BUSINESS NEWS CMA Green Agreements Guidance: Regulator issues cooperation guide. Ian Taylor reports


CMA outlines deals that won’t breach competition rules


The CMA Green Agreements Guidance notes “rules around how businesses can and cannot work together” stem from the Competition Act 1998. It makes clear several categories


of agreements are “unlikely to raise competition concerns”. These


include agreements to: O Run joint campaigns to raise


awareness about environmental sustainability, so long “as these do


not amount to joint advertising”. O Set non-binding, industry-wide


environmental sustainability targets. O Develop new products or initiatives where none of the parties


could do the same individually. O Participate in an environmental sustainability standard, such as green labelling, or to


phase out unsustainable products. The CMA suggests sustainability


agreements “are likely to restrict competition” if they result in “an increase in price, or a reduction in choice, quality or output”. However, an agreement that


restricts competition may be lawful if it meets the criteria for exemption, such that “the benefits for consumers outweigh the harm. For example, agreements that result in price rises may be permitted if businesses can show the benefits . . . outweigh the costs. If an agreement helps combat climate change, the benefits for all UK consumers may be considered.”


Eco cooperation guidance ‘may have little impact’


Competition and Markets Authority (CMA) guidance to businesses on how to cooperate on sustainability without contravening competition law “may not make much difference”, according to a competition lawyer. The CMA issued a Green


Agreements Guidance document on October 12 to “give firms greater clarity about agreements addressing environmental sustainability, including climate change”. It explains how agreements on tackling climate change will be considered, following a consultation earlier this year. The authority pledged to offer


“an open-door policy” for businesses and their representative bodies, non-governmental organisations and charities to seek guidance informally. It noted “businesses want


more clarity about what is legal when working together towards


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environmental sustainability goals” and said it “does not expect to take enforcement action against environmental sustainability agreements that correspond clearly to the principles in this guidance [or] where parties approach the CMA to discuss their agreement . . . provided relevant information is not withheld.” Sarah Cardell, CMA chief


executive, said: “We’ve developed the Green Agreements Guidance for all companies considering collaborating so they can understand how to agree green goals without breaking the law.” Ian Giles, EMEA head of antitrust


and competition at global law firm Norton Rose Fulbright, hailed the CMA for “sending a strong signal to businesses and other authorities”. He noted: “Confirmation of the


CMA’s more permissive approach for ‘climate change agreements’ is a positive development.”


Guidance aims to help firms agree green goals legally


However, Giles warned: “This


may not make much difference in practice because businesses will still need to demonstrate climate change benefits are in line with or exceed existing legally binding requirements or national or international targets.” He also warned: “The challenge


continues to be that if agreements impact on more than one country, they need to navigate different approaches.”


Green Agreements Guidance is third issued by regulator


The Green Agreements Guidance is the third in a series of documents on environmental sustainability issued by the competition, markets and consumer law regulator. The CMA published a Green


Claims Code in September 2021 on the obligations of businesses under consumer protection law when making claims about environmental sustainability, and it issued advice to the government in March 2022 recommending: “Changes to consumer law to make it easier for consumers to make sustainable choices and to support effective enforcement against breaches of consumer law that may give rise to environmental harm.” It also recommended the


government encourage “greater consistency and coordination across sectors and regulatory regimes in the approach to tackling climate change”. The CMA outlined “key


changes to competition and consumer law the government


might consider” including: O Legislating to create standardised definitions of commonly used environmental terms to which


businesses must adhere. O Confirming in legislation a requirement for mandatory


disclosure of information. O Legislating to require businesses to provide better environmental


information to customers. O Adding misleading and/or unsubstantiated environmental claims to the banned practices


under consumer law. O Extending consumer protection remedies to address harm to the environment caused by commercial practices.


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