Farm Ireland

Monday 22 January 2018

EU legal development signals producer groups will be subject to competition law

Ciaran Moran

Ciaran Moran

French farmers cannot use EU agricultural law to avoid the effects of EU antitrust law, an advocate general at the EU's highest court has said.

In 2007, the French competition authorities discovered practices that they considered anticompetitive in the endive (curly-leafed type vegetable) production and marketing sector.

Those practices, implemented by farmer's producer organisations (POs) and various bodies and companies in the sector, consisted, in essence, of concentration in the price of endives and the quantities of endives placed on the market as well as the exchange of strategic information.

The producer organisations and the other penalised entities brought an action before the French courts contesting the fine of almost €4m imposed on them, arguing that their practices did not fall within the scope of the prohibition of anticompetitive agreements, decisions and concerted practices under EU law.

However, the producers argued that they were only doing what was required of them under EU agricultural law, which tasks farmers with creating associations in order to stabilise prices and manage production against demand. Performing that task justified the practices, they said.

The French Court of Cassation has asked the Court of Justice of the EU (CJEU)  to clarify the issue.

In a non-binding opinion in the case, advocate general Nils Wahl said POs and APOs have, among other tasks, the general objective of adjusting production to demand, reducing the costs of production and stabilising producer prices. Thus, the POs and APOs are required to play a decisive role in centralising the marketing of their members’ products and are, in essence, forums for collective concertation.

Since the objectives of the Common Agricultural Policy (CAP) take precedence, under the FEU Treaty, over the objectives of competition, certain actions taken by the POs and the APOs, which are strictly necessary for the fulfilment of their tasks, may escape the application of competition law.

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However, this only covers practices relating to tasks specifically assigned to the POs, APOs and any professional organisations in charge of marketing the products, and if the practices are adopted within one organisation.

If the practices take place between separate organisations they must be subject to competition law, as these are economic entities that are supposed to be independent, the advocate general said. 

Opinions of advocates general are not binding on the court, but are followed in the majority of cases.

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