Food retailers are considering pooling their resources to purchase Fairtrade food products after the competition watchdog gave an initial green light to the collaboration.
The FT reported that a number of British supermarkets are in talks with Fairtrade about combining forces to buy ethically sourced bananas, coffee and cocoa from farmers in developing countries under long-term contracts in what would be the first buying coalition of its kind.
Such collaborative efforts would previously have violated competition law, however new guidance from the Competition and Markets Authority (CMA) has opened the door to businesses cooperating on challenges faced by issues such as climate change, deforestation and biodiversity loss.
In February last year, the CMA published draft guidance on the application of the Chapter I prohibition in the Competition Act 1998 to environmental sustainability agreements in which it set out how competition law applies to agreements between companies that span air and water quality, biodiversity conservation, sustainable use of raw materials, and net-zero. (Footprint’s analysis of the guidance is here.)
Last November, the CMA issued an “informal guidance” to Fairtrade saying it “does not expect to take enforcement action” as a result of the proposed scheme, according to the FT.
A pilot scheme is now underway with the hope being that a buying coalition will make contracts less fragmented and more secure, allowing farmers in countries such as Ivory Coast, Ghana, Kenya and Colombia to invest in practices to combat the impact of climate change.
In its guidance, the CMA said that the proposed pilot scheme was unlikely to infringe competition policy given its scale, but if it were ramped up significantly it would need to look again.
“We don’t think we’ll achieve environmental sustainability — or any sustainability — in supply chains without businesses working together more,” Anna Mann, associate director for responsible business at Fairtrade told the paper.
