- What is the purpose of the new Guidelines?
Article 101 of the Treaty on the Functioning of the European Union bans anticompetitive agreements, unless the agreements improve production or distribution while allowing consumers a fair share of the resulting benefit. In line with and to the extent provided by the relevant regulations, these rules apply to the agricultural sector, subject to specific derogations.
The 2013 Common Agricultural Policy (CAP) Reformintroduced such derogations for the sale of olive oil, beef and veal, and arable crops. The Common Market Organisation Regulation (the "CMO" Regulation) allows producer organisations and associations of producer organisations in these three sectors to jointly sell and set prices, volumes and other trade conditions for these products, if they create significant efficiencies through other joint activities (e.g. distribution, storage).
The new Guidelines are aimed at helping farmers, producer organisations and associations of producer organisations in assessing whether they fulfil the conditions to benefit from the derogations. They include flowcharts, which explain step-by-step how to proceed
The new Guidelines also provide real life examples in each of the sectors concerned, illustrating situations in which farmers’ organisations either are or are not in compliance with the rules.
The new Guidelines should furthermore ensure that the derogations are applied in a consistent manner in all Member States. They will serve as a common reference for national competition authorities and courts.
- Why do the new Guidelines deal with three sectors specifically?
The new Guidelines focus on the new rules introduced by the latest CAP Reform, which were specifically geared towards these three sectors.
- Under which conditions can farmers engage in joint selling activities?
Farmers can engage in joint selling-activities in the arable crops, live animals for beef and veal production or olive oil sectors if the following conditions are fulfilled:
- The joint selling activities need to be carried out by producer organisations or associations of producer organisations ("the organisations") formally recognised by national authorities.
In case of individual farmers jointly selling their products outside those organisations, these activities will be assessed under the standard EU agricultural and competition rules.
- The quantity jointly marketed by the organisations cannot exceed:
- 15% of the national market for beef and veal, and arable crops; or
- 20% of the relevant market for olive oil
- The organisations should carry out other activities than joint selling, for example storage or distribution, and
- These additional activities must significantly improve farmers' competitiveness on the market (i.e. create significant efficiencies).
The new Guidelines provide explanations on how to measure the marketed volumes that must not exceed the required limits.
The new Guidelines also provide, for each of the three sectors, clear examples of activities that can create significant efficiencies and describe a number of situations in which these efficiencies are generated.
For example, the Guidelines explain how olive oil producers could jointly process their olives to share the high investment costs of acquiring an olive oil mill. A further example would be how beef and veal producers could jointly promote their products in cases when they are aiming at creating a distinctive product. Both examples are subject to the conditions set out in the new Guidelines as described above in question 3.
- How does that help the position of farmers in practice?
First, if farmers sell together volumes of up to 15% of national production for beef and veal and arable crops, and 20% of the relevant market for olive oil, they will represent as much of the demand as the largest buyers in the market. Hence, they will have significantly increased their bargaining power and achieved a better balance vis-à-is their buyers, compared to each selling separately.
Second, by carrying out supporting activities together through an organisation, farmers can get access to cheaper inputs (e.g. through joint procurement of feed or fertilisers), can reduce costs for transport or distribution, or offer more flexible or more reliable supplies (e.g. through storage and/or distribution). Ultimately, they may reduce their costs and improve their offers, meaning more competitiveness for farmers on the market.
- Does the joint selling require any prior authorisation?
No. Farmers or their organisations need to check themselves whether the joint selling activity fulfils the above listed conditions. However, when starting their joint-selling activities, the organisations have to notify without delay the competent authority appointed by their Member State. The list of competent national authorities is available here:
- What is the role of competition authorities?
It is the Competition authorities' role to monitor the markets in order to maintain a level playing field for all competitors. Competition authorities are entitled to ask any entity engaged in an economic activity - including farmers - to provide information to verify that competition rules are respected. If an organisation receives such a request and would like to benefit from the specific derogations on joint-selling activities, it needs to demonstrate that the conditions set out in question 3 above are met.
In exceptional circumstances, and under certain limited conditions explained in the Guidelines, competition authorities may decide that a particular joint selling arrangement of an organisation should not take place or should be adjusted.
- How do the Guidelines fit together with other Commission initiatives for strengthening farmers’ cooperation?
The Guidelines' objective is to make it easier to apply in practice the new rules provided for in the CMO Regulation. Hence, their aim is to help farmers to engage in joint selling activities under certain conditions and to strengthen their position in the food supply chain.
The Commission will continue to look into the functioning of the food supply chain and the position of farmers in it. The Commission is in the process of establishing an Agricultural Markets Task Force, which will provide external advice and expertise regarding the functioning of agricultural markets and the farmers' position in the food supply chain, as well as make recommendations and propose possible policy initiatives in this field, after having taken into account global challenges for sustainable agriculture.