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Brussels, 13th December 2006

Competition: Commission welcomes Court of First Instance judgment in the French Beef case

The European Commission welcomes today's judgment by the European Court of First Instance dismissing the action by four French federations of farmers and one French federation of slaughterers against the Commission's April 2003 decision fining a price agreement and an agreement to suspend/limit imports from other Member States (cases T-217/03 and T-245/03). The CFI notably confirms the application of EC Treaty competition rules in the agricultural sector and that such federations may infringe competition rules when they enter into business activities. It however reduces the fines imposed in order to reflect the specific economic context in which the agreement was adopted.

On 2 April 2003, the Commission imposed fines totalling €16.7 million on six French federations in the beef sector (see IP/03/479). The federations were fined for having taken part in a written agreement in the first place, and in an oral secret agreement in the second place, 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 following fines were therefore imposed:

  • Fédération Nationale des Syndicats d’Exploitants Agricoles (FNSEA): € 12 million
  • Jeunes Agriculteurs (JA): € 600 000
  • Fédération Nationale Bovine (FNB): €1 440 000
  • Fédération Nationale des Producteurs de Lait (FNPL): € 1 440 000
  • Fédération Nationale de l’Industrie et des Commerces en Gros des Viandes (FNICGV): €720 000
  • Fédération Nationale de la Coopération Bétail et Viande (FNCBV): € 480 000.

In setting such fines, the Commission took account of the specific context of the case (notably the "mad cow" disease crisis) and reduced the fines it would otherwise have imposed by 60%.

The judgment of the Court of First Instance

All the federations appealed the Commission's decision. However, one of the appeals (FNICGV) was rejected as inadmissible in 2004.

The other appeals raised a large set of pleas, both on substance and on procedure. The parties asked the Court to either annul the decision or to reduce substantially the level of the fine imposed on them.

In support to their request, the parties notably claimed: that the EC Treaty's competition rules do not apply in the agricultural sector; that federations such as them are not association of undertakings; that the existence of the secret agreement was not proven; that the overall agreement had produced no effect on the market in any event; that the agreement was among the practices which are authorized under Regulation N° 26/62; that the procedural rights of the parties had been infringed in relation to the imposition of a fine; that the fine exceeded the legal ceiling; that the level of the fine was disproportionate; that acts of violence by farmers could not be considered as an aggravating circumstance against the federations of farmers.

The CFI judgment rejects these claims. It however considers that the Commission should have reduced the fines by 70% in order to take account of the specific circumstances of the economic sector, rather than the 60% reduction applied by the Commission. The CFI accordingly reduces the fines imposed on the five applicants.

The cartel

On 24 October 2001, after several weeks of demonstrations by farmers, 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 secretly 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.

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?". DGCCRF is the French competition authority.

In its decision, the Commission recognised the importance of trade union freedom. However, the decision indicated that 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.

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