Agriculture

19 August 2009
by inadim -- last modified 19 August 2009

Europe's agricultural sector, and the behaviour of farmers and associations of farmers - such as cooperatives - is subject to the competition rules of the European Union.

Agriculture is an economic activity which is undergoing significant change as a result of globalisation and technological innovations. Indeed, global competition between exporters of certain agricultural products (such as wheat, rice, oilseeds, sugar and livestock) will likely intensify over the next ten years.

Antitrust

The competition rules apply to the agricultural sector, and the behaviour of farmers and associations of farmers -like cooperatives- is subject to EU competition rules. The application of competition rules to the agricultural sector was decided by the Council in 1962 and amended in 2006. Regulation 1184/2006 provides that Articles 81 and 82 do apply to the production and trade of agricultural products.

The Regulation identifies three exceptions to this general rule:

• Agreements, decisions and practices which form an integral part of national market organizations,
• agreements, decisions and practices which are necessary for the attainment of the objectives of the Common Agricultural Policy (CAP) and
• agreements between farmers or associations of farmers belonging to a single Member State not involving an obligation to charge identical prices.

In addition, some Common market organisations like those dealing with "fruit and vegetables" or "wine" containing specific provisions on interbranch organisations are considered outside the scope of Article 81, under certain conditions.

The Common Agricultural Policy (CAP) has been in a process of ongoing reform since the early 1990s with a view to increasing the competitiveness of agriculture by reducing support prices and compensating farmers through direct aid payments. This reform mirrors the outside pressures on the agricultural sector as well as the growing consensus that this sector does not require specific antitrust exemptions.

The role of the Commission, through its competition department in this sector is essentially twofold. On the one hand it tries to avoid that legislative proposals have unacceptable anti-competitive effects on the markets concerned (advocacy role). On the other hand the European Commission, may undertake concrete actions to ensure that competition rules are fully applied to the agricultural sector, for example, fighting illegal concerted practices.

Merger control

A merger can only be declared incompatible if it would significantly impede effective competition. There have been a number of mergers decisions adopted by the Commission relating to mergers in the agricultural and fisheries sector.

State Aid

The Commission’s department for agriculture is active in the control of State aid to the production, processing and marketing of agriculture products. Following the adoption of the 'Agenda 2000' package, and in particular, the creation of the policy for rural development, the European Commission provided a framework for the granting of aid by Member States to the agricultural sector (Community Guidelines for State Aid in the agricultural sector). The guidelines apply to all State aids granted in connection with activities related to the production and marketing of agricultural products falling within the scope of Annex I of the EC Treaty. They do not apply to State aids in the fisheries and aquaculture sector or aids for the forestry sector. The fisheries sector has its own rules on state aid.

Source: European Commission