Australia Publishes Draft Antitrust Guidance on Sustainability Collaborations
In Short
The Development: Recently, the Australian Competition and Consumer Commission ("ACCC") published draft guidelines designed to assist businesses to understand how they can collaborate on sustainability initiatives without breaching competition laws ("Draft Guide").
The Context: Acting Chair of the ACCC, Mick Keogh, recently noted, "As Australia transforms to a more sustainable economy, there will be instances where businesses seek to work together to achieve better environmental outcomes". Businesses are increasingly looking for ways to meet ESG-related obligations and expectations, including through collaborations with other firms. In recognition of this, the ACCC has released the Draft Guide to help businesses manage their competition law compliance risks.
Looking Ahead: The ACCC has received considerable feedback on the Draft Guide which is likely to be reflected in the final Guide to be published in due course. However, in the interim, the Draft Guide will be an important tool for businesses engaging in sustainability collaborations and managing their competition law compliance.
The Draft Guide outlines the framework under which sustainability collaborations may be assessed by the ACCC for compliance with competition laws. The ACCC defines sustainability collaborations as "discussions, agreements or other practices amongst businesses which are aimed at preventing, reducing or mitigating the adverse impact that economic activities have on the environment".
Australian competition law prohibits cartel conduct (e.g., competitors agreeing to engage in conduct that includes bid rigging, fixing prices, restricting supply, and allocating customers) as well as anticompetitive practices and agreements that have the purpose, effect, or likely effect of substantially lessening competition in a market in Australia.
The Draft Guide states that a sustainability collaboration has greater risk of breaching Australian competition laws where:
- The collaborators are competitors or potential competitors for the purchase or sale of any goods or services;
- The collaboration inhibits businesses from competing effectively; and
- The collaboration involves the sharing of commercially and competitively sensitive information.
Conversely, the Draft Guide also provides examples of sustainability collaborations that are less likely to breach competition laws including:
- Jointly funding research into reducing the environmental impact of activities;
- Pooling information about the environmental sustainability credentials of suppliers;
- Setting an industry-wide emissions reductions target (provided it is voluntary); and
- Independent decisions about using a sustainable input.
Whilst some collaborations are more likely to be compliant with competition laws, the Draft Guide notes that if businesses are unsure whether their proposed collaborations will be compliant, they can seek statutory immunity via formal authorization from the ACCC. Such immunity can be obtained for proposed collaboration likely to deliver a public benefit that will outweigh any likely public detriment from the proposed collaboration.
The Draft Guide introduces a streamlined procedure for assessing authorizations which do not contain significant detriments and deal with an industry that the ACCC has previous experience with. The streamlined approach may be accessible for: (i) joint renewable energy buying groups; (ii) industry stewardship schemes which impose a levy for the recycling or safe disposal of products; or (iii) joint tenders by local councils in new waste disposal or recycling facilities.
The Draft Guide does not impose any new or additional obligations, but rather constitutes the ACCC's views on the application of existing competition laws to sustainability collaborations. Businesses should therefore review existing sustainability initiatives and assess proposed initiatives against the Draft Guide, and where appropriate seek legal advice on structuring collaborations and obtaining ACCC authorization to minimize competition concerns. In addition, the ACCC's Draft Guide is part of a more general movement from competition authorities globally to publish guidelines facilitating sustainability initiatives among businesses. These include the European Commission's Horizontal guidelines (in particular in paras 515 et seq.), the Dutch sustainability claims guidelines and the French Notice on informal guidance from the Autorité in the area of sustainability guidelines.
The Draft Guide has been the subject of public consultation. On 22 August, the Chair of the ACCC commented that they have received over 30 written submissions which they are "carefully considering." As a result, it is possible, if not likely, that the ACCC will revise the guidelines before finalizing the document.
Three Key Takeaways
- Although the Draft Guide may be subject to revision, businesses considering ESG collaborations in Australia should review the Draft Guide carefully and seek legal advice as appropriate. This is especially the case if a business seeks to collaborate with one or more competitors (or potential competitors).
- The Draft Guide suggests that, consistent with competition law generally, ESG collaborations that involve sharing sensitive information with competitors present more risk than collaborations with non-rivals or collaborations that do not require the exchange of sensitive information.
- Likewise, consistent with competition law generally, collaborations that allow each participant to retain independent decision-making authority are less likely to draw scrutiny from the ACCC, and instances where businesses are unsure, authorization may be an option.
