Background
In October 2023, the CMA published its Green Agreements Guidance ("the Guidance") on how businesses can ensure compliance with competition law in relation to environmental sustainability agreements between competitors. The CMA is determined to help businesses who try to do the right thing in relation to environmental sustainability. As such, they are operating an open-door policy, as outlined in Section 7 of the Guidance. This allows businesses to approach the CMA for informal guidance on proposed agreements if there is uncertainty on application of the Guidance. A key advantage for businesses of this open-door policy is that the CMA does not expect to take enforcement action in relation to an agreement where the business has discussed it with the CMA and the CMA has not raised any concerns. For further information on the Guidance and its provisions, please view our insight here.
In anticipation of businesses approaching the CMA for such informal guidance, the CMA has published a submission guide.
The Submission Guide
The submission guide sets out questions which are intended to outline information the CMA would find useful to help determine whether the agreement is suitable for an informal assessment under their open-door policy. There are also guidance notes elaborating on what would help the CMA in assessing the proposed agreement.
The CMA's open-door policy allows businesses to approach the CMA for an informal assessment that involves a light touch review that is proportionate to the size, complexity and likely impact of the agreement. This assessment will typically be conducted on the basis of publicly available information and the information shared with the CMA. The CMA will indicate any options, concerns, risks and possible solutions available to parties in relation to the proposed agreement. In some circumstances, the CMA may agree adjustments with the parties that should be made to the agreement before it is implemented.
The submission guide is divided into five sections:
- Background information;
- Overview and context;
- Competition considerations;
- Questions for the CMA; and
- Further information.
Background information
It is important for parties to stipulate the desired timeframe for a response to a request. However, the promptness of a response will be subject to the nature and complexity of the proposed agreement. Parties are also expected to highlight information that is confidential.
Overview and context
Parties are encouraged to provide background detail which sets out the broader context of the relevant services or products involved in the agreement, the nature of the collaboration and the role of the respective parties. Parties should also explain what matters to consumers when choosing between products and services and, where possible, include any significant barriers to entry or expansion for the relevant products or service and a rough estimate of shares of supply of parties.
Competition considerations
Parties are encouraged to explain how their proposed agreement could meet and/or go beyond the scenarios described in Section 3 of the Guidance (which sets out examples of agreements unlikely to infringe competition law). This is also an opportunity for parties to explain the expected environmental benefits, the relevant consumer benefits and why any unilateral actions do not lead to the desired outcome (and therefore the agreement between competitors is necessary).
Questions for the CMA
If the parties to the proposed agreement have any particular questions that are not already covered in response to the above sections, they can set out such issues where they need informal guidance from the CMA.
Further Information
Parties are encouraged to include all relevant information in their submission, including attaching supporting documents such as information packs or slides.
Looking ahead
It is apparent that the CMA is eager to counter concerns among businesses that sustainability agreements are not worth entering into, citing lack of understanding competition law and consequent fear of breaching such law.
With the open-door policy providing assurance regarding enforcement action and protection from fines (provided that the CMA has not raised concerns in its informal guidance, or that any concerns identified have been addressed by the parties), this submission guide further bolsters the CMA's commitment towards ensuring that entering into sustainability agreements is as accessible as possible. Businesses who previously might have been reluctant to enter into sustainability agreements due to fear of breaching competition law may now rethink this hesitation.
Businesses interested in submitting a request for informal guidance under the CMA's open-door policy or interested in having an initial discussion about their initiative can make such requests at sustainabilityguidance@cma.gov.uk. The CMA expect businesses to typically make such an approach at an early stage in the development of a sustainability agreement, but following an initial self-assessment of the agreement in accordance with the principles set out in the Guidance.
Submitting a request for informal guidance does not guarantee that your proposed agreement will be accepted under the CMA's open-door policy. Following the CMA's review of the request, they will get in contact to explain the next steps.
