CMA is Focus on Green Claims Enforcement

Is the UK's CMA Set to Increase Enforcement of Green Claims?

The UK’s Competition and Markets Authority (CMA) has recently sharpened its focus on environmental claims made by businesses. This follows the introduction of the Green Claims Code, targeting descriptions and labels promoting 'eco-friendly' products. Applicable to any green claim made by a business for consumers, the code is a significant step in the CMA’s evolving interest.

The CMA's attention has primarily been on two sectors: fashion retail and Fast Moving Consumer Goods (FMCG). While investigations in the fashion sector are already underway, the CMA has recently initiated a review of environmental claims in the FMCG sector.

Read also: BIS and Climate Change: Key Milestones Since the COVID-19 Pandemic

Upcoming Enhancement of CMA’s Enforcement Capabilities
This new focus is set against a backdrop of anticipated strengthening of the CMA’s enforcement powers. The Digital Markets, Competition and Consumer Bill (DMCC Bill), expected to be enacted in late 2024, proposes to significantly augment these powers. The DMCC Bill, currently progressing through parliament and at the committee stage in the House of Lords, includes provisions for the CMA to unilaterally impose fines on businesses bypassing court proceedings.

Under the proposed DMCC Bill, the CMA could levy substantial fines on businesses for breaching consumer laws: up to £300,000 or 10% of their annual turnover, whichever is greater. Additionally, for non-compliance with a CMA direction, the penalties could include a fixed 1% of annual global turnover, a daily rate of 5% of global turnover, or a combination of both.

CMA’s Investigation Approach
In its investigative process, the CMA typically begins by contacting the concerned business and detailing its concerns in writing. The investigation then intensifies as the CMA utilizes its information-gathering powers to collect further evidence. Depending on its findings, the CMA has several options: securing amendments to the business’s practices through undertakings, initiating court proceedings, or concluding the investigation without action.

Recommendation for FMCG Sector Businesses
Given these developments and the CMA’s increased focus, it is advisable for businesses within the FMCG sector to thoroughly review their environmental claims. Ensuring alignment with the Green Claims Code is crucial to avoid potential scrutiny or penalties under the enhanced enforcement regime expected with the DMCC Bill.

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