ACCC releases draft guidance for businesses engaging in sustainability collaborations

One of the ACCC’s current enforcement and compliance priorities is addressing competition concerns in relation to environmental claims and sustainability, which includes businesses engaging in sustainability collaborations.

‘Sustainability collaboration’ has been adopted by the ACCC as a term to refer to discussions, agreements or other practices among businesses that are aimed at preventing, reducing or mitigating the adverse impact that economic activities have on the environment.

The ACCC recognises that certain conduct associated with sustainability collaborations may risk businesses breaching Australia’s competition laws. Accordingly, the ACCC has released the Sustainability collaborations and Australian competition law guide (Draft Guide) in order to:

• assist businesses engaging in sustainability collaborations navigate the competition law risks associated with those collaborations
• provide guidance on how businesses can seek an exemption through the ACCC’s authorisation process where sustainability collaborations may otherwise breach competition laws
• promote sustainability collaborations that generate a public benefit.

Draft Guide

The Draft Guide outlines the circumstances in which the ACCC considers sustainability collaborations may contravene Australia’s competition laws and provides guidance on how businesses can be exempt from such contraventions.

Sustainability collaborations and anti-competitive conduct

As sustainability collaborations involve the cooperation of two or more businesses that may be competitors, there is a risk that sustainability collaborations may result in participating businesses unlawfully engaging in:

• cartel conduct
• a contract, arrangement or understanding that has the purpose, effect or likely effect of substantially lessening competition in a relevant market
• concerted practices
• exclusive dealing.

For example, if competing suppliers agree to impose a levy on their customers for the purposes of funding a sustainability initiative, they may be unlawfully engaging in cartel conduct.

Businesses may be subject to significant pecuniary penalties for breaching Australia’s competition laws, as well as criminal penalties for engaging in cartel conduct.

ACCC authorisation

Businesses that believe their sustainability collaborations may contravene Australia’s competition laws should obtain legal advice to determine whether an exemption applies under the Competition and Consumer Act 2010 (Cth).

In addition to other exemptions, the Draft Guide emphasises that a business can seek authorisation from the ACCC. The ACCC may grant a business authorisation to engage in an otherwise unlawful sustainability collaboration where:

• in respect of cartel conduct, the collaboration would or would be likely to result in a public benefit that outweighs any public detriment
• in respect of other unlawful conduct, the collaboration does not have the effect or likely effect of substantially lessening competition in a relevant market.

If a business obtains authorisation from the ACCC before engaging in a sustainability collaboration, then the business will be exempt from breaches of Australia’s competition laws in relation to the authorised collaboration. The Draft Guide contains a detailed overview of the ACCC’s authorisation process.

What should businesses do?

The ACCC is expected to publish its finalised guidance in late-2024. In the meantime, businesses should carefully review and consider whether their sustainability collaboration practices align with the Draft Guide to mitigate the risk of breaching Australia’s competition laws.

If you would like to receive advice on your business’ sustainability collaboration practices or organise competition or consumer law training for your business, please contact our corporate advisory team.