Competition and consumer policy for a sustainable future

This blog is based on a speech by Sharon Darcy to the CMA on 27th April 2022 as part of the CMA’s first ever sustainability week. 

The CMA’s March 2022 advice to government on how consumer protection and competition law can help meet the UK’s environmental goals is to be welcomed. How the CMA interprets and implements subsequent decisions and puts these into practice will be crucial for success.

To deliver net zero by 2050, we need systems change at scale and pace. Nearly all actors and sectors of the economy – not just individual consumers or certain net zero relevant markets - will need to fundamentally alter how they do business if we are to avoid catastrophic climate breakdown and build a future which is climate resilient.  

And all this change needs to happen in the 2020s.  If greenwashing erodes trust, leads to inertia, or delays substantive change, we will not only put-up costs for future generations but will curtail future standards of living and potentially pass irreversible climate tipping points.

The CMA clearly cannot bring about change in this area on its own. Action is needed by all actors on all fronts. However, it can play an incredibly important role in this area.  Directly, in terms of helping markets to flourish, stamping out sharp practice and ensuring consumers aren’t taken for a ride by misleading claims.

Indirectly, the CMA’s influence can, however, be potentially far more significant. The CMA’s actions and communications can remove concerns around the threat of the ‘dead hand’ of competition law that may get in the way of the transformative innovation we desperately need.  

When considering how to reshape its culture and implement change ‘on the ground’, the following areas merit wider thought: 

  1. What evidence-based decision making looks like for a truly sustainable competition and consumer protection policy 

To truly assess environmental sustainability impacts, requires a wider analysis framework and broader evidence base than that the CMA has traditionally used. It requires systematically asking new questions and gathering new information about externalities, including on:

  • Nature based impacts: Understanding and measuring natural impacts can be challenging as nature is often silent, mobile and invisible.
  • Inter temporal impacts'Green efficiences' are further away in time and hence can be more difficult to quantify. A lower discount rate may be needed.
  • Geographical and spatial impacts: Many environmental impacts don’t respect local, regional or national boundaries. An increasingly sophisticated understanding of the impacts of value chains across different geographies is needed. 
  • Tragedy of the commons: For example, energy efficiency can clearly deliver multiple positive outcomes but is the Cinderella of the sector (and was noticeable by its absence from the Government’s recent Energy Security Strategy). How do these types of collective benefits get recognised in discussions around efficiency?

All of this is clearly relevant to much of the CMA’s work, including that on green claims. Standardising environmental information is vital to avoid green wash. However, this is just the beginning. Going forward, understanding the limits of green definitions, no matter how tightly and consistently drawn, is likely to become increasingly important.  

As the CMA gets a better grip on externalities, it will no doubt want to consider how this knowledge is applied not only after environmental risks have crystalised but also ex-ante to shape markets and prevent harms from occurring in the first place.

Environmental issues can, however, present challenges for modelling future impacts. This is because when it comes to climate change, the past is not necessarily a good guide to the future. Non-linear change and ecological tipping points can make it more challenging to assess future harms and benefits.

New approaches may be needed, including proxy measures and scenario analysis, along with understanding qualitative assessments of impacts from those that have already experienced harms (such as flooding, for example).

  1. Collaboration, partnership working and mergers for a sustainable world 

Whilst competition is clearly going to be important to get the innovation needed for the transition to net zero, so too will be collaboration. To facilitate the shift to greater circularity and to support systems change often requires a focus on co-benefits and partnership working. 

The CMA’s developing thinking on fair shares for horizontal agreements is clearly relevant here.  It is vital that the CMA looks beyond narrow measures of willingness to pay and also seek to understand the broad range of potential fundamental impacts, both positive and negative, that may arise as a result of such agreements. 

Asking who the harms fall on and benefits accrue to is clearly key. This inevitably raises distributional issues as well as those of practicality. The question of how benefits may actually be passed on to the consumer is also important. 

When examining such benefits, it can be difficult to separate out environmental impacts from social impacts. Social and environmental issues are deeply inter-linked. Not only because the most vulnerable are the most likely to bear the costs of climate change and this is therefore the right moral course of action. To politically de-risk net zero, we need a just transition. It would clearly be undesirable if in the UK the move towards environmental issues was at the expense of consumer protection and inclusion.

Taking thinking about co-ordination one step further, how should the CMA treat potential environmental benefits in mergers? If a merger promised to deliver significant positive sustainability impacts, how should this be balanced against potential short-term harms?  

Getting a better grasp of how to balance, or trade-off, different types of efficiency is going to become increasingly important.

  1. Roles, responsibilities and democratic mandates during disruptive change

If understanding environmental impacts requires a longer-term perspective, what does this mean for competition policy if this is based purely on consumer outcomes?  

How should the needs of current and future consumers, and individual consumers versus communities, be balanced? Going forward, I would argue that to get a greater focus on sustainability, the CMA’s statues and vires need to change to also include the interests of citizens and communities

The establishment of the Sustainability Task Force should absolutely help the CMA make some of the difficult decisions in this area. Opening itself up to challenge from more diverse voices, making more of the experience of CMA panel members and creating safe spaces for strategic and ongoing dialogue with key external organisations, and government, to explore new territories in a safe and iterative way can also help. As can exploring cross-sector learnings, themes and interdependencies from across market studies, as these relate to sustainability.


One of the CMA’s core objectives is to improve trust in markets. To do this, markets need to be reliable and work in practice. Current markets have brought multiple benefits across the globe. But many aspects of the existing arrangements in the market economy are not sustainable. The consumerist lifestyles that we lead are not resilient.  

The CMA has held its first ever sustainability week, a development to be truly welcomed. As it considers what it might do differently as a result and how it can embed sustainable approaches in its ongoing work, it needs to take a moment to stand back.  

To stand back and ask itself what a twenty first century competition authority might look like for a more sustainable world. To lift its sights from a short-term and narrow consumerist framing and to explore what a flexible competition and consumer protection regime might look like to not just protect the unsustainable status quo but to help us all promote and create a more resilient future.