Brussels, 2 April 2003
Commission imposes fine on French federations for unlawful agreement in the beef sector
The Commission today imposed fines totalling €16.7 million on six French federations in the beef sector. The federations are being fined for having taken part in an agreement to set a minimum price for some categories of beef and to suspend or, at the very least, limit imports of all types of beef into France. "The competition rules also apply to agriculture, as this decision makes clear. Nevertheless, the Commission has taken account of the difficult context facing the beef sector, which had been shaken by successive crises. As far as the slaughterers are concerned, it has also taken account of the fact that they were acting under pressure and the threat of violence from farmers", Mario Monti, the Commission Member with special responsibility for competition, stated.
On 24 October 2001, six French federations entered into an agreement in the beef sector. Four of the federations represented farmers and the two others slaughterers. Under the agreement, the federations jointly set a minimum price. They also undertook to suspend or at least limit imports of all types of beef. The agreement continued beyond the end of November 2001, the date on which it was supposed to end, despite the fact that the Commission had warned the federations on 25 November 2001 that the agreement was unlawful.
Agreements on prices and restrictions of imports are amongst the most serious infringements of competition law.
There is no doubt that the organisations knew that their conduct was unlawful. During the inspections carried out by the Commission in December 2001, documents were found which noted that the agreement was "a bit against the law, but that can't be helped" and asked "can we close ranks, without being caught by the DGCCRF [the French competition authority]?".
The fines imposed by the Commission on the trade bodies concerned demonstrate clearly that agriculture is bound by the competition rules. Although the EU rules and regulations in this sector provide for a number of exceptions to the competition rules, the agreement in question is not covered by any of the exceptions.
The Commission has imposed the following fines:
The calculation of the fines takes account of a number of aggravating or mitigating circumstances, which apply to all or only some of the parties involved.
One of the aggravating circumstances was the fact that three federations (FNSEA, FNB and JA) were involved in acts of violence against the slaughterers intended to force them to conclude the agreement and monitor and enforce its implementation. Secondly, all the parties continued to apply the agreement in secret after they had received a warning from the Commission and after they had given an assurance in writing that the agreement would not be renewed. A further aggravating factor to be taken into account was the fact that one of the agricultural federations, the FNB (an association specific to the beef sector), was the initiator of the infringement.
As far as mitigating circumstances are concerned, the Commission considers that the role of the Minister for Agriculture, who pressurised the slaughterers into signing the agreement on 24 October 2001 and who subsequently described the agreement as "an act of good citizenship", means that the fine imposed on the slaughterers should be reduced. This does not apply to the farmers' federations, since the violent protests carried out by some of their members prompted the Minister's action in the first place. Furthermore, the slaughterers concluded the agreement under the threat of violence from the farmers and not under their own volition. Indeed, the setting of a minimum purchase price and the suspension of imports were not in the slaughterers' interests. Their main interest lay in having the farmers' blockades of their plants lifted, in return for signing the agreement. Lastly, one of the farmers' federations (FNPL) played a passive role in the affair.
This is the first time that the Commission has imposed fines on farmers' unions. The Commission recognises the importance of trade union freedom, but it is not the job of trade unions to assist in the conclusion and implementation of agreements that disregard the rules governing law and order and, more specifically, the competition rules.
It should be noted here that price agreements are generally viewed as very serious breaches of the competitions rules and that the basic amount of the fine is normally €20 million which is then increased to take account of the duration of the infringement and other factors.
Though it considers the infringement to be very serious, the Commission has taken account of the specific economic context which, since 1996, has shaken the farming community, had a far-reaching impact on consumers' attitudes and highlighted questions of food safety. These exceptional circumstances have prompted the Commission to grant an additional reduction in the fine.
Use made of the fines
The federations have three months in which to pay the fines, which are entered into the general budget of the European Union once they have become definitive. The overall EU budget is fixed in advance and so any unscheduled revenues are deducted from the contributions made by Member States to the EU budget, ultimately to the benefit of the European taxpayer.