Further to an appeal lodged by the French Competition Authority (“FCA”) in the endives cartel case, the French Supreme Court referred the case for preliminary ruling to the European Court of Justice in Luxembourg (“ECJ”) on 8 December 2015. In essence, the dispute concerns the conflict between two key EU policies: The EU’s Common Agricultural Policy (“CAP”) which allows producers to group together to help stabilise prices, and EU competition law on the other hand, which prohibits competitors from fixing minimum prices and exchanging sensitive information.
In the light of the issues in dispute, the FCA, backed by the European Commission, has requested for judges to seek guidance from the Court of Justice in Luxembourg on the interpretation of certain CAP exemptions from competition law, regardless of the Court’s ruling.
As entitled under art. 267 of the Treaty on Functioning of the European Union (“TFEU”) the ECJ should provide guidance and clarify the issues resulting from the concurrent application of CAP rules and EU competition law.
In March 2012, the FCA levied fines of approximately 3.6 million euros on ten producers of endives and seven representative bodies for their involvement in a price-fixing cartel since 1998. The FCA found that the cartelists had engaged in an “organized and elaborate” system aimed at jointly coordinating prices of endives to wholesalers and retailers. The FCA concluded that price fixing remains prohibited, even where national rules implementing the EU’s CAP allow producers to collaborate to increase their bargaining power with food retailers.
The Paris Court of Appeal overturned the fine in May 2014. The Court found that the farming sector has special characteristics, and essentially held that the objectives of the CAP should prevail over competition law enforcement. In that respect, the Court held that certain CAP based regulations introduced a derogation from the general rules under competition law. These CAP regulations especially set out the option for producer organisations to join together in “associations of producer organisations” for the purpose of stabilising production prices and, within such organisations, to consult each other.
The French Competition Authority appealed the judgment to the Supreme Court and was backed by the European Commission. In its opinion dated 27 February 2015, the European Commission stated that the Court of Appeal had erred when it failed to apply EU law where it conflicted with national provisions implementing the objectives of the CAP.
It is expected that the ECJ will rule on this case in early 2017. The Advocate General will publish an opinion (recommendation to the ECJ) in the meantime.
This case is significant for three reasons. First, this is the first time that the European Commission has made oral submissions in its written intervention at a national court. Secondly, the outcome of this case will be significant in ensuring that EU law is applied consistently across EU Member States given that a Dutch court has previously held that producers could not rely on the European agricultural rules to avoid European competition law enforcement. Thirdly, this case might lead to clearer rules for implementing competition law in cases involving EU sectorial policies such as the CAP and EU competition law.