German Bundeskartellamt tolerates two sustainability initiatives

Germany

The Bundeskartellamt has concluded the examination of two sustainability initiatives:

  • An initiative launched by the German retail sector and Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH to introduce living wages in the banana sector.

  • An initiative to expand the animal welfare initiative “Initiative Tierwohl” to include cattle fattening.

Living wages in the banana sector

The Bundeskartellamt has no competition concerns about the food retail sector’s voluntary commitment to set common standards for wages in the banana sector. GIZ and German retailers intend to introduce pilot measures to promote living wages in the banana sector. For this purpose and against the backdrop of the Act on Corporate Due Diligence in Supply Chains, which will enter into force in 2023, due to sector cooperation in the food retail industry, companies are to agree on voluntary common standards and strategic goals along the private-label banana supply chain.

The core objective is to jointly introduce responsible procurement practices and develop processes to monitor transparent wages. At the same time, participating companies are planning to gradually increase the sales volume of bananas produced and procured in line with living-wages criteria.

No information on procurement prices, other costs, production volumes or margins is to be exchangednor are compulsory minimum prices or surcharges to be introduced at any point of the supply chain. 

Animal welfare initiative “Initiative Tierwohl”

“Initiative Tierwohl” is a project based on an agreement between the agricultural, meat production and food retail sectors, which will reward livestock owners for improving the conditions in which animals are kept. The four largest food retailers EDEKA, REWE, Aldi and the Schwarz Group are the main financers of the initiative whose key component is paying participating livestock owners a standard premium (i.e. “animal welfare payment”) via participating slaughterhouses. Beginning in 2022, “Initiative Tierwohl” wants to introduce this model for cattle fattening.

The Bundeskartellamt has provided guidance to the animal welfare “Initiative Tierwohl” since 2014. Going forward, the authority is calling for the inclusion of more competition elements in the structure of the financing model. The agreement reached between businesses on paying a standard premium was tolerated for a transitional period due to the project’s pioneering nature. However, the Bundeskartellamt requests that competition elements must gradually be introduced. These, for example, may include a recommendation to pay compensation for animal welfare costs regarding calves, rather than a standard premium for animal welfare, which has been the case for poultry and pork.

The Bundeskartellamt encouraged the initiative to introduce over several stages a clear labeling system for meat produced in line with animal welfare criteria to make the origins of animals and the conditions in which they are kept transparent for consumers.

For more information on these initiatives and animal-welfare laws in Germany, contact your CMS client partner or local CMS experts: