Competition watchdog sets out plans for business collaboration on climate

The Competition and Markets Authority (CMA) has provided its environmental sustainability advice to the Government, in a move which could change how businesses can work together on pre-competitive environmental issues.

Competition watchdog sets out plans for business collaboration on climate

The advice is part of plans to help business collaboration on initiatives that would reduce emissions or improve climate adaptation across the economy.

As part of that work, the CMA found that businesses needed more clarity about what is, and what is not, legal when working together towards sustainability goals.

Brexit has also offered an opportunity for the CMA to go further than it has before in providing reassurance to businesses and clarity on the CMA’s enforcement approach in relation to environmental sustainability agreements.

The CMA’s proposed new guidance, published this week in draft form for consultation, explains how competition law applies to environmental sustainability agreements between firms operating at the same level of the supply chain.

The new guidance will help businesses take action on climate change and environmental sustainability generally, without undue fear of breaching competition rules.

CMA chief executive Sarah Cardell said: “Tackling climate change and promoting environmental sustainability are priorities for the CMA and many businesses across the UK.

“We hear increasingly that firms want to do more to cooperate and tackle climate change issues but are worried that competition law may prevent or impede them from working together to address them.

“We are committed to helping these businesses deal with the issue together, without unfounded fear of breaking competition rules.

“The draft guidance goes further than we have done previously. It gives firms greater certainty about when agreements that genuinely contribute to addressing climate change will be exempt from competition law.

“Businesses involved in agreements promoting environmental sustainability should also be assured that if they have concerns, they can speak to us, and we can provide bespoke advice.”

Cardell first announced plans for this guidance at a speech at the Scottish Competition Forum in January.

In its draft annual plan for 2023/24, published in December 2022, the CMA also set out that supporting the UK’s transition to net-zero is one of its key aims for the upcoming year.

In the draft guidance, the CMA has provided clear working examples that businesses can use to inform and shape their own decisions when working with other companies on environmental sustainability initiatives.

It explains that the CMA is likely to look favourably on agreements that are in line with the guidance and is very unlikely to prioritise them for enforcement action. The draft guidance also invites parties to approach the CMA for informal advice, in what it is calling an ‘open-door policy’.

The draft guidance published today is part of a wider range of documents on horizontal agreements between businesses.

This follows work from the CMA’s Sustainability Taskforce after it published its environmental sustainability advice to the Government in March 2022.

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