The competition regulator is alert to anti-competitive behaviour in the unfolding green transition, warning that its mandate extends well beyond “greenwashing”, where companies exaggerate their green credentials to capitalise on the growing demand for environmentally sound products.
Australian Competition and Consumer Commission chair Gina Cass-Gottlieb said in a speech on Wednesday that the regulator would keep a close eye on illegal collusion, and closely scrutinise mergers in key transitioning industries.
“Collusion distorts market incentives and investment signals, which may in turn hinder the development of market-based responses to environmental challenges,” Ms Cass-Gottlieb said.
“Assessment of mergers in key transitioning industries will also be critical.
“Collusion or anti-competitive aggregations could damage the economy and diminish environmental benefits.”
The ACCC, she said, also recognised there would be cases where it was more efficient and effective for companies to work together as industries decarbonised or looked to achieve other environmental outcomes.
For example, industry collaboration between competitors could help to remove first-mover disadvantages and free-rider problems, leading to “significant” environmental and other economic benefits.
Australia already had the authorisation framework in place to deal with exemptions for proposed agreements between competitors.
This enabled the ACCC to take real, verifiable and significant environmental benefits into account as part of the “net public benefit” test, if businesses wanted to coordinate so they could achieve sustainability goals.
Ms Cass-Gottlieb also used her speech at the National Press Club to call for an overhaul of the nation’s merger approval process, saying it was no longer “fit for purpose”.
She said the reforms were needed to enable the regulator to properly scrutinise and prevent mergers that were likely to substantially reduce competition.
“As we know, concentrated markets are generally not good for consumers, or indeed for economic growth and productivity,” the ACCC boss said.
Turning to climate change, she said decarbonisation and market-based responses were “rapidly” emerging.
The regulator had responded by setting up a taskforce to provide input on sustainability issues across all its functions so that consumer protection and competition were front-of-mind in sustainability-related policy and business decision-making.
The ACCC also had a number of greenwashing enforcement investigations underway in relation to environmental and sustainability claims by businesses.
“We intend to complement these investigations with work that we are doing to improve compliance using a range of other tools, including publishing guidelines, to encourage truthful claims that we know consumers are seeking,” Ms Cass-Gottlieb said.
“We want to ensure that trust in business is not eroded and that consumers get the value they seek, and often pay a premium for.”