The European Court of Justice (ECJ) has given its ruling on the question of whether an agreement between Irish beef processors to reduce processing capacity may amount to a restrictive practice in breach of Article 81(1) EC. Case C-209/07 came before the ECJ on a preliminary ruling from the Irish Supreme Court. The background was that, following concerns in 2002 about overcapacity in the Irish beef market, the 10 largest processors formed the Beef Industry Development Society (BIDS). BIDS formed a rationalisation plan to reduce capacity by 25%. Under the plan, BIDS would offer a standard contract to processors exiting the market to whom a compensation payment was made from a fund created by a levy on members of BIDS remaining in business. The Irish Competition Authority challenged the scheme on the basis that it breached Article 81(1) EC and the issue eventually went before the Irish Supreme Court. The ECJ concluded that the standard form agreement to reduce capacity would fall within the scope of Article 81(1) EC as it involves co-ordination of behaviour on the market and limits independent action. The ECJ did not rule out that the crisis in the sector may be relevant for consideration of whether the Agreement might benefit from exemption under Article 81(3) EC, but this did not affect the analysis of whether it fell within the scope of Article 81(1) EC.