**Germany**: The German Federal Office for Economic Affairs and Export Control (BAFA) issued informal guidance in April 2025 to help companies collaborate in sector-wide supply chain due diligence initiatives without breaching antitrust laws, amid evolving regulatory demands on human rights and environmental compliance.
The German Federal Office for Economic Affairs and Export Control (BAFA) has issued informal guidance in April 2025 to clarify how companies can participate in sector-wide initiatives for supply chain due diligence while complying with antitrust laws. This development occurs amid growing global regulatory expectations for businesses to identify, assess, and address human rights and environmental risks within their global supply chains, as mandated by laws such as Germany’s Supply Chain Due Diligence Act (SCDDA) and the forthcoming EU Corporate Sustainability Due Diligence Directive (CSDDD).
The guidance note recognises the increasing complexity and limited transparency of upstream supply chains and the role that collaborative sector initiatives play in helping companies meet due diligence obligations. These initiatives enable businesses—even competitors—to share information, standardise risk assessments, coordinate audits, implement preventive and corrective measures, and establish grievance mechanisms. Collaboration is seen as an important tool to reduce administrative burdens and promote efficiency.
However, the guidance also highlights the potential tensions between such cooperation and antitrust regulations. Sharing competitively sensitive information or coordinating actions may be construed as anti-competitive behaviour under Article 101 of the Treaty on the Functioning of the European Union (TFEU) and corresponding national laws like Germany’s Act against Restraints of Competition (ARC). Moreover, unilateral conduct such as pressuring partners to sever ties with non-compliant suppliers could violate boycott prohibitions.
Although BAFA is not responsible for enforcing antitrust law, its guidance provides practical insights and a general framework to help companies evaluate whether their collaborative activities fall within legal boundaries. It recommends a two-step antitrust assessment process. First, companies should determine if the sector initiative or any information exchange could restrict competition by affecting key parameters such as price, quantity, quality, product variety, or innovation. Key questions include whether the measures are necessary for due diligence objectives, whether the information exchanged is competitively sensitive, and whether the initiative impacts non-participating market players or excludes suppliers. Second, if potential restrictions are identified, companies should assess whether an exemption applies under Article 101(3) TFEU or Section 2 ARC, which requires demonstrating efficiency gains, indispensability, consumer benefits, and that competition is not substantially eliminated.
BAFA’s guidance also offers practical examples of permissible cooperative activities within sector initiatives to support due diligence compliance without breaching antitrust rules. For risk analysis, this may include developing a shared understanding of sector-specific risks, exchanging publicly available or anonymised compliance data, and jointly creating standardised questionnaires. For preventive and corrective actions, sharing best practices, conducting joint training, drafting guidelines, collectively agreeing to comply with legal requirements, and developing accessible standards are suggested. In terms of grievance mechanisms, establishing inter-company platforms ensuring protection of competitively sensitive information is considered feasible.
The guidance emphasises that collaboration must remain transparent, open to all members, and avoid restricting independent business decisions. While encouraging cooperation to enhance sustainability outcomes, it underscores that companies are individually responsible for ensuring that their participation in such initiatives aligns with competition laws. Firms are advised to seek legal counsel and possibly submit proposals to competition authorities for informal review, such as the German Federal Cartel Office’s “chairman’s letter” procedure.
In summary, BAFA’s informal guidance provides businesses with initial orientation on balancing supply chain due diligence collaboration and antitrust compliance. It endorses sector initiatives as vital to addressing complex human rights and environmental risks while delineating clear legal parameters to prevent anti-competitive conduct. The guidance, however, is non-binding and does not substitute comprehensive legal advice tailored to specific cases and jurisdictions.
Source: Noah Wire Services
