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Commission publishes report on application of competition rules in the agricultural sector

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

Monday 29 October 2018 (9 months 20 days ago)

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.

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.

Friday October 26, 2018/ EC/ European Union.

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