Fluctuations in food prices over the last few years have caused the Competition Authority, the European Commission and other national competition authorities within the European Competition Network (ECN) to examine the functioning of the food supply chain. This recently resulted in an ECN report on competition enforcement in the food sector, which states that the commission and national competition authorities will continue to ensure the competitiveness of food markets.(1)

The Dutch Competition Authority has kept its word so far: it not only imposed fines on 15 flour producers for cartel activities(2) and performed market studies regarding pricing in the agro-food sector, the tomato market structure and the Dutch fisheries sector during the reporting period, but also recently imposed a total of €23 million in fines on participants in two cartels in the agricultural sector.

It is no surprise that the food sector is still getting a lot of attention: EU food prices have been increasing at all levels of the supply chain since 2007.(3) In 2009 the commission adopted a communication aimed at improving the functioning of the food supply chain in the European Union.(4) In the same year, the Dutch authority published its study on pricing 'from farm to fork', in which it examined developments in the price of eight basic products in the food and agro-processing industry (ie, potatoes, apples, bread, eggs, cucumbers, bell peppers, onions and chopped onions during the period between 2005 and 2008). This study into retail prices, costs and margins along the food production chain concluded that supermarkets were unable to unilaterally raise their prices profitably at the expense of producers and consumers. However, the scrutiny of the food sector did not end there.

Earlier in 2012 a food taskforce was established within the Directorate General of Competition to monitor the food sector for a two-year period. The commission finds most cases in the food sector to have a national dimension and considers them to be the main responsibility of national competition authorities. A sector inquiry into this area thus seems unlikely in the near future,(5) although close attention is being paid to what is going on along the food value chain.(6)

A sector inquiry may not be necessary, given that national competition authorities appear to be on the ball: over 180 antitrust investigations (with sanctions in respect of over 50 cartels), nearly 1,300 merger control proceedings and over 100 market monitoring actions have been launched since 2004.(7)

The authority recently confirmed its active role in this sector by imposing fines totalling €14 million on two cooperatives of bell pepper growers for price fixing, and five participants in a pearl onion cartel were fined €9 million in total. In addition, a fine of €5,000 was imposed on a cartel facilitator.(8)

Food sector participants should remain alert as the commission and national competition authorities will continue to watch their every move.

For further information on this topic please contact Jolling De Pree or Erik H Pijnacker Hordijk at De Brauw Blackstone Westbroek by telephone (+31 70 328 53 28), fax (+31 70 328 53 25) or email (jolling.depree@debrauw.com or erik.pijnackerhordijk@debrauw.com).

Endnotes

(1) ECN report on competition law enforcement and market monitoring activities by the European competition authorities in the food sector, May 2012.

(2) In December 2010 the authority fined the flour producers for cartel activities. Seven of these 15 fines were reduced in its decision on objection.

(3) See the ECN report.

(4) For the European Commission's actions on improving the functioning of the food supply chain in the European Union, see its press release of October 28 2009: www.europa.eu/rapid/pressReleasesAction.do?reference=IP/09/15938&format=PDF&aged=0&language=En&guiLanguage-en.

(5) According to Commissioner Almunia:

"Maybe we will need one day to launch a sectoral enquiry in this sector, but so far what we need to know is what is going on and if we should act at the EU level because the [national authorities] are not able to tackle the problems".

See Mlex, "Directorate General of Competition taskforce examines need for EU action on food-chain problems", March 8 2012.

(6) See the speech by Commissioner Almunia of June 8 2012: www.europa.eu/rapid/pressReleasesAction.do?reference=SPEECH/12/4288&format=PDF&aged=0&language=En&guiLanguage-en.

(7) See the ECN report.

(8) This is the second time that the authority has imposed a fine on a cartel facilitator.

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.