Asia-Pacific

Horizontal Agreements in the Environmental Context: In 2020, the OECD issued a paper that discusses whether competition policy should be influenced by sustainability. The 2020 paper follows the OECD's 2010 paper, which considers, from national perspectives, the interaction between horizontal agreements with environmental goals and competition law policies.

The 2020 paper also analyses the substantive application of competition law to sustainability issues by exploring the extent to which competition law can be interpreted in a way that fosters or limits sustainability initiatives. In addition, Australia and New Zealand, Germany, Greece, Lithuania and the Netherlands have submitted contributions to this discussion. The OECD's 2020 paper provides a thorough introduction to the state of play of sustainability in the context of competition law. It encourages agencies to be clear about their objectives and priorities in order to provide clarity on how sustainability fits into competition law, with formal and informal guidance emphasised. It also examines approval procedures, sandboxing, admissible evidence, capacity, fining, and international co-operation as possible measures to further sustainable goals. In December 2021, the OECD roundtable assessed these issues again and published a follow-up paper specifically on environmental considerations in competition enforcement. Additionally, the 2022 OECD Competition Open Day addressed, inter alia, Green Innovation. Lastly, in December 2022, OECD Global Forum on Competition will discuss the goals of competition policy including the question on whether "competition law and policy needs to adapt as a policy instrument to better accommodate socio-economic trends such as the rising importance of sustainability".

Guidelines: The Japan Fair Trade Commission ("JFTC") decided to publish guidelines in order (i) to prevent restrictive practices that impede the realization of a Green Society and (ii) to further improve transparency and predictability in the application and enforcement of the Anti-Monopoly Act for businesses in efforts to achieve a Green Society. In this regard, the JFTC held three meetings, on October 20, November 21 and December 5, 2022. Outside experts participated in of the meetings, including professors of economics and law. The guidelines will likely be published by the end of FY2022 (March 2023).

Consultation cases: There are two JFTC consultation cases in which the JFTC concluded that co-ordination amongst competitors would not violate the AMA because the relevant objective was legitimate and the co-ordination was necessary. In Case No. 12 of FY2019 JFTC consultation cases, the JFTC concluded that a retailers' trade association's plan of implementing new guidelines for its members to not provide conventional plastic bags, and to provide lower environmental impact plastic bags instead, charged to customers at three yen (approximately three € cents), would not violate the AMA because, inter alia, it has a legitimate objective based on the plastic resource recycling strategy promoted by the Government of Japan, and the plan in question is within the reasonable scope of the objective. (Another pertinent JFTC consultation case from FY2007 is available at pp.6-7 of this link).

Recent developments: From March to August 2022, the Ministry of Economy, Trade and Industry ("METI") held five meetings of the "Study Group on Competition Policy for achieving a Green Society" in order to discuss competition policy issues that arise when encouraging efforts to achieve a carbon-neutral society. The METI issued a report on September 30, 2022, including the status of discussions overseas and issues to be considered in Japan in the future.

Merger and Antitrust Rules: New Zealand's authorisation regime enables the New Zealand Competition Commission ("NZCC") to authorise a merger, acquisition or contractual arrangement that otherwise substantially lessens competition in a market if the benefits to the public outweigh the detriments (the "public benefit test"). Whilst economic efficiencies are a typical example of relevant benefits, the New Zealand courts have recognised benefits beyond economic efficiencies when assessing the public benefit test, including "environment, health or social welfare" benefits. The NZCC has previously considered benefits such as "reduced pollution or other environmental improvements" and detriments such as "adverse effects on the environment" in its assessment.

Exception to cartel prohibition: Section 31 of the Commerce Act provides an exception to the cartel prohibition for "collaborative activities" between competitors (such as joint ventures) that are not for the dominant purpose of lessening competition between the competitors, provided that any cartel provisions that are part of the collaboration are reasonably necessary for that legitimate purpose. The NZCC has considered that competitors' legitimate purposes for collaboration may include environmental, health and safety, or other social welfare purposes. It is important to note that this exception does not provide protection from the prohibition on arrangements that substantially lessen competition in a market (only from the cartel prohibition), but such arrangements can be authorised by the NZCC if the benefits to the public outweigh the detriments (as described above).

Recent Cases: The NZCC has recognised sustainability benefits in several authorisation decisions to date, for example, in Refrigerant License Trust Board and Nelson City Council and Tasman District Council. However, in Nelson City Council and Tasman District Council, the NZCC, whilst recognising environmental benefits, did not consider these benefits to be determinative in its final decision. The NZCC noted in its December 2020 "Sustainability and Competition" submission to the OECD that "generally, these benefits were unable to be quantified and did not materially affect the NZCC's final determination". This demonstrates that it may be difficult to rely on environmental benefits alone to justify authorisation where an arrangement has the effect of substantially lessening competition in a market (but the weighing of environmental benefits against competition detriments will always be fact-specific in any given case).

Support of renewable energy: The NZCC granted a revenue increase for electricity lines company Unison, helping it cover the $7.3 million cost of connecting its local network to the Tauhara power plant. The grid will transport the renewable electricity generated to supply consumers.

In an open letter published in April 2021, the NZCC emphasised a significant change in the investment required in energy sectors and its support in increased electrification and transitioning to a low carbon economy and the need for regulation to accommodate the energy transition.

Environmental claims guidelines

The NZCC has published an 'Environmental Claims Guidelines' document for traders to understand their obligations when making environmental claims or 'green marketing'. The guide includes specific criteria to follow such as substantiating any green claims made and being specific in the information provided to consumers.

Anti-Monopoly Law 2022: The Anti-Monopoly Law 2022 has come into force on 1 August 2022. Undertakings may benefit from an exemption to concluding horizontal agreements, RPM agreements and providing material assistance to the conclusion of such agreements by other undertakings if they can demonstrate that these are aimed at achieving energy savings, environmental protection, disaster relief, and such other public interests. To qualify for an exemption under efficiency grounds, the applicant has to show that the agreement concluded will not seriously restrict competition in the relevant market and that it will enable consumers to share the resulting benefits. There are no available cases yet where an otherwise anti-competitive agreement was successfully defended on this basis.

Auto-industry guidelines 2019: New electric vehicles manufacturers benefit from an exemption for RPM agreements for an introductory period. SAMR suggested a promotional period of nine months, although the time limit is subject to adjustments based on actual industrial and technological developments.

Authorisation based on public benefit test: The Australian Competition and Consumer Commission ("ACCC") administers an ex ante approval procedure, whereby the ACCC may provide statutory protection from legal action against mergers or restrictive trade practices that may reduce competition if there is a net public benefit. Some sustainability initiatives have been considered to satisfy that test. Examples include initiatives whereby a levy was authorised for schemes which promoted recycling and environmentally conscious disposal, such as the Battery Stewardship Scheme, Tyre Stewardship Scheme, and a paint collection and disposal scheme.

The ACCC has also recognised the environmental benefit of the reduction of greenhouse gas emissions in its authorisation of:

(i) the Barwon Region Renewable Energy Project, a Western Australian Local Government Association energy group, and Equinix Australia, which in each case created joint, renewable energy purchasing groups to pool electricity demand and jointly tender for Power Purchasing Agreements;

(ii) collective bargaining for waste disposal in respect of a renewable organics network project; and

(iii) joint purchasers for a large-scale renewable wind energy project.

More generally, the ACCC has considered environmental benefits when granting a number of recent authorisations to local councils for the collective tendering of recycling services (here and here) and e-waste collection. Recently, the ACCC allowed supermarkets to cooperate when pursuing sustainability goals.

Priority Issue: The ACCC listed consumer and fair-trading issues in relation to environmental claims and sustainability as one of its Compliance and Enforcement Priorities for 2022/23. In a speech announcing these priorities, former chair of the ACCC, Rod Sims, expressed concerns relating to the false promotion of environmental practices by businesses, and spoke of the "unfair competition" that genuine environmentally-friendly business face from "businesses making misleading green claims without incurring the same costs." Mr. Sims warned that the ACCC's focus will extend beyond consumer goods, to also consider claims made in the manufacturing and energy sectors, and regarding carbon neutrality.

ACCC actively monitoring and targeting 'greenwashing': The ACCC has already launched two internet sweeps, where at least 200 company websites will be reviewed in identifying misleading environmental and sustainability marketing claims and fake or misleading online business reviews.

A public warning has been issued for businesses to be prepared to substantiate their environmental claims, as false or misleading claims undermine consumer trust and confidence in the market. In a speech to the SMH Sustainability Summit on 20 September 2022, ACCC Commissioner Ms Rickard said that "the ACCC won't hesitate to take enforcement action where we see that consumers are being misled or deceived by green claims". In saying this, Ms Rickard cited the prior $125 million penalty against Volkswagen AG for false representations about compliance with Australian diesel emissions standards.