OREANDA-NEWS. November 30, 2015. European Commission has adopted new Guidelines on how specific agricultural derogations from EU antitrust rules apply to the sale of certain agricultural products. The Guidelines will help explain to farmers how, if certain conditions are fulfilled, they can jointly sell olive oil, beef and veal, and arable crops in compliance with EU competition rules. The European markets for these three products are worth more than €80 billion annually. An explanatory factsheet is available here.

Margrethe Vestager, Commissioner in charge of competition policy, said: "These Guidelines are a manual explaining to farmers how to organise themselves in order to be able to jointly sell olive oil, beef and veal, and arable crops, while still fully respecting EU competition rules. The objective is to ensure that European farmers can work together to remain competitive and benefit from bargaining power towards the buyers”.

Phil Hogan, Commissioner for agriculture and rural development, said: "The guidelines are about strengthening farmers' collective position in the food supply chain by setting out clear and practicable rules. They help farmers to counter-balance the effects of increasing concentration at the processing and retailing stages of the chain. This is an important step towards workable conditions of competition on agricultural markets and the full use of the available tools in the new CAP."

The new Guidelines complement the 2013 Common Agricultural Policy (CAP) Reform that introduced a number of changes to the rules on how EU farmers can cooperate. The aim of the CAP reform measures is to increase the competitiveness and sustainability of EU farmers and strengthen their bargaining power vis-?-vis buyers, while still preserving a market-oriented approach.

The EU's standard competition rules ban agreements to set prices or other trading conditions or to share markets unless the agreements improve production or distribution while allowing consumers a fair share of the resulting benefit (Article 101 of the Treaty on the Functioning of the EU). These standard competition rules apply to the agricultural sector subject to certain specific derogations as set out in the Common Market Organisation Regulation (Regulation (EU) No 1308/2013 - the "CMO Regulation").

These Guidelines are about three efficiency-based derogations that allow producers of olive oil, beef and veal, and arable crops to jointly sell and set prices, volumes and other terms through recognised organisations, if they fulfil certain conditions (Articles 169, 170 and 171 of the CMO Regulation). In particular:

-         such organisations must make farmers significantly more efficient by providing them with supporting activities other than sales (e.g. storage, transport, distribution); and

-         the volumes marketed by a given organisation must not exceed certain thresholds (20% of the relevant market for olive oil and 15% of the national market for beef and veal, and arable crops).

The new Guidelines help farmers to comply with these requirements. They will also help competition authorities and judicial authorities in the Member States to apply the new rules. In particular, they:

-         provide a clear definition/indication of the type of activities that can create the significant efficiencies required to benefit from the derogation and give specific examples of situations in which such activities can create significant efficiencies;

-         give guidance on how to calculate the volumes marketed by farmers' organisations and how to check that they do not exceed the thresholds, taking into account notably natural variations over time;

-         explain how exceptional circumstances, e.g. a natural disaster, can be taken into account when calculating the volumes marketed by farmers’ organisations; and

-         clarify the situations in which the national competition authorities and the Commission may apply the safeguard clause foreseen by the CMO Regulation. This safeguard clause allows competition authorities, in exceptional circumstances, to decide that joint sales of a farmers’ organisation should be either reassessed or should not take place if the overall market is negatively affected.

The Guidelines will be published in the EU Official Journal in the coming days.The full text of the Guidelines will be available here.

Background

Between January and May 2015 the Commission carried out a public consultation on the draft text of the Guidelines. Further to this, the European Parliament and the competition authorities of the Member States were consulted. All the replies to these consultations are available here.

Successive reforms have made the CAP increasingly market-oriented. Today, European agricultural producers compete on a daily basis in many markets, where they face specific challenges:

-         increasing consumer demands, for better, sustainable and traceable products;

-         global competition from non-European imports;

-         business partners who are often larger and financially stronger, be it processors, manufacturers or retailers, as the majority of the agricultural holdings in Europe are very small.

The Commission's impact assessment in the context of the latest CAP Reform pointed out the need to improve the functioning of the food supply chain and to create the right conditions for the agricultural sector to become more competitive and innovative. In particular, this implies encouraging cooperation between farmers through producer organisations and associations of producer organisations while ensuring competition in the sector.