Antitrust scholars and authorities are debating how antitrust can and should align with green sustainability initiatives. A recent ruling from Brazil’s antitrust authority, the Administrative Council for Economic Defense, in approving the launch of a commercial platform for agricultural commodity traders to track global supply chain sustainability metrics, presents one case study on how to advance sustainability goals without compromising competition.
Global interest in the nexus of antitrust law and green sustainability initiatives is undeniably expanding. In the past three years, several European jurisdictions, notably the Netherlands, Greece, Germany, and the United Kingdom, have undertaken to refine their Guidelines for Horizontal Agreements to address this convergence. The European Commission has also reflected this development in its newly revised Horizontal Guidelines, which dedicates an entire chapter for sustainability agreements.
Despite the proliferation of these European endeavors, identifying uniform political consensus around incorporating sustainability in antitrust proves exceptionally difficult. These developments have catalyzed a bifurcation, as some scholars advocate for a normative shift to center sustainability in antitrust doctrine. Others caution against the potential adverse impacts of a “greener” antitrust agenda, suggesting it could inadvertently curb competition and serve as a guise for greenwashing cartels.
The recent stances of the European Commission and European nations offer a window into the merits and drawbacks of broadening the scope of efficiency analysis coming from sustainability agreements. On one hand, confining the analysis of efficiencies to the strict boundaries of neoclassical microeconomics seems ill-equipped to fully encompass these benefits in their societal breadth. On the other hand, significant measurability challenges arise to frame and quantify societal, dynamic, and “out-of-market” efficiencies.
Given the lack of harmonization in global efforts, a crucial question emerges: How should antitrust agencies, which have not clearly articulated a policy position on sustainability, handle green initiatives among competitors? This dilemma is set to become increasingly significant given the international scope of sustainability initiatives.
A recent decision from the Administrative Council for Economic Defense (CADE), Brazil’s antitrust authority, provides a persuasive example of how “agnostic” agencies can establish some cautionary principles. This ruling revolved around a joint venture agreement between leading global agricultural commodity traders to create and operate a platform designed to standardize sustainability metrics within the global food chain. The case prompts more specific questions about how big data-based initiatives could present unpredictable competitive risks.
Drawing from this case, I propose that “agnostic” antitrust jurisdictions should establish minimum criteria for reducing the competitive risks associated with data-driven horizontal initiatives spanning supply chains. This policy approach should steer clear of complex debates on how to assess societal benefits in antitrust analysis and focus on devising appropriate measures to mitigate competitive risks.
Critical Analysis: Unpacking CADE’s Landmark Decision on Sustainability Agreements
In spring 2023, CADE undertook a comprehensive review of a joint venture agreement focused on the operation of an innovative platform designed to standardize sustainability metrics within the global food supply chain. The platform was engineered to enhance the management of various forms of sustainability data, including product traceability information such as origin, environmental metrics like agricultural practices, water usage, energy consumption, chemical use, assessments of deforestation, and socioeconomic data regarding education, child protection, and smallholder farming.
The parties involved maintained that the platform’s functionality would offer significant benefits to supply chain participants and end consumers. The platform was envisioned as an efficient information management system capable of reducing the manual labor businesses expenses in soliciting, gathering, processing, maintaining, and reporting sustainability data.
Despite initial unconditional approval from CADE’s General Superintendence, in a preliminary decision on April 10, CADE’s tribunal ruled that further scrutiny was required. CADE’s commissioners raised concerns that the parties involved in the agreement could foreclose competition among several levels of the global food chain by denying rivals access to the platforms. Concerns were also raised about the potential exposure of sensitive competitor, supplier, or customer information through the platform.
During the tribunal’s investigation, the joint venture parties eventually clarified that the platform’s primary goal was not to create new sustainability metrics but to collate and organize pre-existing sustainability metrics from various external sources. Also, as part of Rapporteur Commissioner Sérgio Ravagnani’s ongoing investigation, the parties to the joint venture have entered into an “Antitrust Protocol” committing to open platform access for all participants in the global food chain on fair, transparent and commercially viable terms, without preference or exclusivity for the joint venture companies.
The Protocol also establishes a compliance team, including a chief compliance officer, to ensure compliance with the Protocol. It explicitly prohibits the use of the platform for the exchange of commercially sensitive information between competitors, thereby addressing potential anticompetitive activities or barriers to entry. It also protects user privacy by limiting platform users’ access to data about their suppliers, subject to supplier consent.
On June 21, CADE’s tribunal gave the go-ahead for the global launch of the platform. The agency evaluated that the principles of non-discriminatory access to the platform in the Antitrust Protocol and in the JV shareholders’ agreement are binding for the lawfulness of the platform’s operation and their inclusion is even more effective than possible time-limited behavioral remedies.
Navigating Uncertainty: Comparative Analysis and Insights for Agnostic Antitrust Jurisdictions
CADE’s recent ruling provides a nuanced perspective on how antitrust agencies should deal with sustainability agreements. It refines some antitrust safe harbors discussed in the European guidelines and provides insights into how competition agencies should limit data-driven initiatives for sustainability purposes.
Indeed, a growing consensus seems to be emerging, both within the realm of academic discourse and European regulatory guidelines, that certain forms of cooperation among competitors can yield positive outcomes for sustainable development, without compromising the principles of competition. Frequent examples include agreements among competitors to phase out ecologically harmful products (as discussed in the European Commission CECED case), agreements that strive to improve product quality whilst concurrently inhibiting the sale of less sustainably produced goods, and various forms of voluntary sustainability standards.
Moreover, some of the recent European guidelines include references to agreements between competitors that facilitate extensive sharing of sustainability data about suppliers and consumers along supply chains, reminiscent of the platform investigated in CADE’s recent decision. For instance, the new European Commission Horizontal Agreements Guideline maintains that databases containing general information about the sustainability credentials of suppliers and consumers within value chains, especially those that do not impose or forbid participants from making any purchasing decisions, generally do not restrict competition. Correspondingly, the U.K.’s Competition and Market Authority’s Draft Guidance on Environmental Sustainability Agreements clarifies that pooling information about the environmental sustainability credentials of suppliers or customers, absent any obligation for parties to make specific purchase decisions or share competitively sensitive information about prices or quantities, is unlikely to detrimentally impact competition.
Against the backdrop of those guidelines, CADE’s ruling shows that the presumptions about the limited impact of those sustainability initiatives in competition cannot always be taken for granted. To avoid potential anticompetitive effects, antitrust remedies or guidance caveats for fair access to data-sharing arrangements shall be provided. In the case reviewed by CADE, the platform, controlled by major agribusinesses, raised concerns about potential marginalization of the parent companies’ competitors. The antitrust protocol then ensured non-discriminatory access and enhanced safeguards against the exchange of competitively sensitive information as a remedy.
This approach highlights the sustainable benefits of the horizontal agreement without requiring a deep dive into measuring and quantifying the societal benefits. Once the potential for anticompetitive effects was mitigated, an extensive discourse on efficiency assessment became unnecessary. This fact was explicitly recognized by the CADE commissioners, who acknowledged the difficulties of measuring sustainability benefits in antitrust analysis. This solution has the great merit of strengthening the intersection between antitrust and sustainability, without moving into an unknown territory.
The road ahead: harnessing the synergies between antitrust and sustainability
The ruling issued by CADE establishes an intriguing precedent for approaching sustainability agreements within the framework of antitrust law. It ultimately signifies the belief that heightened levels of competition often lead to improved sustainability outcomes.
The idea that antitrust regulations hinder sustainable objectives, if accurate, seems to be primarily relevant in highly exceptional circumstances that deviate from the majority of cases assessed by impartial agencies. Due to the inherent uncertainties involved in evaluating the societal benefits of sustainability, the most prudent course of action for antitrust agencies in the future is to prioritize their fundamental mission: ensuring that environmentally conscious initiatives do not impose significant restraints on competition. Currently, this approach appears to be the most advantageous means for antitrust to contribute to the sustainability agenda.
Author’s note: The opinions expressed in this article are his own and do not reflect the positions of any of the institutions mentioned above.
Articles represent the opinions of their writers, not necessarily those of the University of Chicago, the Booth School of Business, or its faculty.