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Law
Competition Policy

Overview

EU competition rules apply to all food products at all levels of the food supply chain, from the production of raw agricultural products to grocery retail. For all food products except agricultural products, the same rules apply as for any other sector. The Treaty on the Functioning of the European Union (TFEU) and its predecessors have granted specific treatment to agricultural products. Agricultural products are defined in Annex I of Regulation 1308/2013. Pursuant to Article 42 TFEU, the legislator can modify the standard competition rules when applying them to agricultural products, taking into account the CAP objectives set out in Article 39 TFEU (i.e. increasing productivity of agricultural production, ensuring a fair standard of living for agricultural communities, stabilising markets, assuring supplies and ensuring reasonable prices for the consumer). The legislator has thus determined some specific rules for farmers, associations of farmers, producer organisations, and inter-branch organisations insofar as they produce or trade in agricultural products.

Antitrust policy

The antitrust rules for agricultural products (other than fisheries products) are set out in Regulation 1308/2013, known as the "Common Market Organisation (CMO) Regulation". The CMO Regulation was amended as of 1 January 2018 by Regulation 2017/2393, which is known as the "Omnibus Regulation". The CMO Regulation sets out in its Article 206 that standard competition rules (defined by Articles 101 to 106 TFEU) apply to agricultural products, except for some derogations set out in a number of other articles of the Regulation. This memo describes the derogations and standard competition rules that are applicable to agricultural products before 1 January 2018.

On 26 October 2018, the Commission published a Report and an accompanying staff working document from the Commission to the European Parliament and the Council on the application of the Union competition rules to the agricultural sector (see also the following webpage). The report and staff working document describe the scope of the Union competition rules in the agricultural sector. It also describes the case investigations, consultations and monitoring activities of the European competition authorities and provides background on the application of the Union competition rules as set out in the CMO Regulation. The period covered by the report is from 1 January 2014 to mid-2017, as far as derogations from the competition rules in the CMO Regulation are concerned, and from 1 January 2012 to mid-2017 for the review of antitrust investigations. A previous ECN Food Report of May 2012 covered antitrust enforcement in the period 2004-2011.

On 27 November 2015 the Commission adopted Guidelines concerning the implementation of the rules regarding joint sales by producers of olive oil, beef and veal and arable crops in Articles 169, 170 and 171 of the CMO Regulation (see note below). The Guidelines aim to help producers, authorities and courts implement the rules by addressing the practical and technical issues they raise. (see press release and memo).  In 2018 the Commission published a Study on Producer Organisations and their activities in the olive oil, beef and veal and arable crops sectors.  

The question of farmers' position in the supply chain, in particular their lack of bargaining power vis-à-vis their buyers, has been at the heart of policy discussions in the last decade. This included the reform of the Common Agricultural Policy (CAP) proposed in 2011 and concluded in 2013, the changes implemented by the Omnibus Regulation and the Commission proposal for a Directive on unfair trading practices (also referred to as UTPs) in business-to-business relationships in the food supply chain made in April 2018.

On the 25 April 2019, the Directive on unfair trading practices (UTPs) in business-to-business relationships in the agricultural and food supply chain was formally adopted.  This directive improves the protection of farmers and of small, medium and mid-range sized suppliers, and provides mandatory rules that outlaw certain unfair trading practices. In line with the Commission’s Impact Assessment, the directive avoids regulating efficient business arrangements that can be beneficial for both suppliers and buyers.

UTP regulation has a scope that is different from competition law. Competition rules prohibit unilateral practices of a dominant operator and anti-competitive agreements between undertakings that affect the market overall. EU competition rules are not concerned with problems faced by small suppliers in the context of their bilateral contractual negotiations with stronger buyers, which have no negative effects on the competitive process or on consumer welfare. Such contractual imbalances associated with unequal bargaining power, but which having no effect on the market overall, are addressed by UTP rules.

For further Information on Antitrust

Mergers

DG Competition works to ensure that all legislative proposals contribute to making agricultural markets more competitive and do not have anti-competitive effects. Together with the national competition authorities, DG Competition works to ensure that the competition rules are respected in the agricultural sector. The Commission has also adopted a number of decisions relating to mergers in the agricultural sector.

For further information on Mergers

State Aid policy

The Commission has set up a specific framework of rules for State aid in the agricultural (the production, processing and marketing of agricultural products) and forestry sectors and in rural areas as well as in the fisheries sector. As of 1st January 2020, DG Competition is responsible for State Aid control in these sectors following the transfer of these competences in 2020 from DG AGRI and DG MARE respectively.

The State aid rules for agriculture, forestry and rural areas are closely related to the Common Agriculture Policy (CAP).

State aid Legal Framework

    Farm to Fork Strategy

    Under the Green Deal, Europe is to become the first climate-neutral continent by 2050. To achieve this goal the EU economy needs to become sustainable, turning climate and environmental challenges into opportunities across all policy areas. For the food system in particular, the Green Deal objectives of designing a fair, healthy and environmentally friendly value chain are laid down in the Farm to Fork Strategy. The Strategy offers a comprehensive approach on how to reduce the climate and environmental footprint of the EU food system while strengthening the resilience of all economic actors involved in it. To encourage collective cooperation and ensure that the threat of non-compliance with competition rules does not stand in the way of any sustainability initiatives, the Commission will issue guidance on the scope of collective action permissible under EU competition rules (DG COMP is the service in charge of this work). It is envisaged that such collective action would be both in the form of horizontal as well as vertical cooperation.

    For more information on State Aid

    For further details see:  Agriculture Legislation