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European Commission - Press release

Competition/Agriculture: Commission publishes report on application of competition rules in the agricultural sector

Brussels, 26 October 2018

The European Commission has published the first report on the application of competition rules in the agricultural sector. The report shows that the work of European competition authorities can help farmers to obtain better conditions when selling their products to large buyers or cooperatives.

Margrethe Vestager, Commissioner in charge of competition policy, said: "This report provides key insights into the valuable work that European competition authorities have been doing in the agricultural sector, especially in protecting farmers from anti-competitive behaviour and ensuring farmers and consumers can benefit from a fully open internal market. We will continue the work together with the national competition authorities".

Phil Hogan, Commissioner for agriculture and rural development, said: "Strengthening the position of the farmer in the food supply chain, in a market oriented policy context, is of utmost importance.  This report highlights how agricultural law and competition law go hand-in-hand in achieving fairer and more efficient outcomes for both producers and consumers. Let us not forget that farmers have a special place insofar as competition law is concerned. Recognised producer organisations can help them strengthen their position in the food supply chain".

EU competition rules that prohibit agreements on setting prices or other trading conditions, or on sharing of markets apply to the production and trade of agricultural products. However, the Common Market Organisation Regulation ("CMO Regulation") contains derogations from the application of these rules, which affect all or some agricultural sectors or deal with specific situations.

The report published today by the Commission is the first focusing specifically on the application of EU competition rules to the agricultural sector.

On the basis of the insights gained from the report, the Commission will continue its dialogue with stakeholders in the agricultural sector, as well as with Member States, the European Parliament and the Council, on future policy choices concerning the application of competition rules to the agricultural sector. The Commission will also intensify its monitoring of the market, in particular as regards collective agreements that segment the internal market.  

 

Main findings of the report

Work of the European competition authorities

(a) Carrying out investigations in the sector

European competition authorities have carried out 178 investigations in the agriculture sector. More than a third of these concerned processors of agricultural products with farmers being the single largest group of complainants.

Almost half of all the competition infringements uncovered by the investigations concerned agreements on prices. These agreements were most typically between competing processors to set the wholesale price (e.g., for sugar and flour) or between processors and retailers to set the retail price (e.g., for dairy products, meat or sunflower oil). Other infringements related to agreements on output, information exchange or sharing of markets.

The report found that the enforcement work of European competition authorities benefitted farmers with better deals for their products. In particular, the report identifies several instances of European competition authorities stopping and sanctioning practices employed by large buyers that aimed to reduce prices paid to farmers. Furthermore, the work of European competition authorities has also helped farmers improve their conditions with cooperatives.

 (b) Safeguarding the internal market

One of the key findings of the report is that some Member States have on occasion sought to restrict imports of specific agricultural products from other Member States. Several European competition authorities have investigated and stopped a number of collective agreements, where for instance farmers in a given Member State attempt to hinder sales by farmers from other Member States.

These actions by competition authorities have helped both the consumers in the Member States where imports could have been restricted but also the farmers in all the other Member States that would have been affected by the attempt to hinder cross-border sales. 

(c) Providing guidance and monitoring

European competition authorities have provided guidance to farmers, other operators and governments on how to interpret and apply competition law in the sector, such as on the farmers' sustainability initiatives or the publication of prices by sector organisations. European competition authorities have also proactively monitored the situation in the sector and conducted sector inquiries into the functioning of the supply chain, with a particular focus on issues like the transmission of prices in the chain and the balance of bargaining power between farmers and other levels of the chain.

 

Derogations from competition rules for producer and interbranch organisations

Recognised producer organisations and recognised interbranch organisations can help strengthen the farmers' position and can contribute to a more efficient food supply chain.

The recognition of producer organisations by national authorities is widely used in the fruit and vegetables sector, where almost 50% of production is marketed by producer organisations, but also in the milk, meat, olive oil and cereals sectors. In addition, there are 128 recognised interbranch organisations in the EU, mainly located in France and Spain.

 

Sectoral tools in the agricultural industry

The report confirms that the specific sectoral tools available in the agricultural industry are being used for the benefit of farmers and the sector at large:

  •         The possibility of agreeing on a value-sharing mechanism on a voluntary basis in the sugar sector has been widely implemented;
  •         market stabilisation measures in the wine sector have also been frequently used;
  •         supply management measures were put in place for products with protected designations of origin or geographical indications in the cheese and ham sector.

 

Background

The Commission's findings presented in the report are based on input from national competition authorities, Member States and private organisations, as well as Commission studies on producer organisations in the olive oil, arable crops and beef & veal sector and on interbranch organisations.

The period covered by the report is from 1 January 2014 to mid-2017, as far as derogations from the competition rules in the CMO Regulation are concerned, and from 1 January 2012 to mid-2017 for the review of antitrust investigations.

Under Article 225(d) of the Common Market Organisation Regulation ("CMO Regulation"), the European Commission must present to the European Parliament and the Council a report on the application of the competition rules to the agricultural sector, in particular on the operation of Articles 209, 210 and 169, 170 and 171 of the CMO Regulation. Articles 169-171 of the CMO Regulation have in the meantime be deleted by the Omnibus Regulation.

The new Article 152 of the CMO Regulation, as introduced in January 2018 by the Omnibus Regulation, provides a safe harbour from the application of competition rules for recognised producer organisations and their associations.

The Commission Staff Working Document, which accompanies the report, provides additional information on the derogations and the antitrust investigations.

The European Competition Network had published in May 2012 a report on competition law enforcement and market monitoring activities by the European competition authorities in the food sector, which describes antitrust investigations for the period 2004-2011.

IP/18/6182

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