The UK’s Competition and Markets Authority (CMA) has recently shared informal guidance aimed at aiding businesses in forming environmental sustainability agreements. This guidance comes as part of an effort to facilitate understanding and adherence to the UK Competition Act 1998 in light of increasing commitments towards climate change initiatives.
Insight into the Guidance
The CMA made this new guidance available by evaluating a proposal from WWF-UK. This proposal involves several top UK supermarkets that are taking strides to lower greenhouse gas emissions within their supply chains. Here’s a closer look at what this entails:
- Aim of the Guidance: The CMA’s primary objective is to give businesses greater certainty when entering similar sustainability agreements.
- Case Study Usage: The WWF-UK proposal serves as a potential case study, illustrating how agreements might look and operate under the new guidelines.
Open Door Policy
Under what the CMA describes as an ‘open-door’ policy, businesses are encouraged to seek informal guidance on new or uncertain agreements that might affect competition but also push forward environmental goals.
- Reassurances Provided: The CMA has stated that as long as agreements are discussed beforehand and no concerns are raised, enforcement action is unlikely—even if later reviews suggest more scrutiny is needed.
Key Points from the Informal Guidance
The CMA’s guidance sheds light on how it evaluates potential competition impacts versus environmental benefits:
- Assessment Basis: The CMA considers whether the commitments within the agreements would likely lead to a broader adoption of net zero targets or other emission-reducing measures.
- Balancing Act: It evaluates the possible competitive impacts against the environmental benefits, ensuring that the latter justifies any minor potential harm to competition.
CMA’s Assurance and Support
Ann Pope, CMA’s Senior Director of Antitrust, highlighted how the guidance assures companies that they can pursue their environmental objectives within legal boundaries:
- Encouragement for Engagement: The CMA is keen to assist sectors across the board, offering insights to ensure that customer fairness aligns with environmental efforts.
Consumer Benefits and Market Impact
The guidance points out several key benefits and considerations:
- Consumer Advantages: By reducing emissions, the agreements are expected to help mitigate climate change impacts, potentially lowering related costs for consumers.
- Market Effects: The CMA does not foresee any significant competitive harm or market disruption from these agreements, describing them as likely to foster positive environmental change without detrimental market effects.
Encouraging Broader Adoption
The informal guidance is not just about one agreement but about setting a precedent that could encourage other businesses to pursue similar paths:
- Phasing Out Non-Sustainable Practices: Described as a ‘phasing out agreement’, the guidance supports initiatives aimed at gradually eliminating unsustainable business practices without reducing market competition or consumer choice.
- Collaboration with Other Regulators: The CMA collaborates with other regulatory bodies like the Financial Conduct Authority to ensure a unified approach to enforcement and guidance.
Conclusion
This move by the CMA is seen as a progressive step towards supporting businesses in their efforts to tackle climate change through collaborative and competitive agreements. By clarifying the legal landscape, the CMA hopes to foster more robust and effective environmental strategies across the UK market, ultimately benefiting businesses, consumers, and the broader environment.
