The relationship between the obligations arising from the European Directive on the duty of care and competition law

Adopted in 2024, the European Directive on Corporate Sustainability Due Diligence (Corporate Sustainability Due Diligence Directive or, hereinafter the “CS3D” or the “Directive”), aims to harmonise the obligations of certain companies regarding respect for human rights. The companies targeted are those that can be qualified as “large enterprises” according to the thresholds set by the Directive.
By introducing binding legal obligations, the Directive breaks with the voluntary approach to corporate social responsibility, by introducing a duty of care. Drawing on both the concept of duty of care – which requires companies to prevent human rights and environmental abuses in their supply chains – and that of due diligence – which obliges them to put in place concrete mechanisms for identifying, assessing and managing risks – the CS3D aims to bring about a lasting transformation in the practices of large companies operating in the European market.

This duty of care applies to all their operations: those they carry out directly, those of their subsidiaries, and those carried out by their business partners within their supply chains. The implementation of the Directive by Member States is phased in, with its provisions to be transposed by July 2028, and applied from July 2029 ; a one-year postponement under the agreement adopted in December 2025 by the European Union.

However, the so-called ”Omnibus 1” Directive of February 24, 2026 raised the threshold for affected companies from 1,000 to 5,000 employees, and from €450 million to €1.5 billion in annual turnover. Furthermore, these companies are no longer required to implement a transition plan compatible with the 1.5°C target of the Paris Agreement. The proposed European civil liability regime has been scrapped, leaving it to Member States to define their own obligations. Finally, the Commission is to set a digital portal for businesses, offering free access to templates, guidance and information on all EU disclosure requirements, in addition to the European single access point. The scope of application of the twin directive on non-financial reporting (CSRD) has also been narrowed.

Nevertheless, and despite these restrictions, a significant number of operators could be caught up in the wake of the large groups to which the texts apply directly and which could pass on the obligations of the directive to their partners, suppliers or service providers, in particular, through their contractual relationships.
In France, the CS3D is not a first: the legislator has paved the way with the law of March 27, 2017 on the duty of care of parent companies and contracting entities. France was one of the driving forces behind its extension to establish a harmonised framework across the single market.

The application of this law has, moreover, given rise to a series of legal disputes before the courts; some decisions have already been handed down, whilst others are expected shortly.
Nevertheless, this article proposes to explore this much-discussed subject from a different angle: that of competition law. The CS3D, by encouraging cooperation between companies, particularly through the exchange of information, is likely to raise questions regarding antitrust law and the respect for free competition.
Indeed, to facilitate the implementation of the duty of care, the Directive provides that the affected companies may share certain information, for example when collaborating with an indirect business partner, of a company with which they have a direct relationship.

Three main mechanisms are established:

• Firstly, companies have the possibility, where no other measure is appropriate or effective, and subject to compliance with EU law and competition law, to cooperate with other entities to strengthen the company’s capacity to prevent or mitigate a potential adverse impact, or to address an actual adverse impact, on human rights or the environment ;
• Secondly, the sharing of resources and information is permitted, both within groups of companies to which they belong and with other legal entities ;
• Thirdly, the Directive requires Member States to ensure that companies take appropriate measures to establish effective dialogue with stakeholders, involving the provision of relevant and comprehensive information.

Such information-sharing mechanisms, intended to facilitate the implementation of European regulations – particularly in the area of prevention – are not new. Thus, in the context of the REACH Regulation, concerns had been raised regarding the obligation for companies to share information, which was intended to ensure the safe use of chemical substances.

In response, the European Chemical Industry Council had published a guide to compliance with competition law.
Similarly , within the framework of the CS3D, the implementation by companies of their information-sharing obligations may entail a risk of anti-competitive practices, which could be sanctioned by national competition authorities.

In particular:

• the consultation of stakeholders may, in certain cases, lead to excessive coordination between competing firms, and thus encourage the emergence of cartel-like situations;
• the exchange with other potential competors, of sensitive and strategic information about suppliers (pricing, contractual terms, etc.) is likely to distort competition ;
• supplier audits, carried out to assess risks and compliance within the supply chain, constitute sensitive commercial information, the sharing of which with other companies in the sector, even with a view to pooling and efficiency, can lead to a standardisation of practices, to the exclusion of certain suppliers, or even to the creation of joint blacklists, a practice prohibited under competition law.

While these risks are very real, coordination mechanisms do exist to prevent any conflict between competition law and the duty of care.
Indeed, Article 101(3) of the Treaty on the Functioning of the European Union (hereinafter “TFEU ”) provides that agreements between undertakings, decisions by associations of undertakings or concerted practices may not be incompatible with the internal market, in certain circumstances: when the agreement contribute to improving the production or distribution of goods and to promoting technical or economic progress, when the undertakings fairly share the benefits resulting from the agreement with consumers, where the restrictions are indispensable to the attainment of their objectives, and do not result in the elimination of competition in respect of a substantial part of the products in question.

In order to fall within the scope of this exemption, the exchange of information provided for by the CS3D may take the form of sustainability agreements, as defined by the European Commission in its guidelines of July 21^st, 2023, on the applicability of Article 101 of the TFEU to horizontal cooperation agreements (hereinafter the “Guidelines”), which identify sustainability agreements “unlikely to cause competition concerns”. The European Commission defines an informal safety zone, known as the “soft safe harbour”, for sustainability standardisation agreements. Finally, it sets out the specific conditions for assessing whether the sustainability agreement meets the exemption criteria of Article 101 of the TFEU.
For example, agreements aimed at establishing a database containing general information on suppliers with sustainable or non-sustainable value chains, and which do not prohibit the parties from purchasing from these suppliers are considered as generally not restricting competition. Thus, the implementation of the Guidelines by companies subject to the CS3D Directive will help mitigate any risks of anti-competitive practices arising from the exchange of information they will carry out. The legislator has, moreover, expressly taken into account these Guidelines when drafting the CS3D, in order to ensure consistency between competition law and the sustainability objectives set out in that legislation, so that the CS3D and competition law are not inherently at odds with one another, but rather form part of a complementary framework.

In this context, the relationship between sustainability requirements and respect with competition law will tend to become a key compliance issue for companies.
The implementation of the provisions of the CS3D Directive will require particular attention from companies and their legal advisers in relation to competition law, which will require the combined expertise of competition law and environmental law advisers, primarily regarding the content of the information shared and the modalities of sharing.