Staying antitrust compliant: New BAFA guidance on sector initiatives in supply chain due diligence

1. Introduction

Supply chain due diligence has firmly taken root in the global regulatory landscape, with laws like Germany’s Supply Chain Due Diligence Act (SCDDA) and the EU Corporate Sustainability Due Diligence Directive (CSDDD) setting clear compliance expectations. Despite political pushback and ongoing debates over whether these laws should be replaced, revised or postponed, companies are still required — or soon will be — to identify, assess, and address human rights and environmental risks across their global supply chain – both upstream and downstream. By joining forces through sector-wide initiatives, businesses can share the burden of compliance, create efficiencies, and gather information on their supply chains in a collaborative way.

However, collaboration – especially among competitors — can raise significant antitrust concerns, as sharing sensitive information, aligning strategies, or coordinating actions may be perceived as anti-competitive practices. To address this tension, the German Federal Office for Economic Affairs and Export Control (BAFA) published an informal guidance note in April 2025, offering practical insights into how companies can participate in sector initiatives on supply chain due diligence. While the BAFA is not responsible for antitrust enforcement, its guidance still helps clarifying how companies can generally align their collaborative efforts with antitrust law.

This article provides an overview of BAFA’s informal guidance note, including some practical real-world examples of sector initiatives that help companies meet their supply chain due diligence obligations while staying within the limits of antitrust law.

2. The role of sector initiatives in supply chain due diligence

The BAFA explicitly supports collaboration among companies – both within and across sectors – calling such initiatives a “crucial tool” that plays a “central role” in due diligence efforts. Given the complexity and limited transparency of many upstream supply chains, the BAFA highlights the value of joint approaches to better identify, assess, and manage risks, standardize expectations, and reduce individual burdens through synergies.

The guidance note outlines four specific areas where sector initiatives can help ease the fulfilment of supply chain due diligence obligations:

• Risk analysis: Sector initiatives can streamline risk assessments by identifying sector-specific risks, building shared data resources, and involving stakeholders and suppliers early on.
• Audit coordination: They can improve the effectiveness of due diligence through audit pooling, helping to reduce redundant audits and avoiding so-called audit fatigue caused by multiple audits at supplier facilities.
• Preventive and corrective measures: Initiatives can serve as platforms for best practices and collective measures to address systemic risks and violations.
• Grievance mechanisms: Joint complaint platforms across companies can enhance the detection and resolution of human rights risks and improve access to remedies.

3. Practical guidance on antitrust limits for sector initiatives

However, joint initiatives, in particular among competitors, must comply with antitrust law. Even when aimed at promoting sustainability, activities such as shared risk analyses, joint preventive measures, or joint grievance mechanisms cannot justify unlawful information exchanges or anti-competitive agreements. Antitrust laws remain in force alongside ESG requirements and must be strictly followed (for further insights, please refer to our previous publications on ESG and Antitrust here and here).

The BAFA clearly acknowledges this, noting that it is not responsible for antitrust enforcement. Therefore, its guidance note should be considered as a general, non-binding reference that offers initial orientation rather than definitive legal advice.

Competitor collaboration through sector initiatives on supply chain due diligence compliance must navigate the boundaries set by Article 101 of the Treaty on the Functioning of the European Union (TFEU) and similar national provisions such as Section 1 of the German Act against Restraints of Competition (ARC). These prohibit agreements between market participants operating either at the same level of the production or distribution chain (horizontal agreements), often as actual or potential competitors, or at different levels of the production or distribution chain (vertical agreements), mostly as producers and distributors, which have the object or effect of restricting competition between them. Further, antitrust limits can extend to unilateral actions, such as when members are pressured to terminate business relationships with suppliers who do not comply with the standards of an sector initiative. Such conduct could violate the boycott prohibition under Section 21 ARC.

Since companies are responsible for independently assessing antitrust limits when collaborating within sector initiatives and assuming the associated risks, the BAFA emphasizes that guidance from competition authorities, such as the European Commission's (EC) Horizontal Guidelines and the case law of the Federal Cartel Office (FCO), provide important reference points for this assessment. Additionally, companies can request an informal review from the relevant competition authority, which, in the case of the FCO, may lead to what is known as a “chairman's letter” (for more details, please refer to our publication here).

Despite not being responsible for antitrust enforcement, the BAFA then provides a helpful overview of the antitrust review process that should be followed:

a) Step 1: Check if the initiative falls under the prohibition of cartels

Companies should first determine whether the planned sector initiative – including any information exchanges or agreements – could prevent, restrict, or distort competition. If so, the prohibition of anti-competitive agreements under Article 101(1) TFEU and Section 1 ARC applies.

This prohibition captures both agreements and concerted practices that have the object or effect of restricting competition. Typical examples include price-fixing, market or customer allocation, the exclusion or discrimination of competitors, and the exchange of competitively sensitive information – such as purchase or sales prices, pricing components, or other non-public commercial terms. Any form of coordination that limits a company’s independent decision-making in the market can also raise red antitrust flags.

That said, according to the EC’s Horizontal Guidelines on sustainability agreements, competition concerns generally do not arise where such collaboration does not significantly affect the market or negatively impact key competitive parameters such as price, quantity, quality, variety, or innovation (for more details, please refer to our publication on ESG and Antitrust here).

To support this assessment, the BAFA guidance sets out key questions that companies can use as a starting point:

1. Is the measure or exchange related to the objectives of the sector initiative and does a joint approach promise better results? Or is the measure not planned or required as part of the collaboration?
2. Does the measure affect a key parameter of competition (such as price, quantity, quality, choice or innovation)?
3. Does the affected cost factor have significant or only marginal effects on the final costs of a product?
4. Does the measure include pro-competitive elements?
5. Are the measures designed to ensure compliance with sufficiently precise requirements or prohibitions under applicable national law or fundamental human rights?
6. Is competitively sensitive information being exchanged?
7. Is the measure likely to have a competitive impact on market players that are not members of the sector initiative?
8. Does the measure exclude suppliers from the market, e.g., by terminating supplier relationships with those who do not meet certain requirements?

In this context, the BAFA emphasizes that a precise examination is particularly necessary if: 

• the initiative directly affects the essential parameters of competition, 
• the collaboration is binding, or 
• several market participants are involved in the collaboration.

b) Step 2: Check for a potential exemption from the prohibition of cartels

If the assessment in step 1 leads to the conclusion that the prohibition of restrictive agreements applies, an exemption may apply under certain conditions (Article 101(3) TFEU, Section 2 ARC). To do so, the companies concerned must demonstrate that four criteria are met:

1. The agreement leads to efficiency gains.
2. The agreement is indispensable to achieve these benefits.
3. Consumers will receive a fair share of the benefits.
4. The agreement does not eliminate competition in respect of a substantial part of the products.

Specifically with respect to supply chain due diligence, the BAFA notes that efficiency gains could be achieved, for example, through cost reductions, improved quality, cleaner production and distribution processes, greater transparency for consumers, or more stable supply chains. Within narrow limits, it adds, efficiency gains could also be achieved through reduced emissions.

A fair consumer share could take, for example, the form of price reductions, longer-lasting products, improved product quality, or even individual use-related benefits such as greater personal appreciation of a product, while respecting due diligence obligations in the supply chain. This could be measured, for example, through surveys. A fair share for consumers is considered appropriate if the benefits of the agreement outweigh the competition harm caused by the agreement so that the overall impact on consumers in the relevant market is at least neutral (cost-benefit analysis).

4. Practical examples of sector initiatives within the limits of antitrust law

Finally, the BAFA provides illustrative examples of possible measures that sector initiatives may take to support supply chain due diligence while remaining within the boundaries of antitrust law. These non-exhaustive examples are intended to provide practical guidance, but are not a substitute for a case-specific legal assessment.

In order to meet the due diligence requirements related to risk analysis, the following types of measures could be allowed:

• Developing a shared understanding of sector-specific human rights and environmental risks along the sector’s respective supply chains.
• Compiling relevant materials and information on human rights and environmental risks within the sector.
• Exchanging on legal frameworks, publicly available information (e.g., studies, statistics, media reports), actual production conditions affecting several companies in the producing countries (e.g., working conditions, handling of chemicals, water consumption, etc.), noting in particular that these aspects may also include relevant competitive parameters.
• Sharing historical experiences of compliance with human rights standards by participating companies, possibly in aggregated and anonymized form when sensitive competitive information is involved.
• Developing standardized questionnaires on sector-specific risks.
• Providing and exchanging materials that companies can use in risk assessments, such as assistance with audits.

For the purposes of preventive and corrective measures, the following could be permitted:

• Exchanging information on measures, sharing anonymized and aggregated examples of best practice, or providing historical data.
• Joint training or education facilities and joint development of training materials.
• Developing guidelines for drafting individual policy statements.
• Agreeing on compliance by members of a sector initiative with legal requirements in a country of production (e.g., minimum wage, environmental regulations).
• Developing standards collectively, provided that all members have effective access to the standard and that they remain free to develop other standards or products that do not meet the agreed standard (for more details, see our alert here).

To comply with the obligation to provide a grievance mechanism, the BAFA lists:

• Establishing an inter-company grievance mechanism set up by a trade association, provided that the protection of competitively sensitive data is ensured (e.g., by anonymizing, aggregating or restricting access to certain data for member companies).

5. Conclusion

BAFA's new guidance provides clarity for companies navigating sector initiatives on supply chain due diligence. It emphasizes the importance of complying with antitrust laws while encouraging collaboration within and across industries. By providing concrete examples of permissible measures, the guidance note helps companies align their efforts with legal requirements and sustainability goals.

While informative, the guidance is not legally binding and should not be relied upon as an official legal opinion, especially as it is not issued by the German Federal Cartel Office. Companies should conduct their own detailed case-by-case assessments and consult with legal experts to ensure compliance with both antitrust laws and supply chain due diligence obligations, particularly before considering to engage with competitors on these topics.

Authored by Christian Ritz, Julian Gingelmaier, and Charlotte Brockmann.