Major agritraders create a platform to standardize sustainability data in food, agriculture supply chain.
On June 21, the Administrative Council for the Economic Defense of Brazil (CADE) approved, without restrictions, the creation of a joint venture (JV) between SustainIt, Cargill Incorporated, Louis Dreyfus Company and ADM International SARL. The companies intend to create a platform of technological solutions aimed at structuring and standardizing sustainability measurement data in the food and agriculture supply chain.
The platform’s main activities will be the standardization of sustainability measurements and the disclosure, aggregation, and comparison of sustainability performance in different areas. All parties involved are active in trading agricultural commodities on the global market. Each will have a 25% stake in the business..
According to a CADE spokesman, the deal identified competition issues related to the exchange of confidential information between platform users and JV members. The companies agreed to take on a number of obligations under the Antitrust Protocol, so the risks of using that information to gain a competitive advantage were mitigated.
The companies informed CADE that the platform is designed to aggregate data from any entity (company or organization) operating at any stage of the global food and agricultural supply chain.
The idea is that participants in the supply chain will report specific sustainability data to the platform, such as traceability (information about where the product was produced), agricultural practices, water, chemical, and energy use, and deforestation assessments, among others. Once in the platform, the data can be analyzed and used to measure sustainable practices.
The concentration act had already been approved by the antitrust regulator in March of this year, but in April the case was referred to the Administrative Tribunal for analysis by the order of CADE counselor Victor Oliveira Fernandes.
According to the counselor, the platform to measure sustainability metrics reaches the entire agricultural and food supply chain and would allow the participation of several actors in a “very sensitive” area. According to Mr. Fernandes, the case raises some important discussions, such as what parameter CADE should use to analyze interactions between competitors, especially when they involve big data solutions.
After reviewing the case, CADE president Alexandre Cordeiro highlighted the relevance of the case, which has led to a discussion that has been held around the world and goes beyond the objectives of competition law.
He mentioned that the regulator considers values such as sovereignty, sustainability, consumer rights, gender equality, labor rights, economic efficiency in its decision. However, according to the president, CADE does not have the power to weigh such values against the effects of competition, despite the fact that they are extremely important for Brazilian society. If the CADE acted in this way, it would encroach on the competence of other Brazilian institutions.
"When we discuss the challenges of competition law, which applies classical analysis, we do so precisely to outline the boundaries of our competence,"
said Alexander Cordeiro.
"There is a worldwide trend that anything that is not solved by another institution is called the responsibility of competition law and the antitrust authority. [...] We have to be very careful with this, so as not to expand our competence erroneously. [...] We approve this operation because there are no competition problems in this case,"
he summarized.
You can read the Concentration Act here.
