The EU Commission issues three implementing regulations temporarily relaxing the scope of competition law rules in three agricultural sectors affected by the COVID-19 pandemic

On 30 April 2020, the European Commission (the “Commission”) issued three implementing regulations temporarily relaxing the scope of competition law rules in three agricultural sectors severely affected by the COVID-19 pandemic.

By way of context, Regulation (EU) No 1308/2013 of 17 December 2013 establishing a common organisation of the markets in agricultural (the “CMO Regulation”) encourages cooperation between agricultural producers, but at the same time makes clear that EU competition law rules remain applicable to production and trade in agricultural products. However, under Article 222 of the CMO Regulation, the Commission may apply temporary derogations from Article 101(1) Treaty on the Functioning of the European Union (the “TFEU”) to specific categories of agreements to address severe imbalances on the market. While hardcore infringements (e.g., price-fixing between competitors) may not be exempted, seven categories of arrangements (e.g., market withdrawal or free distribution of products, transformation and processing) may be exempted, provided that they aim to stabilise the sector concerned and do not undermine the proper functioning of the internal market.

As a result of the COVID-19 crisis, the Commission has noted severe issues in certain agricultural sectors. For example, extensive movement restrictions on people and limited availability of labour has led to significant disruptions and cash-flow issues for farmers. In addition, the cancellation of festivities (e.g., annual garden shows, cultural and open-air festivals, sports tournaments) and the closure of markets, specialised retail shops and fast foods have led to significant economic disruptions on the markets for processed potatoes, live plants and cut flowers, and milk and dairy products.

According to the Commission, these disruptions qualify as severe market imbalances which, under Article 222 of the CMO Regulation, justify the adoption of temporary derogations from Article 101(1) TFEU. Consequently, farmers and producers, as well as recognised organisations thereof, are temporarily authorised to:

• conclude agreements and take common decisions on planning the volume of raw milk to be produced (based on Commission Implementing Regulation (EU) 2020/599);

• conclude agreements and take common decisions on market withdrawal and free distribution, joint promotion and temporary planning of production of live plants and flowers (based on Commission Implementing Regulation (EU) 2020/594); and

• conclude agreements concerning potatoes for processing and take common decisions concerning potatoes for processing on market withdrawals and free distribution, transformation and processing, storage, joint promotion and temporary planning of production (based on Commission Implementing Regulation (EU) 2020/593).

Each Implementing Regulation covers the territory of the EU and entered into force on 5 May 2020 for a period of six months.

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Author

  • Court of First Instance of Namur

Quotation

Martin Favart, The EU Commission issues three implementing regulations temporarily relaxing the scope of competition law rules in three agricultural sectors affected by the COVID-19 pandemic, 30 April 2020, e-Competitions April 2020, Art. N° 95196

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