AGRICULTURAL SECTOR: WHAT ARE THE LIMITS TO THE DEROGATION FROM APPLICABILITY OF COMPETITION RULES?
On 14 November 2017 the Court of Justice of the EU (CJEU) delivered its preliminary ruling in Case C‑671/15. The case was referred to the CJEU by the French Court of Cassation and concerned the interrelation between the competition law and agricultural policy in the EU. The main question the CJEU was to provide its clarification on was whether (anti-competitive) agreements/ practices of professional organizations (producer organizations/POs, or associations of producer organizations/APOs) in the agricultural sector, such as collectively fixing minimum sale prices, concerting on the quantities placed on the market and exchanging strategic information, can be excluded from the scope of the prohibition of Article 101(1) of the Treaty on Functioning of the EU (TFEU). The judgement should be of particular importance for the undertakings active in the agricultural sector. Below we provide the highlights of the case, including the findings of the competition authority and position of the CJEU.
French Competition Authority’s findings
The French Competition Authority investigated practices applied in the endive production and marketing sector. By its decision of 6 March 2012, it found that certain professional organizations had operated a cartel in the endives market through different mechanisms (e.g. disseminating a minimum price on a weekly basis, setting a central rate and reserve price, colluding on the quantities of endives placed on the market, exchanging strategic information used for the purpose of price maintenance, etc.). The French Competition Authority consequently imposed on the organizations fines totaling EUR 3 970 590.
Court of Appeal – no violation found
Several undertakings and organizations fined brought an action for annulment before the French Court of Appeal, which ruled that in this case it had not been established that the dissemination of minimum price instructions was a violation of competition rules due to the nature of the responsibilities lawfully assigned to the POs/APOs as regards price stabilization and other objectives of the organizations in question related to the agricultural policy.
The French Competition Authority brought an appeal in cassation against that judgment claiming that the responsibilities of those POs/APOs must in any case be in compliance with the rules of competition. The Court of Cassation referred the case to the CJEU for a preliminary ruling.
The CJEU, in line with its previous rulings, confirmed that the objectives of the common agricultural policy in fact do have precedence over those relating to competition policy: “[…] in pursuit of the objectives of introducing a common agricultural policy and establishing a system of undistorted competition, Article 42 TFEU recognizes that the common agricultural policy takes precedence over the objectives of the Treaty in the field of competition […]”
At the same time, the CJEU admitted that the common organizations of the markets in agricultural products were “not a competition-free zone” and outlined certain conditions that should be observed in order to rely on the derogation from competition rules applicability:
- The EU Member States are to recognize the POs and APOs that specifically take responsibility for one of the objectives defined by the EU legislature in the agricultural sector.
- The practice in question is necessary in order to achieve one or more of the objectives of the common organization of the market concerned and is implemented by the PO/APO that is entitled to do so/recognized by the Member State.
- The practice in question must remain within a single PO or APO (certain forms of coordination or concentration only between producers that are members of the same PO or APO recognized by a Member State may be justified).
- The practices in question must be justified/ proportionate, i.e. must not go beyond what is necessary for the achievement of the objectives of the PO/APO.
Possible justifications of anti-competitive practices
Exchanges of strategic information between producers within the same PO or APO shall be regarded as proportionate if they are in fact made for the purposes of one or more of the objectives assigned to that PO or APO and are limited only to the information that is strictly necessary for those purposes.
Coordination between agricultural producers in the same PO or APO with regard to the quantities of agricultural products put on the market may be justified by the objective of stabilizing producer prices to ensure a fair standard of living for the agricultural community.
A certain form of coordination of the pricing policy of individual agricultural producers within a PO or an APO may be justified by the objective of concentrating supply to strengthen the position of producers in the face of ever greater concentration of demand.
As seen from the above analysis of the CJEU’s judgement, in answering the question on the whether the (anti-competitive) practices in the agricultural sector may enjoy the derogation from the competition rules applicability, the CJEU states that:
- YES, the practices that relate to a concertation on prices or quantities put on the market or exchanges of strategic information, may escape the prohibition laid down in Article 101(1) TFEU if they are (i) agreed between the members of the same PO or the same APO (ii) recognized by a Member State and (iii) are strictly necessary for the pursuit of one or more of the objectives assigned to the PO or APO concerned in compliance with EU legislation; and
- NO, such practices cannot escape the prohibition under Article 101(1) TFEU if they are agreed (i) between a number of POs or APOs, or are agreed (ii) with entities not recognized by a Member State in order to achieve an objective defined by the EU legislature under the common organization of the market concerned, such as (iii) professional organizations not having the status of PO, APO within the meaning of EU legislation.
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 APVE, Cerafel, FNPE, Celfnord, APEF, SNE, FCE and Groupe Perle du Nord, as well as the POs Fraileg, Prim’Santerre, Soleil du Nord, France endives, CAP’Endives, Marché de Phalempin, Primacoop, Sipema and Valois-Fruits,
 Milk Marque and National Farmers’ Union (C‑137/00, EU:C:2003:429), Panellinios Syndesmos Viomichanion Metapoiisis Kapnou (C‑373/11, EU:C:2013:567)
 Para 37, Case C‑671/15. See also France v Commission, C‑456/00, EU:C:2002:753, para 33
Para 47, Case C‑671/15. See also Milk Marque and National Farmers’ Union, C‑137/00, EU:C:2003:429, para 61
 Para 53, Case C‑671/15