European Union: Clarification Of Relationship Between EU Common Agricultural Policy And Competition Law

Last Updated: 16 January 2018
Article by Richard Burton

Most Read Contributor in Belgium, December 2018

The objectives of the EU's common agricultural policy ("CAP") differ from those of EU competition law. While the CAP aims to actively address certain perceived failures in agricultural markets, EU competition rules are premised on the objective of market liberalisation. Under Article 42 TFEU, the objectives of the CAP take precedence over the objectives of EU competition law. Hence, although agricultural producers' organisations ("POs") and their associations ("APOs") constitute forums for concerted action, which would normally be considered problematic from a competition law perspective, they nevertheless escape the application of Article 101 TFEU in situations where the EU's common rules for agricultural markets provide for explicit derogations. These derogations are framed narrowly. The question arises whether further derogations may follow implicitly from the POs/APOs' responsibility to (i) adjust production to demand and concentrate supply; (ii) reduce production costs; and (iii) stabilise producer prices.

The underlying case relates to a 2012 decision adopted by the French Competition Authority in which it fined a number of endive producers' organisations and associations a total of € 4 million for their involvement in a price-fixing, output restriction and market-sharing cartel. The organisations and associations concerned appealed against the authority's decision, arguing that they had a responsibility, under EU law, to stabilise endive producer prices and to adjust production to demand. The French Court of Appeal upheld their argument, which was subsequently appealed before the French Supreme Court. The French Supreme Court stayed proceedings and requested guidance from the ECJ.

In its judgment, the Grand Chamber of the Court of Justice of the European Union ("ECJ") considered that, although the EU's common organisations of the agricultural markets are not a competition-free zone, actions taken by POs and APOs may escape the application of EU competition law where these actions (i) relate to objectives specifically assigned to them under the CAP; and (ii) do not go beyond what is strictly necessary to achieve these objectives. This implies that the practices concerned must be adopted by a PO/APO that is recognised by an EU Member State and remain within the framework of the same PO/APO. In other words, the practices discussed within a PO/APO (e.g., production and marketing of products) must be limited to the activity of the PO or APO members. Conversely, practices occurring between (i) different POs or APOs, (ii) a PO/APO and entities not recognised by a Member State in the context of the implementation of the CAP or (iii) several non-recognised entities are all subject to EU competition law.

The ECJ examined the alleged cartel on the French endive market in the light of the above principles.

First, as regards the exchange of strategic information, the ECJ considered that the mission of POs/APOs necessarily entails the exchange of strategic information between individual producers that are members of the PO/APO concerned. Therefore, exchanges of strategic information between producers of the same PO/APO may escape the application of EU competition rules, if they are (i) actually made for the purposes of one or more of the objectives assigned to that PO or APO and (ii) limited to information that is strictly necessary for those purposes.

Second, as regards the concertation on the quantities placed on the market, the ECJ held that such concertation can escape the application of EU competition rules only if it takes place within the same PO/APO and if it is genuinely intended to regulate production to stabilise the prices of the products concerned.

Finally, the ECJ found that the objective of concentrating supply to strengthen the position of producers against the concentration of demand may also justify a certain form of coordination of the pricing policy of individual agricultural producers within a PO/APO, in particular where the PO/APO concerned has been assigned by its members with the responsibility for marketing all their products. In contrast, the collective fixing of minimum sale prices within a PO/APO cannot be considered proportionate to the objectives of stabilising prices and concentrating supply when producers are prevented from selling their products at a price below the fixed minimum price, because this further reduces the already low level of competition in the markets for agricultural products.

The judgment is of great practical interest to the agricultural sector and is in line with Advocate General Wahl's opinion (see VBB on Competition Law, Volume 2017, No. 4, available at It is also noteworthy that the Commission has submitted amicus curiae briefs to the French Supreme Court in the proceedings on the merits, which is exceptional.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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