Antitrust Law Daily Wrap Up, ANTITRUST NEWS: EC adopts guidelines on joint selling of olive oil, beef, veal, and arable crops, (Nov 30, 2015)

By Linda O’Brien, J.D., LL.M.

The European Commission (EC) has adopted new guidelines on how specific agricultural derogations from European Union (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.

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 was to increase the competitiveness and sustainability of EU farmers and strengthen their bargaining power, 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. Between January and May 2015, the Commission carried out a public consultation on a draft of the guidelines and also consulted the European Parliament and the competition authorities of the Member States.

Today, European agricultural producers compete on a daily basis in many markets, where they face specific challenges, including increasing consumer demands for better, sustainable, and traceable products; global competition from non-European imports; and business partners who are often larger and financially stronger.

The 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 recognized organizations, if they fulfil certain conditions. In particular, such organizations must make farmers significantly more efficient by providing them with supporting activities other than sales and the volumes marketed by a given organization must not exceed certain thresholds.

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. Specifically, the guidelines: (1) provide a clear definition and 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; (2) give guidance on how to calculate the volumes marketed by farmers' organizations and how to check that they do not exceed the thresholds, taking into account notably natural variations over time; (3) explain how exceptional circumstances can be taken into account when calculating the volumes marketed by farmers’ organizations; and (4) clarify the situations in which the national competition authorities and the Commission may apply the safeguard clause foreseen by the CMO Regulation.

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

News: Antitrust