Dutch ACM welcomes Commission’s draft guidance on sustainability but remains critical

This response is part of the final round of consultations on the draft revised HBERs and Horizontal Guidelines that is currently being conducted by the Commission.

General remarks on sustainability

As an instigator for guidance on the application of competition law to sustainability agreements, it is unsurprising that the ACM seizes this opportunity to comment on the sustainability chapter of the draft revised Horizontal Guidelines. It is also unsurprising that the ACM is generally supportive of the Commission’s specific guidance on sustainability agreements. In particular, the ACM takes a welcoming stance towards Sections 9.2 and 9.3 of the Horizontal Guidelines; where its own view that generally competition law does not stand in the way of sustainability agreements, is affirmed by the Commission.

The ACM is also pleased to see that the Commission recognises the existence of out-of-market benefits, in the form of collective benefits. However, the ACM fears that the currently proposed wording in the revised Horizontal Guidelines, leaves companies reluctant to invest their resources in sustainability initiatives; such as those that make the economy less dependent on fossil fuel. 

As a final remark, the ACM mentions that pending the final revised HBERs and Horizontal Guidelines, it will continue to apply its own Guidance on sustainability agreements in the Netherlands. Thereafter it will re-evaluate its Guidance to clarify its interpretation of competition law, where that should differ from that of the Commission.

Specific remarks on sustainability

The ACM states that an agreement with the sole purpose of respecting national or international legal standards, which applies to business in or outside the EU, should fall outside the scope of Article 101(1) TFEU. The ACM goes further by saying that competition below national or international standards, does not deserve the protection of EU and national competition laws. It then gives several reasons for parties to wish to conclude agreements which restrict below-standard competition. For example, standards that involve fundamental social rights, such as bans on child labour or minimum wage, could not have made their way into laws or regulations in certain countries Therefore, companies who wish to adhere to these standards must rely on agreements with competitors to ensure these standards are respected. 

With regards to the fair share-criterion of Article 101(3) TFEU, the ACM comments that the Commission seems to suggest in the draft Horizontal Guidelines, full compensation of consumers is not required to receive a fair share. Rather, it is sufficient that consumers enjoy an appreciable objective advantage, which is to be determined on a case-by-case basis. As a result, collective benefits may count towards the fair share enjoyed by consumers. The ACM believes it necessary to have a broader policy reading of the term 'fair share'; which reflects the case law (see ACM’s own Guidelines, p. 14 and it’s Legal Memo on the ‘fair share’). 

The ACM also asks the Commission to clarify how far use-value, non-use value, and collective benefits count towards a fair share for consumers. Allocating the benefits to consumers can be done in different ways, e.g., for reasons of consumers being part of a global benefit, as part of the EU population’s share of the global benefits, and as the EU consumers’ share of the benefits within the relevant market. By extension the ACM advocates for the concept of future generation benefits to make its way into the fair share assessment.

On the indispensability of cooperation agreements, the ACM disagrees with the Commission. Where the Commission deems the use of cooperation agreement dispensable, if EU or national law already requires an undertaking to comply with concrete sustainability goals, the ACM believes these agreements to be indispensable if they aim to exceed or accelerate public targets.

Finally, the ACM points out that cooperation agreements could be necessary for bolstering local compliance amongst direct and indirect importers, such as agreements that set certain labour standards to be met by the producer in a country in which enforcement of such standards is lacking. All below-standard agreements should therefore fall outside the scope of Article 101(1) TFEU.

Clarifications

The ACM also requests the Commission to give more clarification regarding several notions used by the Commission in its draft HBERs, for instance on the ‘field of use’ and the ‘competing efforts’ as used by the Commission in its draft revised R&D block exemption.

Consultation period

The consultation period lasts until 26 April 2022, after which the Commission will finalise its revised HBERs and Horizontal Guidelines. The revised HBERs and the Horizontal Guidelines will come into effect no later than 31 December 2022, when the incumbent versions will expire. It is not until then that we learn which of the suggestions above will make their way into the final versions.

For more information please contact Matteo Stainer or Joost van Roosmalen.