The Netherlands Authority for Consumers and Markets (“ACM”) has recently informally assessed and supported five sustainability agreements under its nonconformist national policy rule on oversight of sustainability agreements (“Policy Rule”). Although the ACM makes it clear in its Policy Rule that it will evaluate sustainability agreements in accordance with the approach outlined by the European Commission (“EC”) in revised EU guidelines for horizontal cooperation agreements between competitors (“EU Horizontal Guidelines”), it nevertheless grants businesses more leeway to conclude two types of sustainability agreements: (i) agreements ensuring compliance with binding European or Dutch sustainability rules, and (ii) environmental-damage agreements. The ACM does so by declining to take enforcement action against such sustainability agreements if the relevant criteria of its Policy Rule are met. The ACM's guarantee not to enforce in some situations, including a commitment not to impose fines, notably covers sustainability agreements potentially incompatible with applicable EU rules set out by the EC in the EU Horizontal Guidelines.
Until the end of 2024, only five ACM informal assessments were publicly available online, providing some additional insight into the ACM's application of its Policy Rule. Nevertheless, the ACM's enforcement divergence from the EU Horizontal Guidelines does not exclude the potential for EC intervention, adding complexity and reducing legal certainty for businesses seeking to act upon the ACM's informal assessments. That said, the sustainability agreements informally assessed and supported by the ACM under its Policy Rule to date, generally do not test the boundaries of EU competition law, and would likely have been acceptable to the EC as well. At the same time, and to the best of our knowledge, no proposed sustainability collaboration has yet been brought to the EC for its review, so we cannot comment on the EC's enforcement practice.
The lack of examples at the EU level does, however, cast doubts over the effectiveness of the EC's outreach to businesses to come forward and discuss their sustainability dilemmas and the related need to cooperate with competitors. It is possible that businesses are sceptical of the EC's overtures, given it has been prioritising sustainability-related antitrust investigations in recent years. It must, however, now be borne in mind that the recent appointment of Teresa Ribera as the EC's Executive Vice-President for a Clean, Just and Competitive Transition has raised questions about whether the EC's approach to competition and sustainability may change, with the possibility of the EC's approach becoming more radical, potentially even going beyond the bold steps of the ACM.
In this context, our article provides a concise overview of the ACM's Policy Rule, including its background and general construction, and the proposed treatment of environmental damage agreements and agreements ensuring compliance with binding sustainability rules. In addition, we also provide a summary of each of the ACM's five publicly available informal assessments.
Competitors are increasingly considering joining forces to pursue sustainability goals, thereby pre-empting a potential “first mover disadvantage”. This is a situation where customers do not reward the choice of an undertaking to adopt higher sustainability standards (e.g. because the product is more expensive) thereby opting for the less sustainable product or service of a competitor instead. As a result, the sustainability efforts of one company lead to sales of products increasing for the more polluting / less sustainable party. By sharing risk and costs, companies are able to avoid this problem, enabling the pursuit of new and, often, costly innovations to achieve greener business practices.
However, if competitors join forces, they may risk flouting the prohibition on anticompetitive agreements. Therefore, companies and their legal advisers need to assess if any proposed pro-sustainability collaboration affects competition parameters (price, quality, choice, innovation, etc.). If competition parameters are likely to be affected, companies must assess if the sustainability objective they seek to pursue can be met individually, i.e., without coordinating with their competitors. In many cases, sustainability efforts may well be rewarded by consumers, allowing the greener product or service to be used as a parameter of competition to the benefit of the innovating party. However, if this is not the case and a first-mover disadvantage exists, a joint initiative with competitors could be the only realistic way to effect change. Firstly, before embarking on any collaboration, it is prudent – under consumer law as well as competition law – to ensure all aspects of a proposed sustainability agreement contribute towards achieving a genuine and verifiable sustainability objective. There must be no “greenwashing” risks. Secondly, it must be assessed whether a proposed sustainability agreement that is likely to affect the parameters of competition can benefit from a statutory exemption under Article 101 (3) TFEU
One of the conditions that is critical in this regard, i.e. to avail a statutory exemption, is that the consumers affected by a restriction of competition receive a 'fair share' of the possible benefits stemming from the sustainability agreement in question. As per the EC, consumers only receive a fair share of the benefits when the benefits deriving from the agreement outweigh the harm caused by the agreement, so that the overall effect on consumers in the relevant market is at least neutral, or in other words, consumers are fully compensated. In addition, another important condition is that the restriction of competition should be indispensable to the attainment of the benefits.
Against this background, both the ACM and the EC have sought to clarify how companies must proceed with such pro-sustainability collaborations without infringing competition rules. To this end, the ACM first published draft sustainability guidelines in July 2020, revising them in January 2021 after a public consultation. The ACM's draft guidelines demonstrated its comparatively progressive approach on several issues, such as diverging from the EC's position that benefits stemming from sustainability agreements that restrict competition must fully compensate affected consumers regardless of the type of sustainability objective pursued. The ACM had argued in its draft guidelines that depending on the sustainability objective driving the collaboration, it should be acceptable if consumers are not always fully compensated for any price increase or decrease in choice as long as there are wider benefits to society. In this regard, the ACM was also more open to accepting out-of-market benefits and unlike the EC, it did not impose a strict condition requiring a substantial overlap between the affected consumers in the relevant market and the beneficiaries outside that market.
Given the ACM recognised the need for a uniform EU approach, it did not finalise its draft guidelines while the EC was working on revising the EU Horizontal Guidelines. The ACM, nonetheless, clarified that it would rely on the draft guidelines as a reference instrument in its review of sustainability agreements. True to its word, the ACM relied on its draft guidelines to assess and support five agreements covering industry sectors as diverse as energy, beverages, and the floricultural market. However, once the EC finalised the EU Horizontal Guidelines, the ACM's approach become contradictory and so it replaced its draft guidelines with the Policy Rule.
Unlike ACM guidelines that explain its interpretation of statutory provisions, its policy rules instead explain how the ACM will exercise certain administrative powers. A policy rule of this kind can be categorised as a type of formal decision by a governing body concerning its exercise of an administrative power. The ACM's Policy Rule on its oversight of sustainability agreements accordingly outlines the ACM's enforcement approach regarding sustainability agreements.
Similar to the EU Horizontal Guidelines, the Policy Rule provides a broad definition of a sustainability agreement, which is any agreement (horizontal or vertical) that pursues a sustainability objective, regardless of its specific form. The ACM reiterates the relevant framework for reviewing sustainability agreements, i.e. the prohibition of anticompetitive agreements (Article 101(1) TFEU/Article 6(1) Dutch Competition Act “DCA”), and the four cumulative criteria for availing a statutory exemption (Article 101(3) TFEU/Article 6(3) DCA). The ACM also explicitly affirms that it will follow the EU Horizontal Guidelines and relevant national and European case law when applying this framework. This is important given most Dutch sustainability agreements are covered by EU competition rules since they are likely to have a cross-border effect. As such, it is worth noting that according to the EU Horizontal Guidelines, sustainability agreements are not a distinct category of horizontal agreements. If agreements between competitors are one of the forms of cooperation agreements covered elsewhere in the EU Horizontal Guidelines, their assessment will be based on the relevant chapter together with the guidance in the separate chapter on sustainability agreements. For example, an agreement to purchase exclusively from suppliers that respect specific sustainability standards is evaluated according to the chapter on purchasing agreements while taking into consideration the chapter on sustainability agreements. If there is a discrepancy between chapters, the parties may rely on the more favourable guidance.
The ACM has thus largely drafted its Policy Rule around the EU Horizontal Guidelines and clarified that it did so to facilitate a harmonised pan-EU approach. Yet the ACM's Policy Rule differs from the EU Horizontal Guidelines when it comes to two specific types of sustainability agreements.
Firstly, compared to the EC, the ACM grants a broader ambit to agreements aimed at ensuring compliance with binding sustainability rules (“Compliance Agreements”). The EU Horizontal Guidelines only place outside the scope of Article 101 TFEU those agreements which aim to ensure compliance with legally binding and sufficiently precise requirements or prohibitions based on international legal sources (international treaties, agreements, or conventions). The ACM goes beyond the EU Horizontal Guidelines by stating that it will not investigate such agreements that are aimed at ensuring compliance with EU or national rules as well. This deviates from the EC's position that where EU or national law already requires market participants to comply with specific obligations that have a sustainability objective, agreements between competitors and any competitive restrictions they entail are not indispensable to ensure compliance with the obligations imposed. According to the EC, obligations stemming from European or national sources of law do not necessitate Compliance Agreements as the legislator has already decided that each undertaking must individually comply with the obligation in question. The ACM, unlike the EC, instead focuses on the actual compliance with and factual enforcement of sustainability rules, regardless of their source, arguing it would be inexpedient to protect "illicit competition" that would not exist if these binding rules had indeed been properly followed. Even before the ACM issued its Policy Rule, it had endorsed a joint initiative by garden centres to boycott suppliers that use illegal pesticides, thereby ensuring the enforcement of statutory requirements. Such a collective boycott would typically fall foul of the prohibition on anti-competitive agreements. However, according to the ACM, the initiative was not anticompetitive as it targeted the elimination of competition based on illegal production methods, which competition law should not protect.
It is questionable whether the ACM's position is in keeping with the Slovak Banking judgement of the Court of Justice of the European Union (“CJEU”)'. In this case, the CJEU held that ensuring compliance with statutory requirements is the responsibility of public authorities, not private entities, also since the application of statutory provisions may require complex assessments. The CJEU's demarcation of the area of responsibility of public authorities may preclude certain Compliance Agreements allowed under the Policy Rule. At the same time, it has also been argued by some that by focussing on the complexity of assessments that the application of statutory provisions may require, the CJEU has left room for those Compliance Agreements which target sufficiently precise sustainability rules that do not require complex assessments, and in particular, the weighing of different public interests.
Secondly, unlike the EC, the ACM distinguishes “environmental-damage agreements” from “other sustainability agreements”. Compared to the general approach outlined in the EU Horizontal Guidelines, the ACM grants greater leniency to environmental-damage agreements which it defines as “agreements that contribute efficiently to compliance with an international or national standard or to the achievement of a specific policy objective to prevent environmental damage”. The ACM states that it will not further investigate environmental-damage agreements, provided that the initial assessment shows that (i) it is plausible that the agreement is necessary for achieving the environmental benefits, and (ii) the environmental benefits sufficiently outweigh any potential anti-competitive effects.
However, different from the framework in its previous draft guidelines, the ACM now furthermore expressly requires that affected consumers in the relevant market must receive an “appreciable and objective part” of the benefits. This requirement is not the same as the EC’s requirement that in order to be exempted, a sustainability agreement that restricts competition must grant affected consumers full compensation for any harm caused (creating an at least neutral overall effect on consumers in the relevant market). It remains to be seen to what extent the ACM will use this seemingly less demanding threshold to pull away from the EC’s twin enforcement standpoints for exempting sustainability agreements, namely, (i) the overall effect on consumers affected by the restriction of competition be at least neutral, and (ii) that out-of-market benefits are only relevant if the consumers affected by the restriction and those benefiting outside the relevant market are substantially the same, and only if the benefits are significant enough to compensate the affected consumers in the relevant market.
In particular, we await in anticipation to see how broadly or narrowly the ACM will, in practice, interpret its requirement of an “appreciable and objective part” of the benefits stemming from an environmental-damage agreement being passed on to affected consumers. Although the ACM has clarified that this obviously makes it a prerequisite that affected consumers belong to the group that benefits from the agreement, it has still not imposed a strict condition that affected consumers and ultimate beneficiaries must be substantially the same.
It is also noteworthy that the ACM additionally explicitly states that it will also consider the polluter pays principle in the competitive assessment of environmental damage agreements. This enforcement slant, in turn, may provide some additional room to exempt environmental damage agreements that do not fully compensate consumers of the concerned polluting products. In this respect, the ACM has consistently advocated for consumers to be held accountable for their demand, which in turn means they should be accountable (at least to a certain extent) for the environmental damage caused by their demand which is sought to be addressed via an environmental-damage agreement. Thus, the ACM, through its Policy Rule, appears to indicate that it may not require a neutral effect on consumers in all cases, which would deviate from the EU Horizontal Guidelines and – in the views of some – potentially the jurisprudence of the CJEU.
While the Policy Rule confirms that the ACM will largely follow the EU Horizontal Guidelines, in section 3, it deviates with respect to Compliance Agreements and environmental-damage agreements. Yet neither this enforcement divergence nor the ACM’s commitment to refrain from fining informally endorsed agreements or publicly announced sustainability agreements that adhere to the Policy rule in good faith, shield prospective participants from potential EC enforcement. This is because, within the EU, both national competition authorities and the EC jointly enforce EU competition rules. EU competition rules apply, inter alia, when there is an effect on trade between EU member states, a condition that is quite easily fulfilled. As many sustainability initiatives in the Netherlands are likely to have an effect on trade between member states, the EC could potentially pursue such agreements even if the ACM chooses not to.
Due to this risk, only participants in purely domestic Dutch sustainability agreements, i.e. those without an effect on trade between EU member states, can take full comfort from the ACM's position. However, even the ACM acknowledges in its Policy Rule that many prospective agreements in the Netherlands are likely to affect trade between member states and thus fall within the scope of EU competition rules. Therefore, the EC may still scrutinise and take enforcement actions against agreements informally supported by the ACM, which can increase legal uncertainty.
That said, one may expect such differences of opinion to happen behind closed doors between the agencies where a proposal is material enough to have a clear EU dimension. Moreover, with Teresa Ribera being appointed as the EC's Executive Vice-President for a Clean, Just and Competitive Transition, there may now be a greater chance of the EC adopting an approach to sustainability agreements which is more closely aligned with the ACM’s position. Ribera has a strong track record in the area of sustainability, and President von der Leyen's mission letter to Ribera builds upon this priority topic, calling for a new approach to, and the modernisation of, the EC’s competition and sustainability policy, such as through reviewing the EU Horizontal Merger Guidelines and adopting the Clean Industrial Deal. As such, Commissioner Ribera is set to become a major “green” influence on the EC’s future competition policy, with some voicing concerns that she may even prioritise sustainability gains over competition concerns, though this view is far from universal.
It also has to be considered whether the ACM’s Policy Rule is in keeping with the duty of sincere cooperation imposed under EU Law. While Member States and, by extension their competition authorities, are granted a degree of freedom to set their own prioritisation policy, sincere cooperation entails that Member States use their discretion to fulfil EU Law obligations. Thus, in principle, the ACM should guarantee the effective enforcement of EU competition law and not deliberately underenforce. It therefore remains a moot point whether the ACM can prioritise enforcement, based not on resource and capacity constraints, but instead based on specific sustainability policy considerations which some may argue lead it to effectively ignore EU competition rules, reducing legal certainty.
The ACM has promptly implemented its new Policy Rule through five informal assessments. These assessments provide insights into the ACM's application of its Policy Rule. The ACM chose not to investigate each assessment further, while reserving the right to review if new facts were to arise. While the ACM reached similar conclusions in each assessment, its reasoning differed, making it useful to evaluate each assessment separately.
On 4 October 2023, the ACM issued informal guidance on an initiative by the Dutch Waste Management Association and several waste collectors regarding the recycling of commercial waste. The participants who are competitors wanted to agree to always offer new corporate clients (waste disposers) a contract for at least two sorted waste streams (such as biodegradable waste, paper, or yard waste). In this way, the participants sought to facilitate compliance with the obligation to separate waste required under the Netherland's National Waste Management Plan, which obliges disposers of 240–660 litres of waste (virtually all the participants' customers) to separate at least one waste category, thereby delivering at least two separate waste streams. This requirement was not being fully enforced by Dutch authorities.
The ACM concluded that the initiative plausibly met the criteria outlined in section 3.1 of the Policy Rule with respect to waste disposers with a statutory obligation to separate waste streams, as it would give effect to Dutch waste separation laws. Additionally, the ACM concluded that it was plausible that the purpose of the initiative was solely to achieve compliance with Dutch waste separation laws, thereby promoting sustainability. In reaching these conclusions, the ACM considered that the initiative was (i) limited to the waste disposer's legal requirements, (ii) contained sufficient safeguards to limit the initiative to that which is necessary and proportionate, as it was voluntary and non-exclusive, and (iii) allowed its participants a degree of freedom to choose which waste streams to separate, as well as to exceptionally deviate from the agreement. While the ACM determined that the agreement could potentially restrict competition for waste disposers who fell below the applicable legal thresholds for requiring separated waste streams (to whom Section 3.1 accordingly did not apply), the ACM concluded that this group was so small that any effect on the Dutch market would be negligible.
On 11 April 2024, the ACM issued informal guidance on the launch of a new sustainability standard for the e-commerce sector by Thuiswinkel, an industry association for the e-commerce sector. The proposed certification system aims to help participating webshops reduce their environmental impact in six targeted areas: strategy, product offering, packaging, delivery, returns, and circularity.
Despite stating in its Policy Rule that it would in principle publish all its assessments, the ACM has not (yet) done so in this case. The press release does not explicitly state how the ACM categorised the proposed agreement. However, the ACM appears to have decided that the agreement constituted a sustainability standardisation agreement which posed no appreciable risk of restricting competition. The ACM stated that it found the following considerations important: (i) participation in the initiative would be voluntary, (ii) an independent third party would determine whether a webshop meets the requirements to be certified, (iii) the participants would maintain a degree of freedom over their sustainability visions, goals and choices within the boundaries of the certification system, (iv) the proposed agreement would leave room for new sustainability innovations, and (v) Thuiswinkel guaranteed it would ensure that no commercially sensitive information would be exchanged. The ACM also favourably considered that the certification system would require participants to communicate about their sustainability efforts in line with the Sustainability Claims Guide, providing consumers with concrete, transparent information about the sustainability benefits of their products and services.
On 4 July 2024, the ACM issued informal guidance on a proposed agreement through which the Royal Dutch Association for Coffee and Tea Companies and nine coffee capsule manufacturers would, through the newly established Association for Coffee Capsules Recycling Netherlands, jointly make arrangements with waste-processing companies to facilitate the sorting and recycling of coffee capsules, including through jointly investing in technologies such as sorting machines. The agreement thus aimed at expanding the percentage of aluminium and plastic coffee capsules recycled.
The ACM concluded that the initiative constituted a sustainability agreement, as amongst other things, its goal was to promote the recycling of plastic and aluminium coffee capsules. The ACM partially based its conclusion that the agreement could be considered a sustainability agreement, on the fact that the most recent EC proposal to amend EU rules on packaging and packaging waste required coffee capsules to be recyclable, as opposed to compostable (as a previous EC proposal had required). The ACM further concluded that the initiative posed no appreciable risk of restricting competition. In reaching this conclusion, the ACM considered that the agreement did not (i) facilitate the sharing of sensitive information, (ii) pose a significant risk of excluding competing producers of coffee capsules or waste processors, or (iii) pose a risk of increased prices. While the ACM also did not find an unacceptable risk of the agreement stifling future innovation, it did advise the participants to actively guard against the initiative precluding innovation in more sustainable alternatives to recycling. Additionally, the ACM clarified that it may request further information about the latest innovation and sustainability developments at a later date.
On 14 August 2024, the ACM issued an informal assessment of an initiative by the Dutch Banking Association and several Dutch banks concerning their Environmental, Social, and Governance (ESG) data reporting requirements. In its pilot stage, the initiative aimed to standardize the interpretation and reporting of ESG criteria within the transport, agriculture, and real estate sectors, increasing the coherence and comparability of banks' ESG reporting, as required under, among others, the Corporate Sustainability Reporting Directive (CSRD). The CSRD is a directive that stipulates that from 2024 onwards, (large) businesses are required to report on their impact on environmental, social, and governance issues, including in their supply chains. Banks currently encounter several challenges, including the lack of an unequivocal interpretation of ESG data. As a result, different banks' sustainability reports are not comparable. The initiative therefore entailed the creation of a digital platform for banks to enable consensus on the following: how statutory ESG requirements can be interpreted, what calculation methods and data points can be used, and what data sources are suitable for this.
The ACM concluded that the initiative constituted a sustainability agreement which enhances the comparability of sustainability performances in banks' ESG reporting and posed no appreciable risk of restricting competition. In reaching this conclusion, the ACM considered that the initiative was (i) open to all banks and (ii) voluntary. Additionally, the ACM found that the agreement did not (iii) involve the exchange of competitively sensitive information, (iv) otherwise restrict competition (such as by negatively affecting competition between banks on price, quality, choice, or innovation), or (v) stifle innovation, given the transparency regarding the information and methodology used by banks when reporting their ESG data. The ACM partially based its conclusions on the lack of upcoming European legislation.
On 6 December 2024, the ACM issued an informal assessment of a collaborative initiative between asphalt producers to make asphalt production more sustainable. The prospective participants were members of the Department on Bituminous Works of Bouwend Nederland, a trade association for the Dutch construction and infrastructure industry. Through the initiative, the prospective participants aimed to phase out asphalt production involving high production temperatures, for asphalt production involving lower temperatures. A lower production temperature would consume less energy and reduce emissions, lowering asphalt production's impact on the environment.
The ACM concluded that the initiative constituted a sustainability agreement and posed no appreciable risk of restricting competition. In reaching this conclusion, the ACM assessed the initiative through the six cumulative conditions for the soft safe harbour for sustainability standards provided under the EU Horizontal Guidelines. The ACM concluded that the initiative (i) was open and transparent, allowing all interested competitors to join, (ii) did not directly or indirectly impose obligations on non-participating asphalt producers, (iii) allowed participants to apply higher sustainability standards, (iv) did not involve the sharing of sensitive information, (v) allowed interested competitors to join on a non-discriminatory basis, and (vi) had no significant effect on competition, including with respect to competition on the price and quality of asphalt. While the ACM could not rule out that the initiative could lead to a minor price increase, it considered the odds of a significant price increase slim enough to satisfy this condition.
Through its Policy Rule, the ACM is essentially attempting to be as progressive as it can be within the constraints of the EU Horizontal Guidelines. Nevertheless, it remains too early to determine whether the ACM's approach will provide sufficient legal certainty to businesses considering the number of informal assessments publicly available remain limited. Moreover, neither the ACM's commitment not to impose fines, nor its leniency towards Compliance Agreements and environmental-damage agreements bind the EC. Therefore, risks associated with the Policy Rule's national scope, and divergence from the EU Horizontal Guidelines should be taken into account when considering sustainability agreements in the Netherlands. However, with the recent appointment of Teresa Ribera as the EC's Executive Vice-President for a Clean, Just and Competitive Transition we may see a shift of EU policy in the area of sustainability to align with – and potentially even extend beyond – the progressive Dutch approach.
