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Competition bosses have set out plans to allow greater collaboration among companies to tackle environmental issues, in a move experts say could have huge implications for the food and drink industry.

Draft guidance published by the the Competition & Markets Authority (CMA) includes proposals to override competition law in cases when it would prevent companies working together to tackle areas such as climate change.

If the guidance is approved by ministers after a consultation with industry, it would mean the CMA agreeing not to take enforcement action or fine companies if their “environmentally sustainable agreements” passed its new set of requirements.

The guidance, which follows plans first mooted by the body in March last year, says companies should “not be unnecessarily or erroneously deterred from lawfully collaborating in this space due to fears about competition law compliance”.

It adds: “This is particularly important for climate change because industry collaboration is likely to be necessary to meet the UK’s binding international commitments and legislative obligations to achieve a net zero economy, and to play an essential part in delivering the UK’s net zero ambitions.”

The move is also being seen as a major boost to the new Food Data Transparency Partnership, a collaboration of industry and government departments, which is planning to come up with common reporting metrics to tackle areas such as the environment and public health.

Fears have been raised that competition restrictions could hamper its work in creating a level playing field.

“The CMA recognises that there are circumstances where collaboration between competitors may be needed to protect or enhance environmental sustainability,” says the new draft guidance.

“Possible examples include where a firm that acts first by itself to protect environmental sustainability would thereby sustain a competitive disadvantage compared with its rivals, for example where an individual firm might be disadvantaged by switching to a more sustainable but costlier input if its competitors do not do so with the result that no firms have the incentive to switch without some form of collaboration.”

Crucially for smaller companies, the CMA guidance says it will allow collaboration in cases where SMEs may lack the resources and capabilities to achieve more environmentally sustainable outcomes but could achieve them collectively.

“For example, a firm may have the required technical expertise among its employees to innovate its production processes to reduce its carbon emissions but lacks the R&D facilities to trial and fully develop the innovation.”

Legal experts said the consultation, which began yesterday and will run until 11 April, could be a major breakthrough for companies, as well as the battle against climate change.

“We believe it would significantly assist businesses to manage their antitrust risk exposure and open the door for more businesses to pursue environmental initiatives at industry level” said Nicole Kar, global head of Linklaters’ Antitrust & Foreign Investment Practice.

“By issuing this guidance the CMA joins other regulators, notably the Dutch and Austrian regulators, at the vanguard of the antitrust and sustainability debate.”

CMA CEO Sarah Cardell said: “Tackling climate change and promoting environmental sustainability are priorities for the CMA and many businesses across the UK.

“We hear increasingly that firms want to do more to co-operate and tackle climate change issues but are worried that competition law may prevent or impede them from working together to address them.

“We are committed to helping these businesses deal with the issue together, without unfounded fear of breaking competition rules.”

The CMA intervention comes as it is probing claims of “greenwashing” by food and drink companies to make sure consumers are not beig misled by environmental claims.

Industry sources believe greater co-operation will allow a more level playing field for environmental reporting and reduce the risk of companies being able to make erroneous claims.