When CSDDD collaboration meets competition law

A briefing on the intersection of competition law and corporate sustainability due diligence

Effective human rights due diligence at scale often requires collaboration, especially in complex supply chains where no single company has enough visibility or leverage on its own. Competition law does not prevent that collaboration. It does, however, shape how collaboration must be designed, governed, and documented. This briefing explores where that boundary sits and how companies can work within it in a Swedish and EU law context.

Top takeaways

• Collaboration should be structured to be part of the solution, not part of the problem. In many supply chains, effective due diligence will require companies to work with others to gain visibility and leverage.
• Competition law is not a barrier to all peer collaboration. Well-scoped industry initiatives can support due diligence, provided they do not drift into unnecessary information exchange or coordinated commercial conduct.
• The key is to build compliance in from the start. Clear objectives, proportionate information-sharing, robust governance and independent decision-making can allow companies to collaborate for sustainability outcomes with greater confidence.

Why this matters now

The Corporate Sustainability Due Diligence Directive (CSDDD) has now settled into shape.¹  After a false start and significant Omnibus amendments, the revised regime entered into force in March 2026. Although the CSDDD will not begin to apply to companies until July 2029, national implementing laws must be in place by July 2028 and companies are already testing governance models, sector initiatives and information-sharing structures that are likely to remain relevant once the regime becomes operational. This period before application is therefore not a waiting room, but an opportunity to structure meaningful and safe collaboration.

The CSDDD recognises that companies may need to collaborate with others to create leverage and help companies identify, mitigate, and prevent adverse impacts on people and planet, in

particular where no other measure is suitable or effective.² A caveat applies, however: collaboration must remain “in compliance with Union law, including competition law”.

That qualification is obvious but challenging. Many of the measures most likely to make due diligence effective at scale – joint supplier audits, shared traceability tools, sector standards, and coordinated engagement with suppliers – have at least the potential to raise issues under Article 101 TFEU and the Swedish Competition Act if not well scoped and managed from the start. Industry initiatives that fail to reflect on competition law can do their sustainability aims a disservice and end up in hot water, facilitating sensitive and unnecessary information exchange, coordinated commercial conduct, or de facto exclusion of rivals.

The issue is broader than the CSDDD itself. Similar tensions can arise under other EU sustainability instruments, but the CSDDD is an especially useful lens because it expressly contemplates collaboration while at the same time acknowledging competition law as a real constraint.

The legal frame in brief

Under Swedish and EU competition law, agreements between undertakings that restrict competition may be prohibited unless they fall outside Article 101(1) TFEU altogether or satisfy the conditions for exemption under Article 101(3). In practice, the EU Horizontal Guidelines are an important reference point for sustainability-related cooperation. They recognise that some forms of sustainability agreement may be unobjectionable, while others require closer assessment, particularly where they involve information exchange, common purchasing behaviour, standard-setting, or restrictions on independent commercial conduct.

In practice, ‘sustainability’ agreements in this context can encompass activities that support economic, environmental and social development, including addressing climate change, reducing pollution, promoting biodiversity, and improving working conditions in supply chains.

For CSDDD purposes, the practical question is not only whether the sustainability objective is legitimate but also whether the collaboration is structured so that it remains confined to that objective. That is where governance, scope, and information flows become critical.

The current risk landscape is complex: where European regulators may be broadly sympathetic to a carefully scoped collaboration with competitors in the name of sustainability, the same conduct may be viewed far less favourably in other jurisdictions applying a stricter or more sceptical approach, for example in the US.

Why the CSDDD may act as a collaboration catalyst

The CSDDD requires companies to identify and assess actual and potential adverse impacts in their operations, subsidiaries and chain of activities. It also allows companies to share resources and information with other legal entities and to use appropriate tools, including digital solutions and risk analysis carried out by industry and multi-stakeholder initiatives.³ At the same time, the Omnibus-amended regime limits when smaller business partners can be asked for information directly, potentially making shared due diligence infrastructure more attractive in practice.

This combination of factors makes competition law a central consideration. The CSDDD may push companies towards forms of cooperation that are operationally sensible and legally permissible, but only if they are kept within proper competition-law limits. Well-intentioned over-compliance will chill what may otherwise be legitimate peer initiatives. The sweet spot is where risk is recognised and managed, allowing sound projects to proceed.

This is not new territory, as such.  Consider examples of positive collaboration from the pre-CSDDD era, such as the Fair Circularity Initiative applied in the informal plastics recycling sector to improve working conditions,⁴ or the Responsible Ship Recycling Standard applied by Nordic banks as part of corporate lending arrangements in the maritime sector.⁵ These examples show that the underlying logic driving collective action pre-dates the emerging hard law framework, even if the CSDDD may now make any tension more visible and more systematic.

Practical guardrails

For companies contemplating peer collaboration with a sustainability objective, consider the following:

• Triage the arrangement against the risk spectrum first
  Some sustainability arrangements are often low-risk, and may in some cases fall outside Article 101(1) altogether, such as internal policies, joint consumer awareness campaigns, common reporting methodologies, industry training, and early-stage complementary research. Others require much closer scrutiny, including joint purchasing, sector-wide minimum supplier standards, and agreements to buy only from suppliers meeting a particular threshold. Where possible, structure the project to raise as few competition issues as possible whilst still achieving the overall goal.
• Define the objective precisely, document it and stick to it
  The sustainability rationale should be specific, genuine and documented from the outset. Where relevant, tie it to an identified adverse impact in the company’s chain of activities and explain why the arrangement is necessary and proportionate. If Article 101(1) may be engaged, that analysis will be central to any Article 101(3) self-assessment. Each restriction should be tested for indispensability, and governance should be designed to prevent function creep.
• Design for openness, where relevant
  Standardisation initiatives are more likely to operate safely where criteria are transparent and relevant, access is available on reasonable and non-discriminatory terms, participation is voluntary, and alternative or higher standards remain possible. Openness can significantly reduce the risk of the arrangement being characterised as exclusionary.
• Build a robust information firewall
  Do not exchange more information than is objectively necessary. For more sensitive information, confidentiality controls, need-to-know restrictions, clear limits on use, and where appropriate an independent third party, should be built in from the start. Discussions of price, volumes, sourcing plans or other commercially sensitive matters remain problematic regardless of the sustainability objective.
• Apply standard caution in competitor contacts
  Sustainability collaboration does not relax the usual need for competition-law discipline. Use pre-cleared agendas, attendance controls, meeting records and clear procedures for stopping or leaving discussions if sensitive topics arise. The same caution as applies in formal meetings should apply in informal exchanges (stretching from board room to coffee break).
• Do not use the CSDDD as cover for more commercially motivated conduct
  A sustainability label will not save an arrangement that in substance restricts competition. Clear danger areas include agreeing price increases to pass on sustainability costs, using collective pressure to exclude competitors or suppliers, or limiting innovation to the legal minimum instead of competing to do better.

Case Study: Sector initiative on garment supply chains

Scenario: As part of their Article 8 assessment under the CSDDD, a group of competing EU-based apparel brands identify recurring risks relating to labour conditions and environmental harm in overlapping supplier networks in higher-risk jurisdictions. They conclude that repeated company-by-company questionnaires and audits are generating duplication without materially improving visibility over the most serious risks. They therefore consider participating in a sector initiative using a shared supplier questionnaire, a common audit methodology, and a central system operated by an independent third party through which supplier-risk information can be collected and, where appropriate, aggregated.

Competition law analysis: From a CSDDD perspective, this may be a legitimate way to support the identification and assessment of adverse impacts and the design of appropriate measures. A relevant competition law question is whether the cooperation remains confined to that purpose. A shared due diligence tool of this kind is less likely to raise concerns where it is limited to common methodologies, verification processes and managed collection of supplier-risk information, and where each participant remains free to gather additional information and decide independently what action to take.

The position becomes more difficult if the initiative moves beyond due diligence infrastructure and begins to influence competitive conduct. That may happen if participants exchange competitively sensitive information, align sourcing strategies, or coordinate supplier suspension or exit decisions. Shared information may inform participants’ assessments, but it should not predetermine a common commercial response.

Do: define the initiative’s mandate narrowly, consider using an independent third party to manage information flows, and ensure participants remain free to act independently on suppliers and remediation.

Don’t: exchange competitively sensitive information or allow the initiative to become a mechanism for aligning sourcing strategy, supplier delisting, or other commercial behaviour.

The example above is illustrative only. Whether a particular arrangement is compatible with competition law will depend on the specific facts, including the design of the cooperation, the information exchanged, the market context, and whether the coordination is limited to what is genuinely necessary to support the relevant due diligence objective under the CSDDD.

Looking ahead

The CSDDD and competition law are not inherently in conflict. The CSDDD itself contemplates collaboration where necessary. Companies that engage now in well-designed, legally robust collaborative frameworks in preparation for the CSDDD will be better placed to demonstrate effective due diligence from day one, and to show that their collaborative approach was built with competition compliance in mind from the outset.