Competition law 'hindering sustainability efforts'

By Katy Askew contact

- Last updated on GMT

Fairtrade Foundation believes competition regulations are a barrier to collective action on sustainability ©ilkefoto/iStock
Fairtrade Foundation believes competition regulations are a barrier to collective action on sustainability ©ilkefoto/iStock
Competition law can actually hinder industry efforts to boost food security by limiting collaboration, according to a new report from the UK’s Fairtrade Foundation.

The research suggests that closer cooperation between companies could benefit consumer choice and value by improving quality and security of supply. A collaborative approach could also deliver social and environmental advantages to the producers and farmers who grow the food we eat, the fairtrade certification body suggested.

However, according to the Foundation, businesses are wary of working in cooperation with rivals to strengthen supply chains due to “fear”​ of falling foul of competition law.

The Fairtrade Foundation stressed that this situation has arisen at a time when farmers and producers are facing greater levels of uncertainty due to pricing fluctuations and factors associated with climate change.

“The world faces tremendous challenges in producing enough food to feed a growing population. Unstable supply chains are causing food shortages all over the world and this trend is set to continue unless we act,”​ Tim Aldred, head of policy at the Fairtrade Foundation said.

“By working together businesses can take the lead in mitigating the fall-out from increasingly fragile supply chains and, at the same time, embed sustainability at the heart of their operations.”

UK government and CMA urged to act

As a result, the Foundation called on the UK government and the Competition and Markets Authority (CMA) to “do more” to encourage private sector companies to work together to promote sustainability in their supply chains.

Specifically the Fairtrade Foundation urged the CMA to issue specific guidance outlining how cross-business initiatives for sustainability purposes would be assessed under competition law. This would help businesses navigate the existing rules better and remove artificial fears about how joint action can be taken forward.

In the longer term, the Fairtrade Fairtrade said it wants the CMA do more to embed sustainability goals in its operations, taking account of this and broader UK policy goals when it assesses how well markets are functioning. The CMA should start to formally report on how it is contributing to delivering long-term food security for the UK, the Fairtrade body suggested.

“Such a move would help foster confidence in further cooperation in the private sector, and help to prevent businesses avoiding collaboration due to overly risk-averse perceptions of competition law.”

As part of the report, commissioned by Fairtrade from the New Economics Foundation, a number of hypothetical collaborations were modelled to illustrate how they would work in practice and what the financial implications would be. In every instance the value to the consumer, through improved product quality and stability of supply, is greater than any additional cost, the report revealed.

“We encourage the government and the CMA to do all they can to foster cooperation between businesses and companies to recognise the importance of collective action on this issue, in the long term interests of both UK consumers and vulnerable farmers and workers growing the food we eat,”​ Aldred said.

“With climate change affecting our ability to feed ourselves, and the world’s population set to reach 9.7bn by 2040, this is a global food security crisis which needs strong policy responses.”

The report also showed that people are increasingly looking to business and government to solve this issue. A survey, commissioned as part of the research, showed that 92% of respondents believe it is the responsibility of retailers to ensure sustainable food production while 72% expect the government to ensure food is produced to high ethical and environmental standards.

Related topics: Policy

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