Skip to main content
Environmental Edge
May 3, 2023

Belgian Competition Authority Clears Collaboration in Supporting Living Banana Wages on Sustainability Grounds

Environmental Edge: Climate Change & Regulatory Insights

On March 30, the Belgian Competition Authority approved a sustainability initiative between the Sustainable Trade Initiative (IDH) and five large retail chains in Belgium (Colruyt Group, Delhaize, Aldi, Lidl, and Jumbo) aimed at ensuring living wages in the banana sector.

Background and initiative

A “living wage” measures the payment that banana farmers need to receive in order to have a decent standard of living together with their families. The “living wage” is assessed by function of access to food, water, housing, education, healthcare, etc.

The aim of the Belgian initiative is to bridge the gap between the “living wage” and the actual wage currently paid to banana workers. To achieve this, the Belgian retailers agreed to enter into collaboration to “set joint objectives, exchange knowledge and learnings, align on approaches and timings, monitor progress, and initiate joint action on the ground, where possible”. They would also collaborate with other living wage activist organizations and have agreed to work according to the IDH Roadmap of Living wages. The Roadmap is a five-step program with corresponding tools to help companies calculate the applicable living wage per region and to compare it against the current wages paid to banana workers. The IDH Living Wage Action Guide, which retailers have agreed to follow, offers solutions on how to align the living and current wages. The Roadmap, however, does not propose to set wages for banana workers, but is a means to incentivize those paying the wages to meet the living income level, essentially through certification based on which they may be able to increase sales.

Assessment of the Belgian competition authority

The full assessment of the Belgian Competition Authority is not published yet. However, based on the available information, the Belgian regulator will look positively upon the initiative if:

  • There are sufficient safeguards built into the cooperation to prevent the exchange of sensitive commercial information. In the banana initiative, the participants agreed to make use of the IDH tools and verify the data by resorting to recommended certification schemes and standards.
  • No recommendations are made on how to pass on the increased cost in the supply chain, nor on minimum prices. Companies should refrain from reaching agreements on specific cost-cutting or setting minimum prices. Instead, they should leave the decision to the individual discretion of the participants.
  • There are set processes entrusting an independent third party with monitoring the implementation of the project across the supply chain—with periodically-assessed progress.
  • The authority is kept informed of any changes to the initiative or future developments.

The assessment was made following the European Commission’s framework set out in the Horizontal Guidelines draft.

Other sustainability projects in the banana sector

This is not the first time a European competition authority assesses sustainability cooperation in the banana sector. Last year, the German Federal Cartel Office (“FCO”) raised no concerns in relation to an initiative by German retailers who joined forces to establish common standards for wages to banana workers. Their idea is to introduce responsible procurement practices and monitoring processes in relation to the wages. The FCO was satisfied that no information on procurement prices, costs, volumes or margins would be exchanged, and that the retailers would not engage in setting minimum prices or surcharges on bananas originating from sustainable sources.

Similar initiatives also exist among retailers in the Netherlands and the UK. All projects arose following a convention between retailers in these four countries last June in Berlin on which the issues of alignment and collaboration on the topic of living wages in the banana sector were discussed.

© Arnold & Porter Kaye Scholer LLP 2023 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.