On 14 November 2017, the European Court of Justice rendered its judgment on a request for a preliminary ruling from the French Supreme Court. The Court clarified the conditions under which competition rules must be applied to agricultural producer organisations (POs). POs are established to pursue the objectives of the common agricultural policy and may – if certain criteria are met – be exempted from the competition rules.
In March 2012, the French competition authority found that several undertakings, POs and other market organisations had implemented a cartel in the endive market. The cartel consisted of the fixing of minimum prices, coordination of the quantity of endives placed on the market and the exchange of strategic information. The undertakings and associations subsequently appealed the decision, arguing that the practices in question were necessary to pursue the objectives of the common agricultural policy and should therefore be excluded from the scope of the competition rules. The French Supreme Court asked preliminary questions to the Court of Justice on the issue.
According to the Court, the common agricultural policy takes precedence over the objectives in the field of competition. However, the common organisation of markets in agricultural products is not a competition-free zone. The Court therefore examined whether the practices of POs and associations of POs (APOs), such as those at issue, are excluded from the scope of the competition rules.
First of all, it is required that the practices of the POs and APOs are necessary to achieve the objectives of the common agricultural policy. According to the Court, this means that the practice is implemented by an entity that is recognized by the Member State as a PO or an APO and that is entitled to pursue the objectives of the common agricultural policy. Moreover, only coordination between producers that are members of the same recognized PO or APO can be justified.
Secondly, the practices must also be proportionate to the pursuit of the objectives assigned to the PO or APO. The Court ruled that the exchange of strategic information between producers is liable to be proportionate, as well as the concentration of supply to strengthen the position of producers vis-à-vis the greater concentration of demand. However, the Court concluded that the collective fixing of minimum sales may not be considered to be proportionate since it has the effect of reducing the already low level of competition in the markets for agricultural products.
With its judgment, the Court clarified the conditions under which agreements on prices or quantity, or the exchange of information by members of such an organisation may escape the prohibition of Article 101 TFEU.
This article was published in the Competition Law Newsletter of December 2017. Other articles in this newsletter:
- Court of Justice dismisses appeal of British Airways in Air Cargo case
- National courts may declare that a practice infringes competition law after it was the subject of a commitment decision
- General Court partially annuls the Commission's ICAP decision (in the YIRD case)