Green Agreements Guidance: Competition watchdog unveils environmental collaboration rules for businesses

The Authority’s new Green Agreements Guidance, published today (12 October), interprets how existing competition laws should be applied to businesses looking to create joint projects with environmental sustainability outcomes.

Its recommendations apply to groups of firms operating at the same level of the supply chain, participating in so-called ‘horizontal agreements’.

CMA members have been repeatedly told, especially since the UK legislated for net-zero by 2050 back in 2019, that fears of falling foul of competition rules have dampened business appetite for joint projects on green issues. As such, the Authority started consulting on the new Guidance earlier this year.v

There is a clear focus on projects relating to reducing climate impacts and preparing for climate-related adaptation but the principles included in the Guidance can apply to all sustainability-related topics.

The framework provides advice on a range of different kinds of collaborative workstreams, from projects in which two or more businesses jointly invest in a low-carbon solution, to collective consumer research, to industry-wide schemes through which businesses set shared environmental targets.

Agreements which do not breach the principles will not be the subject of legal action from the CMA, the Guidance states.

Gareth Mills, Partner at law firm Charles Russell Speechlys, described the 45-page Guidance document as “voluminous” and “representative of a proactive approach from the CMA to create a regulatory environment capable of reviewing and approving sustainability agreements between competitors that might otherwise have fallen foul of black letter competition law”.

Tailored advice

After listing a set of principles and categorising different kinds of collaborations by risk level, the Guidance confirms that the CMA will encourage businesses and other bodies to approach its staff for bespoke advice before reaching a green agreement which could potentially breach competition laws.

It will implement an “open-door policy” to hear from any business that has questions or concerns about the application of the Guidance. Trade associations and NGOs are also being invited to have these kinds of conversations. Whoever requests the guidance, this must be done at the earliest possible opportunity in the development of a new agreement.

Mills added: “The nature of the CMA’s ‘open-door policy’ and how it will be structured is the clearest indication possible that the CMA wishes to facilitate a more collaborative regulatory landscape, by policing it less stringently than they usually would.”

Related article: How can businesses avoid falling foul of the CMA’s Green Claims Code?