The Australian Competition and Consumer Commission (ACCC) has published important draft guidance on sustainability collaborations and competition law.
The draft guidance is intended to assist businesses to understand the competition law risks that arise from collaborative sustainability initiatives, and how the ACCC authorisation process can address those risks. The ACCC is keen to ensure that businesses do not operate under a misconception that competition law is an “immovable obstacle” to collaborations between businesses.
The draft guidance builds on previous ACCC work, including the December 2023 publication of its guidance on misleading environmental claims (“greenwashing”), and the recent release of its enforcement and compliance priorities for 2024-25, which include consumer, product safety, fair trading and competition concerns in relation to sustainability.
Key takeaways
The draft guidance makes the following key points.
- Low-risk collaborations. From a competition law perspective, many sustainability collaborations are low-risk. For example, the ACCC highlights the joint funding of public research, the mere pooling of information about the environmental credentials of suppliers, and non-binding industry-wide emissions reduction targets, as initiatives that are less likely to involve contraventions of competition law.
- Higher-risk collaborations. However, sustainability collaborations between competitors that relate to or affect their prices, the markets in which they operate, the customers or suppliers with whom they deal, their capacity or output, and/or their bids in tenders, may breach competition law prohibitions on cartel conduct and/or anti-competitive agreements. Examples include initiatives under which competitors agree that they will charge customers a levy to fund product stewardship activities, that they will only acquire inputs from suppliers that meet certain sustainability criteria (or jointly purchase an input such as energy from a single supplier), or that they will phase out environmentally unfriendly production processes or technologies. The sharing of commercially sensitive information, such as future pricing or pricing strategies, in the context of sustainability collaborations, may also breach the competition law prohibition on anti-competitive concerted practices.
- ACCC authorisation is available. Where a proposed sustainability collaboration involves a potential competition law breach, participants can apply for ACCC authorisation. The ACCC may grant authorisation, and thereby provide legal immunity to participants if it is satisfied that the proposed collaboration has public benefits that outweigh the detriments (for cartel conduct) or does not substantially lessen competition (for anti-competitive agreements and concerted practices).
- The ACCC has a broad view of public benefits. For the purposes of the ACCC authorisation process, public benefits include anything of value to the community generally and any contribution to society’s aims. The ACCC identifies renewable energy generation, reductions in greenhouse gas emissions, biodiversity protection, and the recycling or safe disposal of environmentally harmful materials as important and accepted public benefits. The ACCC also notes that participants in a sustainability collaboration can mitigate public detriments by limiting the scope of the joint conduct, limiting the exchange of commercially sensitive information, and ensuring that the participation of targeted third parties (e.g., suppliers) remains entirely voluntary.
- The ACCC is willing to streamline authorisations. The ACCC authorisation process, which is public, can be a time-consuming and resource-intensive process. For relatively straightforward applications where the ACCC has previous subject-matter experience and/or where the initiative has no apparent detriments (despite the potential for a technical competition law breach), the ACCC may consider streamlining its process and making its determination on a shortened timetable.
Next steps
The ACCC is seeking feedback on the draft guidance, ahead of the publication of final guidance in late 2024.
Get in touch
As pressure for industry-led sustainability initiatives builds, we expect businesses to increasingly seek out opportunities to collaborate with each other to achieve their environmental aims. In that context, the ACCC’s draft guidance is a timely and useful reminder of both the potential for competition law risks to arise and the key role that an ACCC authorisation process can play in insulating businesses from those risks.
For further details or assistance navigating these issues, please contact Alistair Newton, James Delesclefs, Michael Tooma and Matt Baumgurtel.
