CMA publishes guidance to help businesses “cooperate” on environment

Climate action

The Competition and Markets Authority (CMA) says its new draft guidance will help businesses “work together with confidence” towards achieving environmental goals.

The CMA’s proposed new guidance, published on 28 February 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 CMA says the new guidance will help businesses take action on climate change and environmental sustainability generally, without undue fear of breaching competition rules.

In March 2022, the CMA provided its environmental sustainability advice to the UK government. As part of that work, the CMA says it found that businesses needed more clarity about what is, and what is not, legal when working together towards sustainability goals.

Sarah Cardell, CMA chief executive, commented: “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The draft guidance goes further than we have done previously.

“The draft guidance goes further than we have done previously.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.”

Sarah Cardell announced plans for this guidance in 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In the draft guidance, the CMA says it has provided “clear working examples” that businesses can use to inform and shape their own decisions when working with other companies on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 The draft guidance also invites parties to approach the CMA for informal advice, in what it is calling an “open-door policy”.

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