Sustainability and the CMA
On 24 January 2023, Shepherd and Wedderburn are delighted to host the Scottish Competition Forum event “An evening on Sustainability, with Sarah Cardell” (CEO of the Competition and Markets Authority) in our Edinburgh office. If you are interested in attending the event, you can register here.
Sustainability has been a prominent topic within competition and consumer law in recent years. The Competition and Markets Authority (CMA) has been at the forefront of promoting and supporting sustainability when developing policy and in the course of its work and projects.
The CMA’s Sustainability Objectives
Sustainability is at the core of the CMA’s strategic objectives. In the CMA’s current Annual Plan, one of the key priorities outlined is “supporting a wider effort to make our economy cleaner and greener”.
Looking ahead, the CMA published the consultation for the 2023/24 Annual Plan in December. One of the proposed priorities for the CMA is that “the whole UK economy can grow productively and sustainably”. The CMA also has a broader aim to promote competitive markets and tackle unfair behaviour, which should support productivity, innovation and growth across the UK economy. This coming year, the CMA will have a particular focus on ensuring that competition aids sustainable growth.
The CMA has set out three key objectives under this priority:
- Help accelerate the UK’s transition to a net zero economy.
- Prioritise sectors that offer the biggest potential for impact on innovation and productivity.
- Promote resilience through competition.
The CMA’s continued focus on sustainability is highlighted through the investigations and studies which it carries out.
In December 2020, the CMA launched a market study into the electric vehicle charging sector in the UK. The aims of the investigation were to consider “how to develop a competitive sector while also attracting private investment to help the sector grow” and “how to ensure people using electric vehicle chargepoints have confidence that they can get the best out of the service”. The study resulted in the CMA publishing a package of recommendations to kickstart more investment and unlock competition. The recommendations included:
- Meeting the scale of the overall challenge,
- Unlocking competition along motorways and targeting rural gaps,
- Boosting investment and maximising competition in on-street charging
- Creating a sector people can trust and have confidence in.
The Government have responded, agreeing with the CMA’s findings and also publishing an electric vehicle infrastructure strategy.
In 2021, the CMA opened an investigation into the supply of electric vehicle chargepoints on or near motorways. The CMA accepted binding commitments from a major chargepoint operator not to enforce exclusive rights in certain contracts, which the CMA proposes will allow significant investments between 2021 and 2025 ahead of the anticipated significant increase in demand, without imposing competition concerns in the market.
The CMA has also committed to launching at least one new market study in a net-zero relevant market this financial year.
The CMA is also increasingly providing guidance for businesses and the UK Government to help the UK to become more sustainable.
Interplay between sustainability and UK competition and consumer regimes
In March 2022, the CMA provided advice to the UK Government on the interplay between sustainability and the UK competition and consumer regimes. The CMA advised the government to consider making changes to consumer law so that it is simpler for consumers to make sustainable choices, and to effectively enforce consumer law breaches which could lead to environmental harm. It also advised a more coherent approach across sectors and regulatory regimes in tackling climate change and suggested that the government identifies new ways to encourage more sustainable consumption.
As part of the advice, the Government posed three questions to the CMA:
- If, and how, do current competition and consumer legal frameworks constrain or frustrate initiatives that might support the UK’s Net Zero and sustainability goals?
- Are there changes to the UK’s competition and consumer law that would help to achieve the UK’s Net Zero and sustainability goals?
- Are there other opportunities within the UK’s competition and consumer policy toolbox that would support the UK’s Net Zero and sustainability goals, which the government should be considering?
The broad response from the CMA was that the current legal framework allows some flexibility to accommodate environmental benefits. The CMA does not see an immediate need for significant changes. However, the CMA identifies that the Government could provide some more explicit clarification which would help to achieve the UK’s sustainability goals. The CMA also noted that “more can and should be done with the UK’s competition and consumer policy toolbox to support the UK’s Net Zero and sustainability goals.”
In the advice, the CMA also outlined its plans to establish a Sustainability Taskforce. The taskforce will lead engagement with stakeholders, develop guidance where needed, continue to develop the CMA’s thinking on the relevance of sustainability issues, maintain a network of experts and support the overall sustainability strategy of the CMA.
Making misleading environmental claims
The CMA has separately published guidance on avoiding making misleading environmental claims on goods and services. The guidance aims to help businesses understand and comply with consumer protection law requirements when making claims that their product or service is better for the environment. The CMA aims to help businesses avoid making claims that their product or service is less harmful or more beneficial to the environment than it actually is.
Sustainability agreements and competition law compliance
Guidance has also been published by the CMA to help businesses understand how competition law applies to sustainability agreements. It wants to ensure that competition policy does not stand in the way of businesses fulfilling their sustainability initiatives in the mistaken belief that they may breach competition law.
“The CMA recognises that collaboration can help achieve sustainability goals. However, sustainability agreements must not be used as a cover for a business cartel or other illegal anti-competitive behaviour.”
The CMA guidance sets out the basic principles of competition law and how businesses can ensure that their sustainability agreements fall within them.
If you are interested in attending the Scottish Competition Forum event, you can register here.