‘Companies’ Category

Marks & Spencer call for Government action on Competition Law flaws

July 15th, 2013

In Marks & Spencer’s response to the Department for Business consultation on Corporate Responsibility (7 July 2013) the company calls for action on Competition Law flaws saying:

“The Government should encourage all major sectors to adopt a common sustainability framework such as the one (A Better Retailing Climate) developed for the retail sector by the British Retail Consortium (BRC). This approach is particularly valuable where issues of competition (both legislation and corporate concerns) would otherwise prevent open collaboration. However, as with the BRC framework, reporting of progress is conducted by sector and not disaggregated by company…. UK competition law currently creates significant barriers to greater collaboration on supply chain management and should be reviewed.”

 

Jason Clay talks about ‘precompetition’ in Guardian Sustainable Business

June 2nd, 2011

Jason Clay, senior vice president of market transformation at WWF, has written on Guardian Sustainable Business the issues arising from consumer goods giants Procter & Gamble and Unilever being fined €315.2m (£280m) by the EC on 13 April 2011 for breaching competition law in the laundry detergent market in eight countries.

“Here lies the challenge in defining what is precompetitive versus what is collusion. While the companies crossed the line of the EC’s antitrust rules, they also accomplished much in reducing the impact of producing, delivering, selling, using and disposing of their products.

“The firms were motivated by shifting the market to greater sustainability, while making it easy for consumers to choose a sustainable product. The new products were better because they were concentrated and worked in cold water. But both of these traits were in conflict with consumer perceptions. Most consumers, for example, think that more detergent means cleaner clothes, and that hot water is more effective for washing laundry than cold.

“This posed a dilemma for manufacturers. The companies believed that if any one of them introduced concentrates independently they would risk losing market share. A consumer confronted with a choice between a 5kg box of powder at €10 and 2.5kg box of a concentrated version at the same price is going to be tempted to go for the big box.

“To avoid this first mover “disadvantage,” the companies co-ordinated the timing of their launches so that all the new product formulations would arrive on the market at the same time. They did this without publicly stating the virtues of one product over another.

“The moral of this story is that such initiatives are essential, but caution must be exercised. As an environmentalist, I applaud companies that work together to put better products on the shelves and take away the ones with the worst impact…

“We can better understand the complicated balance between what is precompetitive behaviour addressing legitimate sustainability issues, and what is collusion around fixing prices or market share. The key component to striking this balance is multi-stakeholder participation. The project should be inclusive of other stakeholders, including regulatory officials and perhaps even NGOs, many of whom don’t have a direct financial interest. This is how successful global sustainability round tables have avoided these issues.

“In light of more companies working together in a precompetitive fashion to improve sustainability, wouldn’t it be forward-thinking for regulators in the EU and elsewhere to invest in the creation of a legal group that defines boundaries? It would be money well spent, because precompetitive sustainability is working, and it’s essential to market transformation.”

Does fashion sector offer opportunity to test ‘Responsibility Deal’ concept?

January 31st, 2010
As an article in today’s Times newspaper once again raises questions regarding low wages in the fashion supply chain, The Cooperatition Incubator asks whether this could be an area for major fashion retailers to establish a ‘Responsibility Deal’.

Key perspectives expressed in the article were:
  • Tony Nadaraja, chief executive of the Hirdaramani Group, a company that supplies Marks & Spencer, Tesco and Asda, said that the basic 8,000-8,500 rupees (£43-£46) of his machine operators was not a “living wage”.  Even with allowances and bonuses, average pay was £67-£70, he added: “We need to find ways of paying them about 15,000 rupees, at least, to allow them to live.”
  • Ashroff Omar, chief executive of Brandix, said the average monthly overtime worked in 2009 was 38 hours.  M&S and Brandix emphasised other benefits for workers including bonuses, a subsidised lunch and medical facilities. The factory has won international awards for environmental standards.  Both companies said workers would be given a pay rise of £2.70-£3.34 a month this year.
  • Workers at the Brandix Seeduwa plant, which produces M&S trousers, said that basic monthly salary of £45 to £50 barely covered rent, food and clothes.  Meeting other costs was difficult, they said, even though the factory provided for some of their needs — offering, for instance, subsidised food and free medical care.  Wage slips indicated that they regularly worked 35-50 hours overtime each month for a premium rate of 34p an hour.
  • Marks & Spencer said: “It is our view that M&S is one of the UK’s leading retailers for ethical performance out of the ETI membership. Unlike many other retailers, we have a permanent ethical compliance team on the ground in Sri Lanka … to ensure that suppliers meet our high standards.  There is no one definition of a living wage. We strongly believe that Brandix Seeduwa factory wages are very fair relative to the cost of living in Sri Lanka.”  The company said that machine workers at the Brandix Seeduwa factory, whose basic monthly wage ranged between £45 and £54 in 2009, plus attendance allowances and other benefits, earned over 25% more than the minimum wage in Sri Lanka. M&S said that it would strive to meet the ETI recommendations: “But there will always be some instances of not being able to meet this aspirational code because of the nature of the industry (global and labour intensive). It is the responsibility of the management of the supplier to ensure that this is not a regular occurrence.”
  • Next estimated a living wage at £86.50, even though many workers making its clothes earn less. Next acknowledged that similar 2009 basic wages of £50-£56 for workers making its own T-shirts, jerseys and children’s wear did not amount to a living wage, although bonuses and allowances took the lower figure up to £70.40. It said subsidised lunches were worth an additional £14.  Pam Batty, global code of practice manager, said: “As a basic wage this is less than what we think the living wage in Sri Lanka is, which is £86.50.  Our aim is that workers are able to make a living wage within normal working hours. That’s what we’re committed to in our code but we are not there yet in all cases.”  Next’s view that many garment workers were not earning a living wage was backed by local economists and union officials, who said basic salaries were inadequate.
  • Tesco and Asda said they were trying to drive “sustainable” improvements in the welfare of workers.
  • The Ethical Trading Initiative (ETI), which promotes a code of conduct on workers’ rights, says that a “living wage” ought to be paid — “enough to meet basic needs and to provide some discretionary income”. Employees should not have to work more than 48 hours a week on a regular basis.  The ETI admits there is a gulf between the code and actual pay. “The deplorable reality is that low wages remain a fact of life for many garment workers,” said Stephen Rylance, its spokesman.  In a statement the ETI said that its members, including M&S, Next, Tesco and Asda, were “at the forefront of good practice”. But “in this case the poorest-paid workers are saying they are struggling to meet basic needs. For those, even the efforts of the most responsible retailers are not yet good enough.”
  • Simon McRae, of War on Want, the anti-poverty charity, said: “The grim reality is that none of Britain’s high street retailers are doing the right thing by the people who produce their clothes.”
  • Factory owners were worried that if production costs increased then Sri Lanka could lose out to cheaper countries such as Bangladesh.

Cement sector cooperation managing competition law constraints

September 11th, 2009

An interview on FT.com (11 Sept 09) with Bruno Lafont, Chief Executive of Lafarge, the French building materials group, highlights what is being achieved by cooperation within the cement production sector.

Asked about the Copenhagen Summit he said: “It is very important that the world together understands what the challenges are. And we should aim to eliminate the risks created by climate change, which are very serious for our children and for the children of our children. There is a need for strong cooperation but [also] an agreement on the goal and how to share the pain, because there will be a cost.”

“Business first should understand the goal and take its share of the goal. For example, the cement business, which has a strong ecological footprint, has taken some actions. We have created cement sustainable initiatives where 30 cement groups are working together at fixing goals, committing to actions, CO2 reductions, improvements in their governance and on their ecological footprint. So that means the sector has started to regulate itself.”

For more information on the Cement Sustainability Initiative visit http://www.wbcsdcement.org/

Significantly the initiative has carefully managed competition law issues:
“Request GNR system data… The PMC will review all requests to determine, first, if the data is available, and second, if responses to the query would fall within the limits of confidentiality and anti-trust constraints adopted for this system.”
Source: http://www.wbcsdcement.org/index.php?option=com_content&task=view&id=66&Itemid=133

“Data Confidentiality …PricewaterhouseCoopers also provides a guarantee of non-disclosure of confidential information and compliance with competition law.”
Source: http://www.wbcsdcement.org/index.php?option=com_content&task=view&id=65&Itemid=132