On July 20, 2023, the Competition and Consumer Commission (CCCS) in Singapore published its proposed guidance note on environmental sustainability collaborations (the Guidance Note, accessible here) for public consultation. The Guidance Note is intended to assist companies that wish to collaborate to realize climate change goals and should be read together with the Business Collaboration Guidance Note issued by the CCCS in December 2021 (the BC Guidance Note) (see Sidley’s prior update on the issuance of the BC Guidance Note here).
The Guidance Note covers four broad topics: (i) clarification on what the CCCS considers environmental sustainability objectives; (ii) examples of collaborations that would typically not be harmful to competition and conditions where competition concerns are less likely to arise; (iii) how collaborations that raise competition concerns may nonetheless not breach competition laws by qualifying for the net economic benefit exclusion (the NEB Exclusion); and (iv) the introduction of a streamlined mechanism for companies to consult with the CCCS to assess proposed collaborations.
Clarification on Environmental Sustainability Objectives
The Guidance Note does not set out a definition of what constitutes an environmental sustainability objective but comments that this will depend on the focus of the collaboration and whether its “crux, or main activity” is the pursuit of an environmental sustainability objective. While the lack of a definition in the Guidance Note may cause some uncertainty as to how the CCCS will approach these sorts of collaborations, the Guidance Note does contain a number of illustrative examples of such collaborations that companies can use for reference.
Collaborations That Would Typically not Harm Competition and Conditions Where Competition Concerns are Less Likely to Arise
The Guidance Note sets out a number of features of collaborations that are unlikely to give rise to concerns about breaching competition regulations. These include collaborations that (i) do not affect how businesses compete (e.g., industrywide efforts in noncompetitive areas such as the reduction of hard-copy printing); (ii) none of the companies could do independently (e.g., where companies in noncompeting businesses collaborate to develop sustainable fuel); and (iii) are done to comply with any written law or acting on the behalf of the government — the Guidance Note states that this will be construed narrowly and “mere encouragement or endorsement” of a collaboration by the government will not be sufficient.
In addition, the Guidance Note sets out conditions where competition considerations are less likely to arise in environmental sustainability collaborations — these are horizontal collaborations that would meet the criteria set out in the BC Guidance Note of collaborations unlikely to present competition law concerns. For example, where two companies collaborate in the distribution of a product by sharing delivery capacities to reduce the number of half-filled vans on the roads, this may be an example of permissible joint commercialization as defined under the BC Guidance Note. Accordingly, companies should ensure that they are familiar with the contents of the BC Guidance Note when planning environmental sustainability collaborations.
The Guidance Note proposes that even where environmental sustainability collaborations may give rise to competition concerns, the NEB Exclusion may still apply. This requires (i) the collaboration to result in economic benefits that outweigh the negative competition effects; (ii) the economic benefits to not be achievable without the collaboration and any restrictions it creates; and (iii) competition to not be eliminated in a “substantial” part of the market.
In applying the NEB Exclusion to environmental sustainability collaborations, it is important to note that the CCCS will consider arguments about the economic benefits’ applying more widely than just within the relevant market of the collaborating businesses. This provides companies that intend to rely on the NEB Exclusion for their environmental sustainability collaborations with greater flexibility to produce evidence demonstrating the benefit to society at large and not just the companies’ direct customers. However, the Guidance Note emphasizes that its assessment of eligibility for the NEB Exclusion will be conducted on a case-by-case basis.
Streamlined Guidance From the CCCS
Businesses wishing to pursue environmental sustainability collaborations can voluntarily notify the CCCS to seek guidance on whether the collaboration presents any competition concerns. The Guidance Note introduces a streamlined assessment process for environmental sustainability collaborations. Whereas previously the CCCS has only stated that the timing for providing guidance depends on the nature and complexity of the application, under the streamlined assessment, the assessment will take 30 days for simple cases and an additional 120 days for more complicated cases.
The public consultation for the Guidance Note remains open until August 17, 2023, and the contents of the finalized version remain to be seen. However, the present draft of the Guidance Note does indicate an understanding by the CCCS that for Singapore to achieve net zero emissions by 2050 under the Singapore Green Plan 2030, companies may need to collaborate with their competitors to achieve environmental sustainability objectives.
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