The Netherlands Authority for Consumers and Markets (ACM) wants to increase the opportunities for competing businesses to collaborate in pursuit of sustainability objectives. Businesses will have more scope to enter into agreements, particularly to achieve climate objectives such as carbon emissions reduction. ACM proposes to allow this in cases where the benefits for society as a whole outweigh the disadvantages of any restriction of competition.
This is set out in ACM’s draft ‘Sustainability Agreements’ Guidelines, which include examples illustrating the opportunities for business collaboration that contributes to a sustainable society. ACM is now presenting the Guidelines to national and international interest groups, businesses, academics, interested parties and government authorities for consultation.
Martijn Snoep, Chairman of the Board of ACM, explains: “We’re seeing that businesses are increasingly prepared to take responsibility for delivering a more sustainable society. We welcome that. The Guidelines give businesses more scope to collaborate to achieve that goal without breaching competition rules. We define that scope, but also set clear conditions to prevent ‘greenwashing’ and ensure that society as a whole benefits from the collaboration.”
More opportunities for collaboration
First of all, ACM explains in the Guidelines that certain types of collaboration do not restrict competition and are therefore already permissible, such as agreements to introduce certain quality marks and labels or joint agreements to comply with laws in other countries, such as bans on child labor or illegal logging.
In cases where agreements do restrict competition, they will be permitted if certain conditions are fulfilled. One such condition is that the benefits of the collaboration must outweigh the disadvantages. The benefits could include lower carbon emissions; the disadvantages could include a price rise for users. A new feature in these draft Guidelines is the way in which these benefits are weighed against the disadvantages.
Suppose five producers of product A agree with each other to make their production fully carbon-neutral. Users and non-users of product A will benefit equally from the reduction in carbon emissions. The disadvantage of the agreement is that the higher production costs will raise prices for users.
Carbon reduction is a key government objective and is enshrined in laws and treaties. The agreement between the businesses contributes to this objective. Under the current rules, the benefits for users of product A (lower carbon emissions) must be equal to or greater than the disadvantages for those users (price increase). Under the new rules, the trade-off is different: the benefits for society as a whole must be equal to or greater than the disadvantages for users. If the benefits for all of society are taken into account, they will more quickly outweigh the disadvantages. The agreement will then be permitted, because society as a whole benefits from it and it contributes to the government’s objectives.
Collaboration is permitted in some cases after a thorough analysis
The Guidelines also include some simplified conditions. For example, it is no longer necessary to a carry out a numerical analysis in all cases. In some cases it will be sufficient to give a full account of the benefits and disadvantages, for example if the combined market share of the businesses entering into the agreement is less than 30% or the benefits clearly outweigh the disadvantages.
No fines, but we may ask for changes
ACM will not impose any fines for joint agreements where businesses have clearly followed the Guidelines in good faith but ultimately do not meet all the conditions. In the first place we will ask for the agreements to be amended.
What do you think of the draft Guidelines? ACM’s consultation on these draft Guidelines is open until October 1st. Let us know your opinion by sending an email to firstname.lastname@example.org.