While the above risks can be avoided, cooperation between undertakings shall not infringe the competition rules, unless the parties have market power. There are various block exemptions (e.B vertical agreements between suppliers and buyers, research and development agreements, technology transfer and specialisation agreements) that could provide a safe haven for sustainability agreements that would otherwise be contrary to competition law. These operate on the basis of market share thresholds and are available as long as the agreement does not contain defined "hardcore" restrictions. However, these exceptions have not been specifically tailored to sustainability agreements, which can create uncertainty and significantly affect the speed and scope of sustainability initiatives. The CMA recently announced that it would provide specific guidance on environmental sustainability in the new vertical guidelines annexed to the proposal for a new Vertical Agreement Block Exemption Regulation (and it would be useful for all block exemptions to have guidelines that take into account specific issues that arise with respect to environmental sustainability). Companies need to avoid sustainability deals that are just a cartel in disguise – that`s clear. Any agreement involving pricing, customer or market sharing, production agreement or bid-setting will be subject to severe penalties, including possible prosecution of individuals in the UK. The following types of agreements between competitors present a high risk: reduction of capacity or production, slowing down of the transition to carbon neutrality, application of an agreed premium for certain green products, phasing out the purchase of certain unsustainable products or those using unethical production processes (as this would be a collective boycott), or joint agreements for the purchase of certain sustainable products. In these examples, the possible benefits (if any) do not outweigh the distortion of competition caused by the collusion. Certain agreements which appear to restrict competition and which are not covered by an existing block exemption (see above) may nevertheless be authorised on an individual basis, provided that they create advantages which are considered to outweigh the disadvantages of restricted competition. If the combined market share of the undertakings participating in a sustainability agreement is below a certain threshold, the agreement may benefit from special competition allowances. For other types of sustainability agreements that are found to restrict competition, an exemption may be granted under one of the many possible block exemptions if the parties` combined market share falls below a certain market share threshold ("safe harbor") and the agreement does not contain prohibited restrictions.

These include specific block exemptions for research and development, specialisation agreements, technology transfer agreements and other types of vertical agreements. Block exemptions automatically exempt agreements from the prohibition in Chapter I of the Competition Act 1998. The document describes the current framework for competitive risk self-assessment and sets out the main points that companies and trade associations should take into account when concluding sustainability agreements. The CMA has produced this fact sheet to help companies and business associations better understand how competition law applies to sustainability agreements and where problems may arise. We will work with stakeholders, especially SMEs and NGOs working in the areas of sustainability. We will also continue our close cooperation with other international competition authorities and examine responses to the European Commission`s consultation on competition policy and the Green Deal. One of the ways companies strive to achieve climate protection or other environmental goals is through "sustainability agreements." These are agreements between companies to work together, for example, to reduce their carbon footprint or improve the environmental standards of their products. The CMA describes sustainability agreements as cooperative agreements between companies (including industry-wide initiatives and decisions made by business associations) to achieve sustainability objectives. Many of these are "normative agreements" that set industry standards, for example with respect to the environmental performance of products.

At this stage, there are no guidelines on whether efficiency gains resulting from sustainability agreements can be taken into account if they benefit society as a whole and not a group of consumers affected by the agreement, or how these efficiency gains should be assessed and measured. Most relevant block exemptions for sustainability agreements: While the recent CMA guidance on sustainability agreements is useful in defining the overall framework, it focuses only on using the tools of the existing regime, without addressing how to demonstrate that the benefits of the agreement are passed on to the consumer. Should this take the form of lower prices or can broader benefits be taken into account? How would the CMA approach the application of sustainability agreements? Further guidance will likely be needed to ensure legal certainty and this will almost certainly be the message that stakeholders have sent to the CMA in response to their current consultation. .