For the EU competition rules to be inapplicable on the basis that anticompetitive practices are strictly necessary and proportionate in order to achieve the objectives of the common agricultural policy, those practices must have been implemented by an entity recognised by a Member State and must remain within such entity.

In 2012, the French Competition Authority imposed fines on several endive producers, producer organisations (“PO”) and associations of producer organisations (“APO”) for violating the French and EU cartel prohibition. The French Competition Authority found that the parties involved had concerted on the price of endives and the quantities placed on the market as well as the exchange of strategic information.

Dispute

The fined parties brought an action before the French courts contesting the fines, arguing that the practices did not fall within the scope of the cartel prohibition, in so far as they come under the common agricultural policy. They argued that the POs and APOs are tasked under EU legislation with stabilising producer prices and adjusting production to demand.

The French Court of cassation, before which the matter was brought, asked the Court of Justice of the European Union (CJEU) to clarify the matter.

Ruling CJEU

To begin with, the CJEU observes that the common agricultural policy takes precedence over the objectives of the Treaty on the Functioning of the European Union (TFEU) in the field of competition. The CJEU also recognises the EU legislature’s power to decide to what extent the rules on competition are to be applied in the agricultural sector. In particular with regard to the fruit and vegetables sector – where endives fall into – the practices for POs and APOs to achieve the objectives assigned to them under EU law may escape the cartel prohibition laid down in Article 101 TFEU.

The CJEU, however, also notes that the common organisations of the markets in agricultural products are not a competition-free zone.

Subsequently, the CJEU concludes that for the EU competition rules to be inapplicable on the basis that the practices in question are necessary in order to achieve the objectives of the common organisation of the fruits and vegetables market, those practices must have been implemented by an entity recognised by a Member State. The CJEU also holds that when practices are applied by a PO or an APO recognised by a Member State, such practices must remain within a single PO or APO in order to escape the cartel prohibition.

Based on the foregoing, the CJEU concludes that to the extent that the practices at hand were not adopted within the same PO or APO – but adopted between several POs or APOs, or between several POs or APOs and entities not recognised by a Member State in the context of the implementation of the common agricultural policy – such practices cannot escape the EU cartel prohibition.

With regard to practices agreed within a single PO or APO recognised by a Member State, the CJEU concludes that only practices that are actually and strictly connected to the pursuit of the objectives assigned to such PO or APO can escape the EU cartel prohibition. That may be the case of exchanges of strategic information, the coordination of the quantities of agricultural products put on the market and the coordination of pricing policy of individual agricultural producers, if such practices are strictly necessary for the pursuit of the objectives assigned to the PO or APO in compliance with EU legislation.

By contrast, the collective fixing of minimum sale prices within a PO or APO cannot be considered to be proportionate to the objectives of stabilising prices and concentrating supply, if it does not allow producers to sell the products themselves at a price below such minimum sale prices.