ESG and competition law: get informal guidance on your project’s compliance

Closely following the European Commission's model (Commission Notice of 4 October 2022), the French Competition Authority (FCA) now allows companies to seek informal guidance (FCA’s communication of 27 May 2024) on the compliance of their ESG projects with competition law.

Who can request guidance?

• Any undertaking or association of undertakings
• If there is any doubt as to the compliance of a practice with competition law

What practices are concerned?

• The practice aims at sustainable development
  E.g. Listing raw material suppliers together with competitors to ensure a more sustainable but more expensive supply
  E.g. All companies in a sector decide together to stop selling inexpensive products that are also the most inefficient ones (washing machine with energy label G for example)
  E.g. A dominant company refuses to sell to clients that do not comply with predefined ESG criteria
• The project has not yet been carried out but is sufficiently structured (implementation stages and agenda) not to be merely hypothetical
  
  At European level, undertakings can ask for the Commission’s view on any practice (not only ESG oriented) of interest at EU level. The question can be about a project already carried out, provided that it is still ongoing

Why contact the authorities?

• The analysis of the practice under competition law is particularly difficult
• The issue must not already be under assessment in an ongoing investigation or another informal guidance request

How to request informal guidance?

• The FCA can be informally contacted in advance
• The file is to be sent by email or physically and includes:
• The companies’ details
• Information on the project and its schedule
• Self-assessment: the company’s own analysis of the project's compliance with competition law based on case law, on the authorities’ practice and the guidelines on vertical restraints or on horizontal cooperation agreements. This analysis must highlight the legal uncertainties raised by the project
• Relevant economic information
• Relevant documents
• The FCA’s head of investigation services has 1 month to decide whether or not he will give an informal guidance on the matter and to inform the company of his decision
• If he decides to give informal guidance, he shall give an estimated timeline, which may not exceed 4 months
• The company can decide at any time to withdraw its question, in which case no guidance is issued and the information transmitted to the FCA is returned to the company
  
  At European level, , the Commission must respond within a reasonable time (no fixed deadline). The company can withdraw its request at any time. However, the information transmitted remains with the Commission, which can use it for the purpose of its investigations and share it with other competition authorities

What is the reach of the informal guidance delivered?

• If the practice is implemented in accordance with the description in the guidance document, the FCA’s investigation services cannot change their view (no investigation or self-referral by the FCA on the matter), as long as the circumstances under which the letter was issued remain unchanged
• Please note that the letter does not protect against prosecution triggered by a third-party’s complaint
• The FCA’s board is not bound but takes into account the existence of the letter in its decision, certainly when deciding the amount of the fine
• The letter is published if the applicant agrees to it
  
  At European level, the letter does not prevent the Commission from investigating the practice. No fine is imposed on the company by the Commission if it has implemented the project as described in the letter in good faith. A non-confidential version of the letter is published

In the end, is it worth it?

• Informal guidance may be relevant for demanding projects when there is a real doubt about their compatibility with competition law (e.g. a 101 par 3 TFEU analysis - individual exemption) may be necessary)
• However, companies should ensure that the information submitted to the FCA do not reveal any current non-compliant practice
• Finally, the protection provided by an informal guidance could be precarious, especially in fast-moving markets

Now, it's time to be creative with your ESG projects!

We look forward to discussing them with you and to help you conduct the required self-assessments and decide whether guidance is needed.