Letter in response to sustainability initiative about reduction of illegal pesticides in garden retail sector
It has turned out that abolishing the use of illegal pesticides is quite difficult. Previous private initiatives to stop the use thereof by means of certification labels, for example, have failed to have the desired effect. Growers that use illegal pesticides incur fewer costs, and disrupt the competitive process with their illegal activities. In that context, ACM understands the necessity for retailers in the garden retail sector to make collective arrangements in order to combat such illicit competition based on the use of illegal substances. In that way, market participants contribute towards making their sector more sustainable.
What do the arrangements entail?
The participating retailers do not wish sell any plants that have been treated with illegal pesticides. If such plants are found anyway, the growers of these plants will not be completely excluded immediately. Supply may be resumed if the supplier or grower has notified the retailer in writing that no illegal substances have been used. In that context, the supplier or growers must also indicate what actions have been taken in order to prevent the substance that was previously found from being found again, and what actions have been taken to stop the use of such substances. The garden centers must have an additional test carried out that shows that no illegal substances have been used. The retailers do not exchange any competition-sensitive information.
What is ACM’s opinion?
Competition rules are not meant to protect competition based on illegal products or production methods. Arrangements among competitors aimed at curtailing the use thereof (and that do not go beyond that objective) are allowed. ACM emphasizes that such arrangements must be open and transparent, and that any decision regarding the exclusion of suppliers must be taken very carefully. On the basis of the information that ACM has received from the parties to these arrangements, this seems to be the case. That is why ACM does not consider this agreement to be anticompetitive.
Hence, ACM did not assess whether or not this could be necessary for the realization of the objective (sustainable or otherwise), if parts of the agreement were to be found to restrict competition anyway (a so-called permitted ancillary restraint). In addition, ACM did not assess whether the statutory exception under competition rules was applicable because, in short, the benefits of the agreement offset the costs, as explained in the draft Guidelines on Sustainability Agreements.
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