Competition, collaboration and climate
With concerns being raised about how businesses can team up to respond to climate problems without breaching competition law, the Commerce Commission recently released its Collaboration and Sustainability Guidelines. The guidelines were produced to support businesses cooperating on environmental sustainability initiatives to avoid collusion and anti-competition behaviours so they don’t fall foul of the Commerce Act 1986.
While not all collaboration will harm competition or breach the Commerce Act, there can be impacts on competition in markets. However, the Commerce Commission’s guidelines acknowledge the critical role of cooperation to achieve environmentally sustainable outcomes to advance climate change initiatives, support sustainability goals, and meet new climate disclosure reporting obligations.
“The Commission recognises that sustainability responses can sometimes require widespread and collective efforts from people, businesses, and government,” it notes.
Collaboration on sustainable production methods, sector-level scenario planning or jointly commissioning research, is not considered cartel conduct (section 30) in the same way as price fixing, market sharing, bid rigging or restricting output, but any arrangement that may substantially lessen competition (section 27) can also breach the law.
While the Guidelines do not replace legal advice, they do provide some practical examples of competitor collaborations and highlight behaviours that are more or less likely to raise competitive concerns. Competition concerns are more likely to be raised if, for example:
- Businesses within an industry are restricted or excluded
- Competitively-sensitive information is shared or discussed
- Processes aren’t open and transparent
- There are obligations or restrictions in place
- Customer allocation agreements are overtly or covertly agreed
Competition law shouldn’t be seen wholly as a roadblock to meeting sustainability objectives. The Commission notes that competition can also be a positive driver of sustainability as it can incentivise businesses to innovate to meet changing stakeholder expectations, particularly for more sustainable products and services.
