German Initiative on Sustainable Cocoa – Bundeskartellamt sees no reason for detailed examination

The Bundeskartellamt currently sees no reason for a detailed examination of the German Initiative on Sustainable Cocoa (“Forum Nachhaltiger Kakao e.V.” – “Kakaoforum”). The “Kakaoforum” is a joint initiative of representatives of public authorities, companies of the cocoa and chocolate industry, a major part of the German retail grocery trade and international non-governmental organisations (NGOs).

One of its main objectives is to help cocoa farmers in Ghana and Côte d'Ivoire, the relevant countries of production, earn a living income. To this end, the forum encourages its members to voluntarily commit themselves to individualised minimum prices, quotas and premium systems to achieve better farm gate prices for producers.

Andreas Mundt, President of the Bundeskartellamt: “When sustainability initiatives involve a cooperation of competitors, this often raises competition law issues. For the “Kakaoforum” there have been no indications that the initiative would incur a clear risk of a restraint of competition. For now, we will therefore refrain from a detailed examination and keep a steady eye on the further development of the project.”

The German Initiative on Sustainable Cocoa does not rely on a system of fixed premiums. Instead, it refers to the reference prices established in development aid research. Each member is to publish, as part of their individual roadmaps and in aggregated form, the minimum prices, quotas and premiums that are achieved based on the members’ individual voluntary commitments. They are to take measures to prevent conclusions about the exact prices the purchasers paid the producers.

One of the decisive considerations the Bundeskartellamt based its assessment on was in particular the fact that the members of the initiative make their commitments on a voluntary basis. There is no sanctioning mechanism if the members fall short of their commitments. Information on individual commitments are only published with the names of the producers and regions involved anonymised. In addition, the producers’ shares account for only a relatively small percentage in the further price formation along the value chain and of the final chocolate products.

Assessment of sustainability initiatives within the EU

Since 7 December 2021 the legal framework for assessing initiatives to implement sustainability standards in the agricultural sector has changed at European level with an amendment to the Common Market Organisation regulation (CMO). Pursuant to Article 210a CMO, restrictions of competition that aim to apply a sustainability standard higher than mandated by European or national law and that are indispensable to the attainment of that standard may enjoy a special exemption from competition law. Even though the case of the “Kakaoforum” did not require a detailed examination, in the Bundeskartellamt’s view there are strong indications that the exemption under Article 210a CMO in itself is not applicable in this case, considering the objective of the initiative.This is because the exemption specifically applies to initiatives that pursue the sustainability objectives laid down in Article 210a(3) CMO (in particular environmental and sustainability objectives, reduction of the use of pesticides as well as animal health and animal welfare (also see press release on the “Initiative Tierwohl” of 25 May 2023).