Legal: Customs & Antitrust Guidance
The Price Parity Toolkit (PPT) aims to close the price gap between next-gen and conventional materials in the fashion industry. For effective and compliant implementation, brands should consider both Customs and Antitrust Guidance.
These guidelines help brands navigate international trade and competition laws, ensuring the shift to lower-impact materials isn’t hindered by hidden costs or legal risks. Customs Guidance clarifies how fee structures affect customs valuation, while Antitrust Guidance ensures fair collaboration and prevents anti-competitive behaviour, creating a transparent, competitive foundation for scaling sustainable materials.
For comprehensive findings and detailed implementation guidance, refer to the extended Customs and Antitrust Annex.
Customs Guidance
Navigating EU customs duties* is an important factor when implementing the PPT mechanism for garments containing next-gen materials. The Transaction Value, the price paid for goods exported to the EU, is the primary basis for customs valuation, but certain fees may be added.
Key Findings:
- Inclusion Rule: Volume-based fees on garments or materials are seen as a condition of sale and should be included in customs value.
- Separation Rule: To exclude a fee, it should be clearly separate from the product price, non-volume-based, not performed by the seller, and not linked to the goods.
- Product Fee: Simple to apply but raises customs value and import duties (however, if a 0% import duty rate applies, the impact is minimal.)
- Service Fees: Structuring non-volume-based service fees (e.g., R&D, Traceability, Supply Chain Engagement, Licensing) offers a chance for exclusion.
- Documentation: it is advised that records are kept for seven years, including service agreements, calculations, import docs, and correspondence. Legally drafted contracts are essential.
*This document focuses on the current European Union (EU) and Dutch customs legislation regarding the valuation of imported goods. If your operations extend outside the EU, please ensure you seek relevant local customs guidance. FFG will be expanding this guidance in upcoming iterations.
Antitrust Guidance
To ensure the PPT mechanism encourages sustainable innovation without hindering competition, antitrust compliance is crucial. It is important to establish clear boundaries for collaboration between brands and suppliers to mitigate potential risks.
General Rules:
- Don’t share commercially sensitive information.
- Pricing guidance may set maximum but not fixed resale prices.
- Avoid exclusivity or non-compete clauses.
- Select innovators and suppliers transparently and objectively.
- Legal advice might be needed for brand collaborations.
Tier-Specific Risks:
- Brands (Tier 0): Avoid collusion, price fixing, or market sharing. Keep the PPT open to new participants and ensure pricing freedom on final products.
- Innovators & Fibre Producers (Tier 4/5): Avoid resale price controls, exclusivity, or boycotts; ensure fair downstream pricing and open access.
- Supply Chain Partners (Tiers 3–1): Apply similar principles, no exclusivity, fair pricing, objective partner selection, and brand autonomy in choosing partners.
- Anti-trust guidelines typically discourage exclusivity. However, given the unique market conditions of next-generation materials, short-term, sourcing-limited exclusivity within the PPT may be permissible, provided specific market share conditions are met.
Other Projects
Price Parity Toolkit
The Price Parity Toolkit (PPT) was designed to help bridge the price gap between next-gen* and conventional materials. This industry-supported framework, with catalytic funding from Laudes Foundation and developed by Fashion for Good with support from Canopy, Finance Earth and select brands and fibre producers, introduces a financing mechanism. This mechanism aims to decouple price premiums early in the supply chain, thereby enabling the adoption and scaling of lower-impact materials.
The Next Stride: Bio-based Materials for Footwear Soles
“The Next Stride: Bio-based Materials for Footwear Soles” aims to validate the performance and environmental impact of bio-based polymers as sustainable alternatives to the fossil fuel-derived materials currently used in footwear soles. The objective is to collectively de-risk the transition to these “next-generation” materials by rigorously testing their technical properties and assessing environmental benefits. Ultimately, the purpose is to accelerate the adoption of these bio-based solutions and pave the way for a more sustainable footwear industry.
Beyond50 Denim: Combining Cottonised Hemp And Green Chemistry
“Beyond50 Denim: Combining Cottonised Hemp And Green Chemistry” aims to validate the performance and environmental impact of cottonised hemp processed with green chemistry to act as a true alternative to cotton in denim applications. The project goal is to evaluate the performance of SEFF’s cottonised hemp fibre in combination with Fibre52’s bio-friendly chemistry solution within denim fabric applications with a total hemp content of 50% and above. The fabrics will be benchmarked against conventional 100% cotton denim with a specific focus on handfeel and aesthetic characteristics.
