The Competition and Markets Authority has published advice to the Government on how competition and consumer laws can help meet the UK's environmental goals.
Following a public consultation on these issues, the CMA states that it has not seen sufficient persuasive evidence to conclude that the current competition and consumer law frameworks are “an obstacle to sustainability initiatives such that fundamental changes to those frameworks are necessary”. Nevertheless, the CMA proposes to continue engaging with stakeholders and keep the situation under review.
The CMA notes that a well informed and competitive market may not always lead to outcomes which best support the transition to Net Zero. In particular, the CMA recognises the need for greater clarity around how competition law will be applied when companies seek to cooperate in order to tackle environmental challenges. A new CMA Sustainability Taskforce will therefore issue guidance to help companies assess their green initiatives.
Of particular interest to companies will be the forthcoming guidance on how environmental benefits will be taken into account when assessing possible exemptions from the competition rules. The CMA notes the ongoing debate between different authorities and other stakeholders around the extent to which consumers of the relevant products must be fully compensated for any competition harm flowing from sustainability agreements. The CMA offers a nuanced view on this issue and indicates that this may be an area where the UK could depart from the pre-Brexit EU case law in order to provide greater flexibility in this area.
The CMA also recommends that the Government consider making several changes to consumer law in order to better support the UK’s Net Zero and sustainability goals. These include:
- creating standardised definitions of commonly-used environmental terms to which businesses must adhere in marketing and labelling their products – such as “recyclable” and “carbon neutral”
- requiring mandatory disclosure of information such as environmental impact, recyclability, repairability and durability
- requiring businesses to provide better environmental information to their business customers
- adding misleading and/or unsubstantiated environmental claims to the list of banned practices under consumer law
- extending consumer protection remedies to address the harm to the environment caused by commercial practices directed at consumers.
The CMA’s advice and recommendations represent an important step forward in the discussion around the role of UK competition and consumer law in addressing environmental challenges. It now remains to be seen how the Government will respond. It will also be interesting to see how useful the CMA’s planned guidelines will be in practice. In particular, will the guidelines provide sufficient certainty for competitors to take collaborative steps together in order to address the challenges that lie ahead?