Recent research undertaken by the Dutch Authority for Consumers and Markets (ACM) indicates that most companies surveyed value sustainability and consider collaboration with customers, suppliers and competitors essential for improving the sustainability of their operations. Notably, large companies seem to work together much more often than small and medium-sized enterprises.

However, any agreement between competitors, including sustainability agreements, risks violating competition law. At the same time, it is fair to say that the relationship between competition law and sustainability agreements has been and remains in flux. Contemporary developments further highlight the interplay between competition law and sustainability in Europe. The European Commission, for instance, recently emphasised that competition policy will play a considerable role in its clean industry plans. The Commission has even indicated that it will soon begin assessing the prospective impact of proposed mergers on the affordability of sustainable products and clean innovation or on creating efficiencies that bring sustainability benefits. The Commission has also been prioritising sustainability-related antitrust enforcement for some time now, including recently fining car manufacturers and their industry association around EUR 458 million for anticompetitive agreements and concerted practices related to the recycling of end-of-life vehicles. The Commission had previously fined car manufacturers EUR 875 million for restricting competition in emission cleaning technology for new diesel passenger cars. Other Commission sustainability-related antitrust investigations are ongoing as well, including one concerning alleged abuse of dominance in wholesale electricity markets in Greece.

Our ABA contribution

Against this background, we are pleased that our article, Sustainability Collaborations: The Dutch Policy Rule in Action, has been published by the American Bar Association's International Antitrust Committee as part of its recent Perspectives issue: Perspectives on International Antitrust: Sustainability and Antitrust (article available here).

Our article delves into the ACM's nonconformist National Policy Rule on Oversight of Sustainability Agreements, including its background, structure and relatively progressive approach to the competitive assessment of environmental damage agreements and agreements ensuring compliance with binding sustainability rules. We discuss the ACM's enforcement choice not to review such agreements in detail and limit itself to an informal assessment.

We note in our article that although the ACM is comparatively more lenient than the Commission, its approach, including a commitment not to impose fines in some cases, extends to overlooking sustainability agreements potentially incompatible with applicable EU rules set out by the Commission in the Horizontal Guidelines (see our previous article). This, in turn, limits the degree of legal certainty that ACM's assessments can provide companies, considering Dutch sustainability agreements are likely to affect trade between EU member states and thus attract scrutiny by the Commission, and possibly even at the member state level. For example, unlike the ACM's policy rule, the Portuguese Competition Authority's Best Practices Guide on Sustainability Agreements does not provide additional leeway to particular types of sustainability agreements and largely mirrors the Commission's approach.

Other authorities, including several outside the EU, have also clarified their views on sustainability agreements, including when a proposed sustainability agreement that will likely affect competition parameters can benefit from a statutory exemption. One of the critical conditions to benefit from a statutory exemption is that the consumers affected by a restriction of competition receive a "fair share" of the possible benefits stemming from the sustainability agreement in question. As per the Commission, consumers only receive such a fair share if the benefits deriving from the agreement outweigh the harm caused by the agreement so that the overall effect on consumers in the relevant market is at least neutral, or in other words, consumers are fully compensated. In this connection, the Commission imposes a strict condition requiring a substantial overlap between the affected consumers in the relevant market and the beneficiaries outside that market. In contrast, the UK’s Competition and Markets Authority, no longer constrained by EU competition rules, has made clear in its Green Agreements Guidance that it will depart from the conventional approach and exempt "climate change agreements" if the "fair share to consumers" condition can be satisfied taking into account the totality of the climate-change benefits to all UK consumers arising from the agreement, instead of apportioning those benefits between consumers within the market affected by the agreement and those in other markets.

However, the recent appointment of Teresa Ribera as the Commission's Executive Vice-President for a Clean, Just and Competitive Transition has raised questions about whether the Commission's approach to competition and sustainability may evolve, with the possibility of the Commission's approach becoming more progressive and facilitative like the ACM's, causing a positive trickle-down effect on the enforcement practices of EU member states. Ribera has a strong track record in sustainability, and President von der Leyen's mission letter to her builds on this priority topic, calling for a new approach to, and the modernisation of, the Commission’s competition and sustainability policy.

Recent Dutch Developments

Our ABA contribution summarises the first five publicly available assessments under the ACM's policy rule and the ACM has published two more informal assessments since we finalised the article. In the first of these assessments, the ACM informally cleared proposed sustainability arrangements (the TruStone Initiative) concluded under the aegis of the Dutch Social and Economic Council (SER) between Dutch and Flemish companies active in the natural stone sector, together with sector organisations, trade unions, civil society organisations and contracting authorities. The TruStone Initiative primarily comprises arrangements on how participants will conduct business in a more socially responsible manner. The goal is to counter the negative impact on people, animals and the environment throughout their production and supply chains, including outside the Netherlands. The ACM appears to have applied the EU Horizontal Guidelines' cumulative criteria for an agreement to benefit from its soft safe harbour (see our previous articles explaining the soft safe harbour here and here) without explicitly referring to these criteria.

More recently, the ACM endorsed plans by clothing and textile companies to make their sector more sustainable within the context of the Alliance on Sustainable Garments, Textiles and Shoes. Like the TruStone Initiative, this alliance also involves multi-stakeholder collaboration under the SER's guidance between companies, trade associations, unions and civil society organisations. The goal is also similar: improving compliance with human rights, environmental objectives and animal welfare requirements in the production and supply chains.

The ACM has also published a favourable impact assessment of a novel sustainability agreement between garden centres, previously cleared by it in 2022 (see our previous article). This agreement entailed a joint initiative by garden centres to boycott suppliers that use illegal pesticides, thereby ensuring the enforcement of statutory requirements. Such a collective boycott would typically fall foul of the prohibition on anticompetitive agreements. However, according to the ACM, the initiative was not anticompetitive as it targeted eliminating competition based on illegal production methods which, in its view, competition law should not protect. The ACM's present impact assessment shows that the ACM will, at least, consider reviewing the impact of sustainability agreements, which it has previously positively assessed.

Conclusion

While recent developments in the Netherlands, EU and elsewhere in the world may create further room for companies to pursue sustainability agreements, prospective participants should carefully consider the geographical scope of any potential agreement, given the divergence between different approaches.

Perspectives on International Antitrust - Sustainability and Antitrust accordingly contains pieces on recent developments regarding the interplay between sustainability and competition law in numerous jurisdictions, including EU member states the Netherlands, Germany, Spain, Greece and Portugal, as well other jurisdictions including China, Brazil, Australia, India and the US.