On 26 January 2014, the Netherlands Authority for Consumers and Markets ("ACM") published its analysis of a set of arrangements between supermarkets, poultry farmers, and broiler meat processors, concerning the selling of chicken meat produced under enhanced animal welfare-friendly conditions. In particular, the agreement saw to replace the regular chicken with the Chicken of Tomorrow, a chicken raised in a more animal friendly manner. According to the ACM, the arrangements restrict competition.
Undertakings can be exempt from the cartel prohibition if the consumer benefit exceeds consumer harm. With respect to benefits arising from sustainability initiatives, the ACM issued a Position Paper on Competition and Sustainability in 2014 to provide guidance to undertakings in their assessment of whether their intended cooperation is in accordance with the Dutch competition rules. The ACM notes that this assessment has to be conducted by the undertakings themselves. In the case of the poultry industry arrangements, however, the ACM explicitly uses its analysis of these arrangements to provide concrete guidance for sustainability initiatives.
In examining the benefits of the poultry arrangements, the ACM considers the improvements to be limited: the animals obtain only slightly more space, have more litter on the floor and live a couple of days longer in addition to some environmental improvements. Nevertheless, consumer research showed that improvements came at a cost higher than the consumer was willing to pay. The ACM therefore concluded that the potential advantages did not outweigh the reduction in consumer choice and potential price increases.
The ACM furthermore considers the market for sustainable foods to be very dynamic and that there is no need for the removal of regular chicken. In particular, the ACM considered that the sales volume of chicken meat produced in a sustainable manner has increased through less restrictive alternatives such as informing the consumer about the available types of chicken.
The ACM discussed the outcome of its analysis with the market participants involved, who then announced that they will explore possible alternatives for their arrangements.
The ACM's analysis follows its much criticized informal advice in 2013 to energy companies, wherein it considered their agreement to close coal-fired plants to be anticompetitive. The analysis concerning the Chicken of Tomorrow confirms that the ACM's policy is to treat sustainability initiatives equal to other forms of cooperation between competitors; in order to be exempt from the cartel prohibition, clear benefits to the consumer must outweigh consumer harm such as fewer options and higher prices.