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Environmental Edge
April 26, 2022

Antitrust Claims Regarding Joint Environmental/Marketing Efforts Permitted to Proceed

Environmental Edge: Climate Change & Regulatory Insights

As discussed in our prior posts (here and here), activities motivated by ESG or environmental reasons are not immune from antitrust scrutiny. This is underscored by a recent court decision greenlighting antitrust claims based on alleged collusion in environmental marketing practices.

As background, in 2011, a nonprofit focused on seafood sustainability sought to encourage tuna suppliers to label their products according to the method by which the tuna was caught in an effort to discourage use of fish aggregating devices (FAD). The nonprofit feared that FAD fishing methods led to increased “bycatch” of other ocean species. Although the ecological impact of FAD usage was disputed, tuna purchasers were interested in “FAD-free” tuna.

Tuna purchasers alleged that several large tuna suppliers violated the Sherman Act through a series of anticompetitive agreements, including an agreement not to label or market their branded tuna products as “FAD-free” or make any claims regarding fishing gear used. The tuna companies moved to dismiss these claims.

The US District Court for the Southern District of California denied the tuna companies’ motion to dismiss, permitting the plaintiffs’ claims regarding the alleged agreement on marketing terms to proceed along with the plaintiffs’ more traditional price-fixing claims. The court ruled that the alleged “FAD-free” agreement was “inextricably intwined with and bound up in” the alleged price-fixing agreement. In a related criminal case, the US Department of Justice indicted a tuna company CEO and alleged that the “FAD free” agreement was part of the charged price-fixing agreement. That CEO was convicted and sentenced to a 40-month prison term.

Notably, aspects of this case are similar to those at issue in a European Commission investigation from just last year that resulted in €875.2M in fines. The Commission alleged that car manufacturers colluded to avoid competition in the use of technology enabling cleaner exhaust emissions. This was the first case in which the European Commission ruled that an agreement limiting technical development amounts to a cartel.

Scrutiny of ESG and antitrust-related activities is likely to continue. It would be prudent for companies to remember a few key compliance reminders:

  • The goal of antitrust law is to ensure that companies compete vigorously and fairly in the marketplace.
  • Competition can take many forms, including price, quality, technical features, and service. This might include “sustainability” or “green” claims.
  • Companies should act independently when setting prices for products, introducing new product offerings, or formulating marketing strategies.
  • Companies should seek legal counsel when collaborating with competitors. Counsel can identify issues and help design activities to minimize legal risk.

© Arnold & Porter Kaye Scholer LLP 2022 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.