Competition Act, in order for sustainability agreements to be exempted, the agreement must not completely eliminate competition, the benefit must emerge, and consumers should be able to get a 'fair share' of this benefit. According to the CMA, if the restriction of competition in a sustainability agreement offers more consumers environmental benefits than those who suffer, those benefits should be considered a 'fair share'. While evaluating the environmental benefits, the relevant provision of the law is suitable for broad interpretation. Suppose the government considers it necessary to be more specific about how environmental benefits should be taken into account. It will be possible to change the legislation by taking similar provisions in Austria as an example. However, the CMA did not see the need for urgent and significant changes in competition and consumer legislation to remove barriers to the government's achievement of its 'net zero' and sustainability goals. Finally, by establishing a Sustainability Task Force within the CMA, CMA announced its aims to guide the government, control whether legislative changes are required, and contribute to the formation of the national corporate strategy.
(CMA – 14.03.2022)
NAZALI TAX & LEGAL