The government has laid out a growth plan to make the UK ‘best in class’ competition regime. Now that the UK has left the European Union (EU), it can make its own rules. These reforms will materialize the ambitions set out in 2018 Consumer Green Paper, and the Competition and Markets Authority (CMA) reforms proposed by the then president, Lord Tyria in February 2019, and by MP John Penrose in his February 2021 report. The government gives the CMA more power to fight against consumer fraud and bad business practices. The reforms cover three areas: competition policy, consumer rights and consumer law enforcement.
The CMA’s mission and powers
The Competition and Markets Authority (CMA) is the UK’s primary competition and consumer authority. It is a non-ministerial department funded by HM Treasury. The CMA’s objective is to make markets work well for consumers, businesses, and the broader economy. It has powers to stop practices and market conditions that harm consumers and inhibit their decision making. It can go to court to enforce consumer protection law. The CMA also has the power to protect businesses from deceptive marketing by other businesses.
As constituent of its functions, the CMA provide guidance for businesses to clarify their consumer protection law obligations and promote observance. On 20 September 2021, the CMA released its guide, ‘The Green Claims’, for businesses to help them understand and meet their existing obligations under consumer law. The Code has been written for all businesses, from fashion titans and chains store to local boutiques.
The International Consumer Protection Enforcement Network (ICPEN) introduces once a year a website investigation, allowing consumer protection authorities worldwide the capability to point deceitful, dishonest, or inequitable behaviour online. The CMA and the Dutch Consumers and Markets Authority (ACM) have led the ongoing action, concentrating unprecedented on confusing environmental claims. As part of the international sweep, ICPEN members have inspected virtually 500 websites advertising products and services in diverse industries, which includes clothing, cosmetics, and food. It was found that 40 % of these websites seemed to employ strategies that could possibly contravene consumer law. These contained: vague claims and unclear language, with terms such as ‘ecological’ or ‘sustainable’, or a mention to ‘natural products’ without satisfactory or evidence of the claims; eco-logos and labels own brand not associated with an accredited body; concealing or ignoring some information, such as a product’s pollution levels, to give the impression of being eco-friendly.
What are environmental claims, and when are they misleading?
Environmental claims are claims which suggest that a product, service, process, brand, or business is better for the environment. They take in claims suggesting or creating the impression that the consumption: has a positive environmental impact or no impact on the environment; is less damaging to the environment than a previous version of the demand; or is less damaging to the environment than competing economic consumptions. Environmental claims can cover the impact on the environment in general, or on specific environmental aspects such as the air, water, or soil; they can be explicit or implicit; they can appear in advertisements, packaging, and any other information supplied to consumers. All aspects of a claim are possible: the meaning of terms employed; explanations of what is said, the colours, pictures and logos used utilized, etc. Environmental claims are valid when they rightly detailed the impact of the product or service, and do not cache or give a false account of determining information. Misleading environmental claims takes place where a business makes claims to make believe that they are less detrimental or more benign to the environment that they are.
‘Too many businesses were “falsely taking credit for being green” to woo environmentally minded consumers’, the Competition and Markets Authority said. The Advertising Standards Authority (ASA) has crack down on several major companies in recent years over greenwashing adverts, including the airline Ryanair, the carmaker BMW, and the oil producer Shell. The UK competition watchdog has left companies that make misleading claims about their environmental credentials until the end of the year to stop the practice, which is called, ‘greenwashing’. Minister of State for Energy and Clean Growth, Greg Hands, said: ‘Millions of UK households are rightly choosing to switch to green products as they look to reduce their carbon footprint. But it’s only right that this commitment is backed up by transparent claims from businesses.’
What happens if businesses do not comply with consumer protection law?
Businesses must ensure that their environmental claims: are truthful and accurate; clear and unambiguous; do not omit or hide important; compare goods or services in a fair and meaningful way; consider the full life cycle of the product or service; and are substantiated.
If a business does not comply with consumer protection law, the CMA, and other bodies, such as Trading Standards Services (TSS), organism protecting consumers in England and Wales, can bring court proceedings. In some cases, businesses may be obligate to pay compensation to consumers harmed by the infringement of consumer protection law.
In some cases, businesses may be required to pay redress to any consumers harmed by the breach of consumer protection law. The ASA could also act against misleading advertisements that contravene the Non-broadcast Advertising, Sales Promotion and Direct Marketing (CAP) or The UK Code of Broadcast Advertising (BCAP) Codes. Businesses may also face legal action from consumers, who can bring legal proceedings in response to a business’s conduct or seek redress in the courts for certain breaches of consumer protection law.
In January 2022, the CMA will begin a review of misleading green claims. Fashion, transportation, food and beverage, and the beauty industries are likely to come under scrutiny. Measures could even be taken before the scheduled review period.