The Belgian Sustainability Guidelines – Last but not Least?

On the 2nd of April, the Belgian Competition Authority (BCA) published its Sustainability Guidelines. The Guidelines are, to a large extent, based on the European Commission (EC)'s Chapter 9 horizontal guidelines (HGL) (specifically paras 515-603).

As with the HGL, the Guidelines follow a similar structure by introducing a two-tier approach (or, so you will, three-tier approach) according to (i) whether Article 101(1) TFEU applies in the first place, (ii) how to interpret Article 101(1) TFEU when it does apply, and (iii) when Article 101(3) TFEU comes into play and what its added value is (or ought to be). As an additional point, the Guidelines provide more guidance on the application of competition law to agricultural sustainability agreements and the CMO-Regulation 1308/2013.

As national competition policy has matured over the last few years (emancipated, some would even say), many NCAs, such as those in the Netherlands, France, Germany, and Austria, have adopted additional guidelines, which frequently paraphrase existing practice. Some give useful, practical guidance, but, like the HGL, they hardly advance a new enforcement approach.

With those precedents in mind, it may not be useful to repeat what one can find in the BCA Guidelines (and, in large part, the HGL), which are rather late to the party. Instead, this post focuses on which novelties set the new BCA Guidelines apart. We first discuss the Guidelines’ main procedural novelties before turning to their scope and substantive differences from the HGL.

Procedural changes

Two-tiered system for informal advice with explicit timeframes

The Guidelines explicitly structure the BCA’s advise-system in two tracks.

First, the parties can submit a request for an informal opinion from the President (public for novel legal questions). This option is limited to agreements that comply with the following conditions:

(i)                  The agreement has not yet been concluded;

(ii)                The agreement is sufficiently concrete and detailed;

(iii)              None of the practices related to the agreement are subject to an investigation; and

(iv)              The subject of the agreement concerns a ‘novel legal question’ with a sufficiently important economic or societal interest.

Second, the parties can also request an informal advice from the CP. This option is open to all complete and transparent agreements, including those already concluded and even for agreements that have resorted potential anticompetitive effects. Potential anticompetitive effects in the year prior to the request could even be included in the CP’s assessment .

Both tracks have a timeframe of three months, with the possibility of an expedited procedure in urgent cases.

From the perspective of the requesting parties, it seems that a request with the CP (the second track) is the most interesting option. It is applicable to ongoing agreements, allows to directly engage with the CP and seems to be more discrete, which could mitigate disclosure risks. Most of all, the request before the CP also introduces a “no-investigation” pledge, a unique and truly novel system.

A "no-investigation" pledge by the Competition Prosecutor (CP)

When the CP adopts its informal advice on a ‘complete’ and ‘transparent’ draft agreement, the Guidelines set out a specific commitment to not conduct an investigation (para 61). As most NCAs are usually reluctant to self-contain their right of action, this commitment is perhaps the most remarkable of the entire text. The BCA, thus, goes further than merely offering informal guidance by offering such a waiver. The enforcement protection even extends to anti-competitive effects in the year preceding the submission, leaning to a de facto quasi-immunity for eligible agreements.

Recent years have seen  informal advice systems of other NCAs gaining relevance, with a growing number of NCA informal guidance cases and the first European-wide cases. At the same time, it goes without saying that this commitment could further increase companies’ incentives to submit their agreement to the BCA.

The commitment comes with some limitations. The CP could still introduce subsequent proceedings where it finds that the parties did not execute the contract in full compliance with the advice. This fine line between (i) compliance with the CPs modalities and (ii) the legitimate expectations created by previous agreements between the CP and the parties may well become a source of discussion and potential litigation, assuming the commitment does not prove to be an empty shell in practice.

The no-investigation mechanism that the Guidelines introduce is reminiscent of comfort letters, which has no equivalent in the HGL, nor in the Dutch or French Guidelines. The EC did reintroduce guidance letters, but these are meant to clarify the EC’s approach to existing questions regarding the application of competition law, not to resolve individual cases, and they do not offer any protection from potential investigations and fines. In that regard, the BCAs new mechanism is the closest to re-introducing the old comfort letter system.

The scope of the BCA Sustainability Guidelines: verticals excluded?

The HGL logically do not apply to vertical agreements and state that they only “set out the principles for horizontal cooperation agreements”. Instead, the HGL refer to vertical agreements being “generally covered by the VBER and VGL”, unless they are vertical agreements between competitors. On the other hand, Article 201a CMO-regulation applies to both horizontal and vertical agreements. Both the Austrian NCA and the ACM also declare, to a certain extent, that their sustainability guidelines apply to horizontal and vertical agreements. While the ACM mentions this without reservation, the Austrian NCA is more cautious and declares that “many of the assessment steps described in these guidelines may be applied analogously to vertical cooperations, that is, business cooperations along the value chain” (para 12).

The Guidelines chose the middle path, at least following the text. It does not explicitly exclude vertical agreements from its sustainability guidelines, but it also does not include them such as the ACM’s approach. Vertical agreements are referred to twice in the text: to state that vertical agreements can also restrict competition, and to clarify that vertical sustainability agreements do not breach Article 101 TFEU if they fall under the Vertical Block Exemption Regulation (para 25). A clear statement on whether the Guidelines apply to vertical agreements or not would have been welcome.

In the absence of a specific rule of thumb, and to take a cautious approach, we believe the Guidelines are best read as excluding vertical agreements, particularly since paragraph 7 of the Guidelines mention the HGL as the point of departure, and thus the text to follow as interpretation by default.

Agreements outside of the scope of Article 101(1) TFEU: compliance agreements

The HGL limited the safe harbour (‘Article 101(1) TFEU does not apply’) for compliance agreements to internationally binding legislation that is not fully enforced. The BCA expressly goes a step further: it holds that this category “can in principle be extended” to agreements aimed at compliance with European or national legislation that is not (yet) fully implemented or enforced in the EU or Belgium (para 15(a)). This is a significantly more lenient approach than the initial choice of the HGL.

Similar to the BCA, the ACM confirms that an agreement to comply with international treaties does not restrict competition. . In addition, the Guidelines add that such compliance agreement can also national, European and international law that is not (yet) being enforced, executed, or which has not yet been implemented. Such clarification should give companies more leeway to proactively introduce compliance agreements, without waiting for the expiry of implementation periods. As an example, industry agreements that would introduce modalities and implementation standards of the Corporate Sustainability Due Diligence Directive 2024/1760 could rely on this clarification, for example by discussing how due diligence under Article 6 should be carried out most effectively. Of course, it is worth noting that these kinds of agreements come at a risk of curtailing ‘goldplating’ by individual companies, which (naturally) would not be covered by the safe harbour.  The Guidelines also provide some useful illustrations (see, for example the practical case on compostable coffee pods under para 16).

Some substantive novelties

Sustainability assessment platforms for suppliers as a separate safe harbour

The HGL provide that the EC is allowed to set up a database where undertakings share information about suppliers and distributors with unsustainable value chains, production processes, inputs, or other business practices. The BCA widens this category of agreements that do not breach Article 101(1) TFEU in paragraph 15(c) (information exchange about suppliers). According to the BCA, agreements that assess suppliers or distributors based on sustainability criteria established in an open, transparent, and non-discriminatory manner also fall outside of the application of Article 101(1) TFEU. Such a form of information exchange appears to go beyond the mere setting up of a database to share general information described by the Commission. Even though it could also be considered as an illustration of the more general wording in the HGL, it effectively gives the green light to sectoral sustainability assessment platforms.

Which kinds of information exchange between competitors are allowed under EU competition law is an incredibly complex topic. While the BCA seems to phrase the allowed information exchange between competitors regarding their suppliers and distributors in broad terms, it is recommended to apply the strictest possible rules to avoid the risk of breaching Article 101(1) TFEU, which, in the case of information sharing, concerns horizontal information exchanges. Companies cannot share commercially sensitive information that could lead to anticompetitive conduct, even if it was intended to have a pro-competitive effect or was shared to comply with a regulatory requirement. In this context, the usual guidance applies: aggregate information, the use historical information, sharing only what is necessary and proportionate, reducing the frequency of exchanges, and using third parties as channel are included. Sustainability is no alibi to a competition law infringement, and the Guidelines do not seem to change much in that regard.

‘Instrumentalisation’ as an aggravating circumstance

The BCA does not just exclude greenwashing or window-dressing under sustainability objectives; the Guidelines also expressly reserve the right to consider such an act (which it calls instrumentalization) as an aggravating factor when it assesses the gravity of the infringement (para 8). This is a clear departure from the HGL, which acknowledge this risk but do not explicitly link it to a potential increase in penalties. The BCA Guidelines refer to the Laundry Detergent case, which is useful as an example of the subject matter, but not as a precedent to qualify false claims as aggravating factors (paras 85-86 Laundry Detergent case, no aggravating factors were included).

The reference to instrumentalisation or greenwashing could have been a convoluted way of confirming the HGL’s typology of sustainability agreements (or at least the typical restrictions it includes) as restrictions by object or by effect.

In the HGL, the EC recognized that the standard of review may change when genuine sustainability objectives are present.  The EC recognizes that if the company can prove that the restriction genuinely pursues a sustainability objective, it will assess this as a restriction by effect, analyse the actual effects on competition, and often find the infringement less harmful (paras 533-534 and footnote 372 HGL). However, under the BCA Guidelines, when there is greenwashing, the aim automatically qualifies as disguising an anti-competitive objective, and the agreement should be assessed more severely as a restriction by object. In this interpretation, the HGL leans to a permissive approach (no mitigating factor in the presence of greenwashing) and the Guidelines to a more deterrent one (aggravating factor in the presence of greenwashing).

If the Guidelines wanted to align with the HGL, the BCA should have benefitted from a more similar wording.

The "substantial overlap" test for collective benefits in Article 101(3) TFEU

The BCA’s approach to collective benefits for consumers, which is essential for the Article 101(3) TFEU-exemption to be met, is slightly different from what we have seen in the HGL.

In the HGL, the EC has identified three different types of benefits to offset the negative impact on consumers of the products covered by the sustainability agreement.

First, the EC considers the individual-use benefits. Individual-use benefits are the benefits that “result from the use of the product and directly improve the consumers’ experience with the product in question”. The EC emphasises that positive externalities (defined by the EC as the reduction of negative externalities) cannot be considered individual-use benefits.

Besides the typical individual-use benefits, the EC also focuses on individual non-use value benefits. Individual non-use benefits are “indirect benefits, resulting from the consumers appreciation of the impact of their sustainable consumption on others” Certain consumers prioritise sustainable products over non-sustainable alternatives because of the former’s lower adverse effects on others. For these kinds of benefits, the consumer does not reap those benefits  himself, but other groups of individuals do. While there is no direct positive effect from the consumers making environmental choices, the “non-use value benefits accrue to consumers within the relevant market via their individual valuation of the effect on others” To assess the offset of these benefits against potential (usually price-related) harm, a “willingness to pay” test can be conducted.

Finally, the EC also considers collective benefits. The EC defines two possible scenarios. First, when there are two separate markets with substantially the same consumer group and the same benefits, the benefits in one market may offset the harm in the other. Second, the scenario in which the affected consumer group substantially overlaps with beneficiaries outside the market. To make use of collective benefits as an argument, the parties have to (i) describe the claimed benefits, (ii) define the beneficiaries, (iii) demonstrate that the consumers in the relevant market substantially overlap with the beneficiaries, (iv) demonstrate what part of the collective benefits that occur outside the relevant market accrue to the consumers of the product in the relevant market.

The BCA’s approach to the exact specifications of Article 101(3)-benefits is much shorter than that set out by the EC. It does align with the EC, in that collective benefits (reduction of negative externalities) count only where the group of beneficiaries and the group of affected consumers substantially overlap (para 23, under c). Moving beyond this, however, the BCA also finds this condition met when the group of beneficiaries is broader than the group of affected consumers, provided that all affected consumers are included within it (footnote 37). While this may at first seem like a different approach, in practice, the BCA describes only one of the scenarios already included in the HGL. Because if the group of beneficiaries includes all affected consumers, it satisfies the requirement that beneficiaries substantially overlap with affected consumers, as required by the EC.

Article 210a CMO Regulation: national application to local agreements

The BCA also announced that it will apply Article IV.1(3) of the Code of Economic Law to local sustainability agreements in the agricultural sector in a manner that aligns with the exemption under Article 210a of the CMO Regulation (paragraph 29). This would mean that purely Belgian agricultural agreements that do not fall within EU law would be assessed under the same principles as the European exemption, thereby broadening the scope of EU law.

When incorporated into Belgian law, the CMO Regulation’s sustainability guidelines and Article 210a establish an exceptionally low threshold for qualifying for the exemption. There is no requirement to demonstrate a concrete contribution to sustainability goals, merely pursuing a sustainability objective is sufficient. The contribution itself can be minimal, sustainability objectives are deliberately defined in broad terms, and compliance is left to self-assessment. This approach significantly lowers the bar for exemption and relies on intent rather than measurable impact.

Conclusion

The BCA’s Sustainability Guidelines largely mirror the EC’s Horizontal Guidelines, but they do distinguish themselves through a handful of meaningful procedural and substantive novelties that may have a real practical impact.

The most noteworthy are the introduction of the double informal guidance system and the CP’s unprecedented “no-investigation” pledge. Such system could encourage companies to engage with the BCA and get legal certainty on enforcement risks.

Substantively, the BCA adopts a more permissive approach extending the safe harbour for compliance agreements to (EU and international) standards that have not yet been implemented, and explicitly accommodates sustainability assessment platforms. The (possibly) firmer line on greenwashing as a potential aggravating factor should definitely be mentioned as well.

Even though certain elements (most notably vertical agreements and information exchanges) would benefit from further clarification, the Guidelines reflect a pragmatic and relatively bold national approach. More generally, these new Guidelines reflect, yet again, another (small) move by an NCA towards more independent policy choices.