Revised guidelines of Dutch competition authority confirm more leeway for environmental sustainability initiatives

On 26 January 2021 the Dutch competition authority (ACM) published its revised draft sustainability guidelines (revised draft guidelines) which set out its approach to assessing the compatibility of sustainability initiatives with competition law. In addition, the ACM also published, in cooperation with the Greek competition authority, a joint economic report on the methods to quantify the efficiency gains of environmental sustainability initiatives (see the report here).

With the publication of the first draft guidelines in July 2020, the Dutch competition authority has taken a progressive and leading stance in this European policy debate by offering more leeway for environmental sustainability initiatives (see for more background our earlier blog). The revised draft guidelines are intended as an opening move in order to come to a uniform EU-wide approach in the competition law assessment of sustainability initiatives. Until the official adoption of its sustainability guidelines and an EU-wide approach may start to emerge, ACM will use the revised draft guidelines as an instrument for enforcement prioritization.

Key changes in ACM’s revised draft sustainability guidelines

In our earlier blog we explained the major change in the competition law assessment of sustainability initiatives which was proposed by the ACM in its first draft version of the sustainability guidelines, published on 9 July 2020. In the now revised draft guidelines, the ACM reiterates that for the separate category within sustainability agreements of so-called ‘environmental-damage agreements’, it should be possible to consider the benefits for the wider society as a whole instead of only the benefits for the users of the products involved. On the basis of this standard, the benefits of an agreement will more quickly outweigh the disadvantages when compared with the previously applicable legal standard. As for environmental-damage agreements (unlike for other sustainability agreements), the revised draft guidelines no longer require that end-users are fully compensated for the harm caused by the restriction of competition resulting from the agreement. 

Following a public consultation process, the ACM maintains in the revised draft guidelines the key principles which were set out in its first draft version of July 2020 (see our earlier blog for more detail). Some important modifications in the revised draft guidelines are:

  1. additional clarifications are provided with respect to the distinction between ‘environmental damage agreements’ and other sustainability agreements. This distinction is important considering the broader competition law test which is proposed for environmental damage agreements compared to other sustainability agreements;
  2. the ACM now emphasizes in the revised draft guidelines that the broader competition law assessment of sustainability initiatives will only apply if, as a result of market failures, companies are not able to obtain the desired sustainability benefits independently. Sustainability agreements between companies thus only satisfy this tightened necessity criterium and may be allowed under the competition rules if and not any further than is absolutory needed. In other words, if no or less far-reaching forms of cooperation are capable of solving the same market failures, this should be the preferred approach;
  3. with respect to environmental-damage agreements, the ACM included in the revised draft guidelines an additional cost-efficiency-test according to which the resulting costs for consumers of the agreement cannot be higher than in case of a government measure with the same sustainability benefits; and
  4. more guidance is provided on how the sustainability and efficiency benefits of agreements can be demonstrated, and which methods could be used for this in practice. Notably, in this respect, the ACM states that in principle (especially for ‘environmental damage agreements’) also the benefits generated outside of The Netherlands can be taken into account in the competition law assessment. The joint publication of the economic expert report further explains how the benefits of sustainability initiatives could be quantified in practice.

Final remarks

With its revised draft guidelines, the ACM is clearly at the forefront of a European-wide discussion on sustainability initiatives and competition law which we also highlighted in more detail in our outlook 2021 on sustainability and competition law. During a highly anticipated conference on this topic in February 2021, the EU competition chief Margrethe Vestager recognised the important contribution of the ACM to this debate. She further explained that the European Commission is aiming for a uniform EU-wide  approach in this policy area and announced that a consultation report for a greener competition policy will be published ‘before the summer’.

In its revised draft guidelines, the ACM states that during this ongoing EU-wide consultation period, it will not impose fines on companies which apply the revised draft guidelines in good faith. Furthermore, the ACM stressed it is open for discussions with companies which are planning to enter in sustainability agreements. Until the official adoption of its sustainability guidelines, the ACM will use the revised draft guidelines in the meantime as an instrument for enforcement prioritization.

On 28 January 2021 the ACM also published its ‘Guidelines regarding sustainability claims’ which explain how companies can prevent their sustainability claims from being unclear, incorrect or misleading for consumers under the applicable consumer laws. For more details please refer to this article by our colleagues Lisette den Butter and Tessa van den Ende.

For more information please contact Piet-Hein Eijssen and Joost van Roosmalen.

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