The concept of sustainable development plays a more important role in our daily lives than ever before, which affects both average citizens and large companies. A recent European survey (Eurobarometer Special 2020/03) suggests that over 90% of the citizens surveyed confirm that environmental protection is an important factor in their daily lives.
New trends on the horizon
Interestingly, 80% of the respondents to the above survey emphasised that ‘big’ companies are not doing enough to protect the environment. While subjective opinions, these responses clearly suggest that European citizens are expecting companies to reshape their policies and restructure their day-to-day operations in order to implement and conduct more sustainable business practices. Correspondingly, the growing expectations of consumers could lead to increased interest by competition agencies in the possible emergence of cases based on sustainability-related considerations.
Although sustainability is a relatively new aspect of competition law and the relevant case-law is therefore rather limited, the growing interest of competition agencies (especially in the European Union) in sustainability-based considerations suggests that this trend is likely to change soon.
The novelty of the topic necessarily raises many questions, including how competition agencies will incorporate sustainability into competition law, and how it will affect the traditional framework of analysing cases. The publishing of soft-law documents to guide businesses with proactive sustainable practices could mitigate these uncertainties.
Competition Authority practices in assessing ‘green’ restrictive agreements
Agreements between undertakings to reduce CO2 emissions during the manufacturing process could be effective in facilitating the realisation of wider public sustainability objectives. However, companies might be reluctant to pursue such initiatives as there is a significant risk they will be investigated for breaching competition laws. In contrast, cooperation between undertakings based on false green claims or minimal green investments involves the risk of less competition and higher prices ‘wrapped’ in undesirable greenwashing attempts.
There are already some agencies in Europe that recognise the need to do more research on this topic and to provide guidance to businesses in order to facilitate sustainable initiatives. The Dutch Competition Agency (ACM) published ‘Guidelines on Sustainability Agreements’ to explain the application of competition law to sustainability agreements between undertakings. Furthermore, the ACM and the Hellenic Competition Commission jointly issued a ‘Technical Report on Sustainability and Competition’ to facilitate analysis in sustainability-related restrictive agreements cases. The most recent example is from Austria where the Austrian Federal Competition Authority published draft Sustainability Guidelines to provide guidance for assessing environmental sustainability agreements under the new exemption recently introduced in Austrian antitrust law. The Hungarian competition authority (GVH) contributed to the ongoing dialogue by publishing the results of its international survey on this topic.
Competition Authority practices in assessing ‘green’ claims
Even if companies reshape their business models to be more sustainable, additional requirements can emerge regarding how the company should communicate such features of their products/services.
Competition agencies in Europe are showing growing interest in investigating the ‘green’ claims of undertakings, and in making sure that claims alleging ‘green’, ‘vegan’ and ‘environment-friendly’ products/services are accurate, and not merely communicated to consumers as unsubstantiated attempts at greenwashing. The increasing willingness of regulators to investigate the accuracy of such claims was recently demonstrated in Germany, where the offices of DWS and Deutsche Bank were raided on 31 May 2022 by German police at the behest of local regulators.
Several agencies in the EU are leading the discussion about green claims. For instance, in its pursuit to combat greenwashing in Denmark, the Danish Consumer Ombudsman issued a clear guidance for businesses wanting to pursue an ‘eco-friendly’ line of communication with consumers. The most recent example is from the United Kingdom, where the UK Competition Authority recently published the ‘Green Claims Code’, which sets out guidelines for businesses making environmental claims. These soft-law guidelines all expect the environmental claims to be clear, specific, and verifiable. In Hungary, the GVH is also active in the field of green claims as related to competition law, which is evidenced by its publishing of a ‘Green marketing’ paper. This Green marketing paper aims to guide businesses in shaping their communications about sustainable products and services.
Upcoming topics in CMS Competition Law and Sustainable Development Series
With so much more on this topic to be explored, CMS Hungary will initiate a series of articles exploring each aspect of sustainability and competition law in the upcoming months. Since we are focusing on Hungarian consumers, each article will put special emphasis on Hungarian developments. Stay tuned for proactive tips for implementing competition law friendly sustainable practices.
For more information on competition law in Hungary, contact your CMS client partner or local CMS experts.