US corporations warned over antitrust risks in circular packaging initiatives
Key takeaways
- 80 corporations involved in environmental groups face antitrust liability concerns from a coalition of US attorneys general.
- Attorney General James Uthmeier warns against packaging targets and recyclable materials dictating that may limit competition.
- Legal notices sent to environmental groups and corporations urging responses to potential antitrust violations.
Nearly 80 corporations associated with the environmental groups the US Plastics Pact, The Consumer Goods Forum, and the Sustainable Packaging Coalition, have been warned that continued participation in these initiatives could expose them to antitrust liability.
These US-based environmental groups focus on promoting a circular economy and reducing the environmental impact of packaging and plastic. They often work with FMCG manufacturers and retailers to design packaging using non-plastic materials and enhance recycling schemes.
Letters signed by 10 US state attorneys general, including Florida, Texas, and Georgia, explain that, by setting uniform packaging targets and “dictating” recyclable materials, the environmental groups may be reducing competition, limiting consumer choice, and degrading product quality.
Florida’s attorney general, James Uthmeier, is leading the multistate coalition of attorneys general putting corporations that work with the environmental groups on notice.
He says: “Multiple advocacy organizations have pressured companies into artificially changing the output and quality of their goods and services in ways that normal market forces would not otherwise bring about.”
“These groups were warned that their activity presents serious conflicts with antitrust and consumer protection laws, and advocacy for a particular agenda is not a basis to mislead consumers.”
Protecting consumer rights
Antitrust and consumer practice laws, like the US Sherman Act, were enacted to protect the market from price-fixing, monopolies, and unfair restraints on trade. An example letter, sent to global retailer Costco, highlights concerns about circular initiatives that could be altering the quality of goods and services.
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The attorney generals argue that the advocacy organizations want to remove products from the market without considering consumer demand.The letter references the UN Environment Programme and the Ellen MacArthur Foundation’s efforts to eliminate unneeded plastics, the US Plastics Pact’s packaging material targets, and The Consumer Goods Forum’s goal of transitioning to a circular economy.
“These advocacy organizations want to remove products from the market without considering consumer demand, product effectiveness, or the cost and impact on consumers of a replacement product,” says the attorney general coalition.
The notices followed previous letters sent last October to the US Plastics Pact, The Consumer Goods Forum, and the Sustainable Packaging Coalition, raising “grave concerns” that the policies, packaging, and material targets, and compliance frameworks of the groups may violate the Sherman Act and other state antitrust laws.
Previous warnings
Uthmeier notes that previously, once concerns were raised about antitrust violations, similar industry initiatives were then abandoned.
The letter adds: “Multiple advocacy organizations have cropped up to pressure companies into artificially changing the output and quality of their goods and services in ways that normal market forces would not otherwise bring about.”
The corporations were also warned in the letter that the attorneys general may gain additional information about their business practices through subpoenas and other legal processes.
In the letter, the corporations are asked to provide a response that explains the legal bases for the collaboration with the environmental group, especially how it does not indicate antitrust or consumer practice violations.
