In recent years, the ACCC has increased its focus on environmental issues. With the creation of an internal taskforce in 2023, the ACCC’s focus on sustainability has expanded to include competition law and product safety, as well as the areas of consumer law and fair trading. [1]

Now, the ACCC has released a draft guide on competition law and ‘sustainability collaborations’ (“Draft Guide”), which refers to discussions, agreements, or practices between companies with the aim of reducing their impact on the environment. The Draft Guide is intended to assist businesses in managing the competition law risks of these collaborations and to provide detail on the authorisation process. 

The competition law risks of sustainability collaborations

Sustainability collaborations can breach Australia’s competition laws where the collaboration involves cartel conduct (which includes bid rigging, price fixing, market sharing and output restrictions) or otherwise has the purpose or likely effect of substantially lessening competition. 

An example of a collaboration which the ACCC considers likely to be a cartel is where companies that typically compete to acquire a particular input, instead reach an agreement with each other that they will only purchase the input from suppliers that have eco-friendly criteria. In contrast, where companies share evidence-based information on suppliers’ environmental credentials, such as sustainable value chains and practices, this will generally carry lower competition risk (unless the businesses share commercially sensitive materials or reach an agreement to purchase, or not purchase, from suppliers). 

The authorisation process

The ACCC’s Draft Guide also focuses on the authorisation process as a means to facilitate sustainability collaborations. 

Businesses can seek authorisation from the ACCC where there are competition concerns with their proposed collaboration. Authorisation is a voluntary process which provides an exception to the competition provisions of Australia’s competition laws. 

In general, the ACCC only grants an authorisation if the proposed conduct's public benefits outweigh its public detriment and typically conducts a public consultation process to assist it in determining whether proposed conduct will achieve the desired outcome.

The ACCC’s guidance makes it clear that environmental benefits, such as a decrease in greenhouse gas emissions or biodiversity conversation, can be public benefits. The ACCC has previously granted authorisation for agreements that involve environmental benefits. A good example is the ACCC’s authorisation to allow the large supermarkets to collaborate via the Soft Plastic Taskforce.[2] This allowed the supermarkets to work together to deal with the soft plastics stockpile and resume in-store collections following the suspension of the REDcycle program. 

The regulator also makes it clear that it is “available and willing” to discuss sustainability collaborations, and that businesses are allowed to have preliminary discussions about pursuing a sustainability collaboration without approval. 

It also provides a chart outlining the “usual steps” a business should take if it considers collaborating with another business: 

Finally, the ACCC has also flagged that, in certain cases, it may be possible to “streamline” an application for authorisation (i.e. to bypass the initial consultation phase and instead proceed to a draft determination). This could occur where the substance of the application has previously been dealt with by the ACCC, since it has experience in looking at sustainability-related agreements.

The ACCC is seeking submissions before it publishes a final guide on its website, with submissions closing on 26 July 2024. 

If you need more information or further guidance in this area, or would like to make a submission, please contact Thomas Jones or Dylan McGirr. This article was written with the assistance of Chloe Corne. 

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[1] Australia: The ACCC Announces its 2023-24 Enforcement Priorities with a Continued Focus on Sustainability and Digital Platforms (Australia: The ACCC announces its 2023-24 enforcement priorities with a continued focus on sustainability and digital platforms - Bird & Bird (twobirds.com)).

[2] Cooperation to Continue on Soft Plastics Recycling after REDcycle Collapse (https://www.accc.gov.au/media-release/cooperation-to-continue-on-soft-plastics-recycling-after-redcycle-collapse).