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HomeNewsBusinessStop Antitrust Laws From Making Business Sustainability Difficult

Stop Antitrust Laws From Making Business Sustainability Difficult

Companies are under enormous pressure to make sure their supply chains are socially and environmentally responsible now that sustainability is a board-level concern. Internal business, consumers, the government, shareholders, or all of them, may be the source of the incentive. In order to connect words with actions, there are targets, commitments, deadlines, and board pressure.

Regulators cast a wide net since the law typically considers where an arrangement may have an impact rather than just the physical locations of the parties. The application of national antitrust laws to sustainable cooperation that can increase costs and limit choice is not always obvious.

Companies may not be able to make a difference on their own in some marketplaces where they pursue sustainability goals on their own to financially deliver consumers the items they want. Sometimes a sectoral or joint endeavour might bring about change on a scale that would be economically difficult for a single company to do. But under US and other antitrust laws across the world, the idea of rivals cooperating may cause problems.

As a result, businesses that wish to act quickly to achieve goals and lead in their industry face a challenging and potentially dangerous legal environment. So how should businesses deal with this?

There is no exemption to antitrust laws for the environment, social issues, or good governance, according to Federal Trade Commission Chair Lina Khan in response to a query at a Senate hearing. “…where corporations have tremendous influence and they use that authority to promote anti-competitive goals, that should be actionable under the antitrust statutes,” said Assistant Attorney General Jonathan Kanter.

Congressmen and antitrust enforcers in the US have made it clear that they will not stand for cartels operating under the pretence of sustainability agreements. Companies might face penalties, legal action, and public accusations of greenwashing, all of which would require time and resources to fight back against in court and in front of the public.

An important investment company received a letter earlier this year from a group of 19 state attorneys general warning that “coordinated activity with other financial institutions to impose net zero poses antitrust issues.”

Collaborations may not truly aim to limit competition in the real world. The initiatives may be managed by sustainability managers or technical specialists (under pressure), but because they are not thought of as in a risky price-setting function.

Those involved may believe that efforts involving competitors are justified by larger, admirable societal or environmental goals. It’s also easy for conversations about moral issues, like prices and the advantages of market stability, to veer off into immoral area. On lengthy projects that are susceptible to scope creep, staff members could lose interest in antitrust hazards. Companies frequently use industry standards and benchmarking to produce more ethical and sustainable results. Standards that are voluntary may have a favourable impact on worker compensation, allowed industrial processes, and even the effectiveness of recycling.

Standards have definite advantages, and many people won’t complain about antitrust difficulties. Companies should, however, watch that standards are not created in a manner that  disadvantages or excludes—i.e., boycotts—others. Additionally, companies might need to exchange data when creating voluntary standards, ensuring compliance, or conducting benchmarking. They can be made compliant by using non-disclosure agreements, clean teams, or a third party to aggregate the provided volume numbers.

There is no antitrust concern as long as there are enough enterprises collaborating to prevent any one participant from being able to reverse-engineer knowledge about its rivals. The challenge for companies and advisers lies in deciding how to approach projects on the right-hand side of the continuum, where a cost/benefit analysis may be needed.

This is difficult because qualitative benefits are harder to quantify or may be more uncertain, for example. because they will only arise in the longer term. Regrettably, companies might conclude that short-term antitrust scrutiny is more certain than environmental and commercial benefits. There are no easy answers for this category of projects, and the legal assessment will always be fact- and jurisdiction-specific. We recommend the following tips to mitigate the risk:

Make sure that those responsible for corporate sustainability initiatives seek out antitrust counsel.
Consider auditing the ESG activities of the group to ensure in-house counsel knows what is going on and why on any project must be conducted jointly: What about the initiative, in terms of risk and cost, means that it could not be achieved alone?
Make sure projects preserve as much room as possible for competition, such as by encouraging individual discretion on how to meet and exceed any jointly set targets. Identify and quantify the benefits of the initiative, who will benefit, and when.
Train all employees who have contact with competitors on how to approach meetings, using a dos and don’ts sheet tailored to the project. Ensure each initiative has a compliance program covering information exchange safeguards, and use of a third party to avoid sharing sensitive information. Have corporate counsel periodically check for scope creep, and consider inviting external counsel to key meetings to ensure conversations stay on track. Also, consider pros and cons of approaching a government body and/or antitrust agency about a contemplated project, which may be a good option where major investments are contemplated.

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Patrick Huston
Patrick Huston
As a senior editor, Patrick is a professional who is in charge of putting out business news. As a senior editor, Patrick is likely to be in charge of the duties of junior editors and writers, make sure the content is correct and high-quality, and work with other departments to make sure the business news is published on time. Patrick knows a lot about business and the latest market trends. He uses this knowledge to choose and edit stories that are both interesting and useful to readers. He also works with reporters and analysts to come up with insightful pieces that help readers keep up with the latest business news. Patrick is a very important part of keeping the public informed and interested in important business issues. He is passionate about journalism and strives for excellence.


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