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Agriculture, food and fisheries

Overview

Background on the EU food supply chain: an important economic sector

The food and drink industry is the EU's biggest manufacturing sector in terms of jobs and value added. In 2016, around 23 million people were employed in the EU food supply chain, representing approximately 10.3% of all EU employment. The total turnover of the food supply chain surpassed €3.8 trillion in the same year and generated an added value of around €732 billion (around 5.5% of the EU gross added value). Spending on food and non-alcoholic beverages represents approximately 13.8% of the average EU household budget in 2017.

Table 1: Structural overview of the food supply chain


 

Agriculture (2016)

Food and drink industry (2017)

Wholesale (2016)

Retail (2016)

Turnover (billion euros)

456

1,192

1,097

1,129

Value added (billion euros)

216

236

102

178

Number of employees (million)

9.2

4.72

2

7.1

Number of companies (1,000 units)

10,468

294

284

905

Source: Food Drink Europe (Data & Trends, EU Food & Drink Industry (2019)

There is no single, homogeneous, and common food supply chain at the European level. The length and the degree of complexity of food supply chains depend on the product and market characteristics. The market structure varies at each level of the food supply chain depending on the products and Member States concerned.


Competition in the food sector

Food prices increased significantly after 2007 and commodity prices have shown increased volatility since then. In addition, concentration has increased at the manufacturing level and to a lesser extent at the retail level. These developments have led to concerns about the overall functioning of the food supply chain.

Competition policy plays a key role in maintaining a level playing field in the food supply chain. Competition policy is about applying rules to make sure businesses and companies compete fairly with each other. This encourages enterprise, innovation and efficiency, creates a wider choice for consumers and helps reduce prices and improve quality for consumers. In a competitive market, prices are pushed down. Not only is this good for consumers - when more people can afford to buy products, but it also encourages businesses to produce and boosts the economy in general. Competition also encourages businesses to innovate in terms of e.g. production methods and improve the quality of goods and services they sell – to attract more customers and expand market share. Competition within the EU is also essential to make European companies stronger outside the EU too – and able to hold their own against global competitors.

The Commission's competition department and the National Competition Authorities in the European Competition Network (ECN) have been very active in food markets over the last decade. The ECN Food Report of May 2012 provides a detailed account of their activity over the 2004-2011 period.

General application of competition rules

EU competition rules apply to all food products at all levels of the food supply chain, from the production of raw agricultural products to grocery retail. For all food products except agricultural products, the same rules apply as for any other sector. The Treaty on the Functioning of the European Union (TFEU) and its predecessors have granted specific treatment to agricultural products. Agricultural products are defined in Annex I of Regulation 1308/2013. Pursuant to Article 42 TFEU, the legislator can modify the standard competition rules when applying them to agricultural products, taking into account the CAP objectives set out in Article 39 TFEU (i.e. increasing productivity of agricultural production, ensuring a fair standard of living for agricultural communities, stabilising markets, assuring supplies and ensuring reasonable prices for the consumer). The legislator has thus determined some specific rules for farmers, associations of farmers, producer organisations, and interbranch organisations in so far as they produce or trade in agricultural products.

State Aid policy

The Commission has set up a specific framework of rules for State aid in the agricultural (the production, processing and marketing of agricultural products) and forestry sectors and in rural areas as well as in the fisheries sector (the production, processing and marketing of fisheries and aquaculture products). As of 1st January 2020, DG Competition is responsible for State Aid control in these sectors following the transfer of these competences from DG Agriculture and DG Mare respectively.

Agriculture, forestry and rural areas

The State aid framework in the agricultural and forestry sectors and in rural areas consists of i) a sector-specific block exemption Regulation, known as ABER, ii) sector-specific State aid Guidelines and iii) a regulation on de minimis aid for farmers. The State aid rules for agriculture, forestry and rural areas are closely related to the Common Agriculture Policy (CAP), in particular the rules on support measures financed by the European Agricultural Fund for Rural Development (EAFRD).

Guidelines for State aid in the agricultural and forestry sectors and in rural areas 2014 – 2020 (“GL”)

The Treaty leaves room for the granting of State aid in respect of several policy objectives aimed at addressing market failures and ensuring a well-functioning and equitable economy. Prior to granting any such aid, the Member States have to notify the Commission for approval. The Guidelines for State aid in the agricultural and forestry sectors and in rural areas set out the conditions and criteria under which aid in these sectors is considered by the Commission to be compatible with the internal market.

State aid to promote the economic development of the agricultural and forestry sectors and of rural areas is embedded in the broader CAP. Within the CAP, the Union provides financial support to the agricultural and forestry sectors and to rural areas. As the economic effects of State aid do not change depending on whether it is (even partly) financed by the Union, or whether it is financed by a Member State alone, the Commission considers that there should in principle be consistency and coherence between its policy in respect of the control of State aid and the support which is granted under the Union’s own CAP. Consequently, the use of State aid can be justified only if it is in line with the objectives of this policy and, in particular, the underlying objectives of the CAP reform towards 2020. Therefore, when the Commission applies and interprets the rules of these Guidelines for specific aid schemes, it takes into consideration the CAP rules and policies.

The Agriculture Block Exemption Regulation (702/2014)

In cases where the Commission has gained sufficient experience with a given kind of State aid, it may block exempt them, i.e. the Member States do not have to notify such State aids. They only have to inform the Commission thereof. These types of State aid to the agricultural and forestry sectors and in rural areas are deemed to be compatible with the internal market. These are contained in Commission Regulation (EU) 702/2014 declaring certain categories of aid to undertakings active in the production, processing and marketing of agricultural products, as well as forestry and in rural areas compatible with the internal market in application of Articles 107 and 108 of the Treaty on the Functioning of the European Union.

“De minimis” Regulation for Agriculture (1408/2013)

Regulation 1408/2013 provides the rules for de minimis aid in the agricultural sector. The aid granted under this Regulation will not distort competition. It sets out the maximum amount that national authorities can use to support farmers without the need for prior approval from the European Commission. Member States do not even have to inform the Commission of such aid. The maximum aid amount that can be distributed per farm over three years is €20,000.

In order to avoid any potential distortion of competition, each Member State has a maximum national amount, which they must not exceed. Each national ceiling was set at 1.25% of the country's annual agricultural output over a reference period. Under certain conditions, a Member State may increase even further the de minimis aid per farm to €25,000, and the national maximum to 1.5% of the annual output.

For countries that do opt for the highest ceiling, the new rules require the creation of mandatory central registers at national level to keep track of the aids granted. Once single agricultural sector cannot received more than one half of the national aid maximum.

Revision of the State aid Framework/ public consultation

The current ABER and agricultural Guidelines are due to expire on 31 December 2020. The Commission has therefore launched a review of those instruments, with a view to establishing a new framework of rules for the period 2021 to 2027.

In addition, the Commission is in the process of preparing an evaluation of the instruments applicable to State aid in the agricultural and forestry sectors and in rural areas covering the period 2014-2020.

The design of the future State aid rules largely depends upon the future legal framework of the CAP, for which the legislative procedure is still pending. For this reason, the Commission is in the process of extending the application of the current ABER and Guidelines until the new rules are adopted.

For more information

Fisheries and Aquaculture

The State aid framework in the fishery and aquaculture sector also consists of i) a sector-specific block exemption Regulation, known as FIBER, ii) sector-specific State aid Guidelines and iii) a regulation on de minimis aid. The State aid rules for fisheries and aquaculture are closely related to the Common Fisheries Policy (CFP), in particular the rules on support measures financed by the European Maritime and Fisheries Fund (EMFF).

Guidelines for the examination of State aid to the fishery and aquaculture sector

The Guidelines set out the conditions and criteria under which aid in this sector is considered by the Commission to be compatible with the internal market.

State aid to promote the economic development of the fishery and aquaculture sector is embedded in the broader CFP. Within the CFP, the Union provides financial support to the fisheries and aquaculture sector. As the economic effects of State aid do not change depending on whether it is (even partly) financed by the Union, or whether it is financed by a Member State alone, the Commission considers that there should in principle be consistency and coherence between its policy in respect of the control of State aid and the support which is granted under the Union’s own CFP. The use of State aid is only allowed according to the Guidelines if they respect the conditions of the EMFF Regulation 508/2014.

Block Exemption Regulation

Certain types of State aid to the fisheries and aquaculture sector are deemed to be compatible with the internal market. These are contained in Commission Regulation 1388/2014 declaring certain categories of aid to undertakings active in the production, processing and marketing of fishery and aquaculture products compatible with the internal market in application of Articles 107 and 108 of the Treaty on the Functioning of the European Union.

De Minimis aid rules in the fishery and aquaculture sector

Regulation 717/2014 provides the rules for de minimis aid in the fishery and aquaculture sector. The regulation sets the ceiling at €30,000 per beneficiary over any period of three years. In addition each Member State has to respect the maximum cumulative amount set out in the annex to the de minimis regulation (the “national cap”) while granting aid to undertakings active in the fishery and aquaculture sector.

The de minimis aid is conditional: it may not be used for the purchase of fishing vessels, for the modernisation or replacement of main or ancillary engines of fishing vessels or to operations increasing the fishing capacity of a vessel, or equipment increasing the ability of a vessel to find fish or any other ineligible operations under the EMFF Regulation.

It should be noted that the Commission is currently in the process of preparing a Report and an accompanying staff working document from the Commission to the European Parliament and the Council on the application of the Union competition rules in the fisheries and aquaculture sector.

Antitrust policy

  1. Agriculture
    The antitrust rules for agricultural products (other than fisheries products) are set out in Regulation 1308/2013, known as the "Common Market Organisation (CMO) Regulation". The CMO Regulation was amended as of 1 January 2018 by Regulation 2017/2393, which is known as the "Omnibus Regulation". The CMO Regulation sets out in its Article 206 that standard competition rules (defined by Articles 101 to 106 TFEU) apply to agricultural products, except for some derogations set out in a number of other articles of the Regulation. This memo describes the derogations and standard competition rules that are applicable to agricultural products before 1 January 2018.
  2. Fisheries and aquaculture
    The competition rules for fisheries products are set out in Regulation 1379/2013. Under Article 40 of Regulation 1379/2013, standard competition rules apply to fishery and aquaculture products. The Regulation also sets out some specific derogations.

The competition rules for agricultural products (other than fisheries products) are set out in Regulation 1308/2013 and as of 1 January 2018 also in Regulation 2017/2393. Regulation 1308/2013 is known as the "Common Market Organisation (CMO) Regulation", as amended by Regulation 2017/2393 as the "Omnibus Regulation". The CMO Regulation sets out in its Article 206 that standard competition rules (defined by Articles 101 to 106 TFEU) apply to agricultural products except for some derogations set out in a number of other articles of the regulation. This memo describes the derogations and standard competition rules that are applicable to agricultural products before 1 January 2018.

The competition rules for fisheries products are set out in Regulation 1379/2013. Under Article 40 of Regulation 1379/2013 standard competition rules apply to fishery and aquaculture products. The Regulation also sets out some specific derogations.

Clarification of the scope of competition rules in the TFEU with regard to sustainability in collective actions

Under the Green Deal Europe is to become the first climate-neutral continent by 2050. To achieve this goal the EU economy needs to become sustainable turning climate and environmental challenges into opportunities across all policy areas. For the food system in particular the Green Deal objectives of designing a fair, healthy and environmentally-friendly value chain are laid down in the Farm to Fork Strategy. The Strategy offers a comprehensive approach on how to reduce the climate and environmental footprint of the EU food system while strengthening the resilience of all economic actors involved in it. It involves actions to be undertaken at all stages of the value chain: ensuring sustainable food production and security, stimulating food processing and retail, promoting sustainable food consumption, reducing food loss and waste, etc.

As part of the action on ensuring sustainable food production, the EU plans to unfold various regulatory measures such as on reduction of the use of chemical pesticides, reduction of nutrient losses, improvement in terms of animal welfare legislation, etc. To achieve the goal of sustainability in food production and to support primary producers in the transition towards the latter the Farm to Fork Strategy will also rely upon voluntary initiatives of actors within the private sector aimed at achieving sustainability. Such initiatives would raise the bar above the minimum requirements prescribed by the law or would set a voluntary standard in the lack of applicable provisions. To encourage collective cooperation and ensure that the threat of non-compliance with competition rules does not stand in the way of any sustainability initiatives, the Commission will issue guidance on the scope of collective action permissible under EU competition rules (DG COMP is the service in charge of this work). It is envisaged that such collective action would be both in the form of horizontal as well as vertical cooperation.

Agriculture

Commission competition investigations concerning the agricultural sector

In early 2015, the Commission initiated an investigation into an agreement between the French retailer, Carrefour, and the main French federation of vegetable growers, Les Producteurs de Légumes de France (Légumes de France). The agreement aimed to restrict most of Carrefour's procurement of certain seasonal vegetables in France to the members of Légumes de France, excluding vegetable producers from other Member States from the French market. The agreement, which was the first of its kind and was only limited to one retailer (Carrefour), was renounced by the retailer after the Commission initiated its investigation. The investigation was therefore closed without a finding of an infringement.

At the end of 2015, the Commission began investigating agreements that national associations of agricultural producers publicly reported that they had reached with national associations of processors and national associations of retailers in France. The agreements aimed at raising prices of some dairy and meat products and excluding supplies of producers from other Member States by committing the retailers to source 100% of the relevant products in France. The Commission intervention ensured that French supermarket shelves were not reserved for French products, thus preventing a damaging cycle of retaliations, blocking imports from outside their own Member States, for all farmers and the cases were closed in 2017.

On 26 October 2018, the Commission published a Report and an accompanying staff working document from the Commission to the European Parliament and the Council on the application of the Union competition rules to the agricultural sector (see also the following webpage). The report and staff working document describe the scope of the Union competition rules in the agricultural sector. It also describes the case investigations, consultations and monitoring activities of the European competition authorities and provides background on the application of the Union competition rules as set out in the CMO Regulation. The period covered by the report is from 1 January 2014 to mid-2017, as far as derogations from the competition rules in the CMO Regulation are concerned, and from 1 January 2012 to mid-2017 for the review of antitrust investigations. See also the press release.

Policy

EU farmers face challenges due to the characteristics of the agricultural sector. Unforeseeable natural elements (such as adverse weather conditions and diseases) can significantly alter production, resulting in volatility of prices and revenues. Farmers also face increased demands in terms of quality, variety and traceability by end consumers. Further, some markets have been liberalised in recent years: EU law removed quotas for raw milk in 2015 and quotas and minimum prices for sugar production in 2017. In addition, agricultural producers form the least concentrated level in the food supply chain. The most common situation across sectors and Member States is that agricultural producers remain atomised or grouped into small cooperatives and other producer organisations. In contrast, their input suppliers and customers (processors, wholesalers and retailers) are often much larger and more concentrated. Agricultural producers therefore typically have very little bargaining power in their negotiations vis-à-vis large suppliers and buyers. These challenges can make it necessary for the less efficient agricultural producers to restructure or convert their businesses to be able to stay viable on the market.

The integration of producers into producer organisations can improve the management of these challenges significantly in various ways. Producer organisations can aggregate supply (both in terms of volumes and variety of products) and serve more customers and additional markets. Producer organisations can offer supporting services that reduce costs (e.g. procurement of inputs, pooling of equipment or services), better manage production (e.g. through advisory services and quality control) and facilitate innovation (e.g. through intelligence gathering and dissemination as well as advisory services). Producer organisations can add value through processing or distribution. In other words, the integration of producers into producer organisations can provide farmers with more stability, resilience, sustainability, flexibility, and more value. Ultimately, the integration of producers into producer organisations of appropriate size and activities can provide farmers with better and more stable revenues, while keeping adequate supply and reasonable food prices for consumers in line with the objectives.

The question of farmers' position in the supply chain, in particular their lack of bargaining power vis-à-vis their buyers, has been at the heart of policy discussions in the last decade. This included the reform of the Common Agricultural Policy (CAP) proposed in 2011 and concluded in 2013, the changes implemented by the Omnibus Regulation and the Commission proposal for a Directive on unfair trading practices (also referred to as UTPs) in business-to-business relationships in the food supply chain made in April 2018.

The 2013 CAP Reform

The 2013 CAP reform, effective as of 1 January 2014, added new competition rules for the agricultural sector.

Articles 169-171 of the CMO Regulation allowed producers of olive oil, beef and veal and arable crops to jointly sell/commercialise their products through Producer Organisations (POs). This was subject to certain conditions. The two main conditions were: (1) these POs should make farmers more efficient by providing farmers with supporting services other than sales, such as storage, distribution or transport services and (2) the volumes marketed by the PO should not exceed certain thresholds. On 27 November 2015 the Commission adopted (see press release and memo) Guidelines concerning the implementation of the rules regarding joint sales by producers of olive oil, beef and veal and arable crops in Article 169, 170 and 171 of the CMO Regulation (see note below). The Guidelines were meant to help producers, authorities and courts implement the rules by addressing practical and technical issues they raise.

Note: To prepare the Guidelines, in 2015 the Commission carried out a public consultation inviting stakeholders' views on a draft text of the Guidelines. The purpose of the consultation was for all stakeholders to comment on the draft text prepared by the Commission services and provide input or raise questions on the implementation of the rules. The consultation aimed to identify issues which might hinder and/or facilitate the implementation, as well as give concrete answers to certain questions set out in the draft text of the Guidelines. In the framework of this public consultation the Commission organised a conference on 4 March 2015 (details concerning the conference are available on the public consultation website).

While Article 169, 170 and 171 of the CMO Regulation have been repealed by the Omnibus Regulation as of 1 January 2018 they continue to be legally relevant for activities that took place while Articles 169, 170 and of 171 of the CMO Regulation where in force.

The 2013 CAP reform also introduced rules in Article 222 of the CMO Regulation that allow a temporary waiver of Article 101 TFEU to measures carried out by producers (essentially short-term quantity management measures) in order to address severe market imbalances. This is subject to a number of conditions and requires a Commission Decision before any of these measures can be implemented.

Omnibus Regulation

The CMO was amended as of 1 January 2018 by the Omnibus Regulation. Article 152 of the Omnibus Regulation introduced a horizontal competition derogation for recognised POs and APOs in all agricultural sectors, as far as certain activities (such as joint sales) of recognised POs and APOs are concerned. The existing sectorial derogations for recognised POs and APOs in the olive oil, beef and veal and arable crops sector (Articles 169-171 CMO) were consequently deleted. The Omnibus Regulation also amended Articles 209 (Recognised POs, APOs, farmers and farmers associations can ask the Commission for an opinion on the application of Article 209 CMO), 222 (extending the possibility of allowing collective agreements to manage supply in times of crisis –so-called "crisis cartels"- to entities that are not formally recognised such as farmers' associations and deletion of the last resort character of the authorisation of such collective agreements) and 232 (removing the sunset clause of the milk package) of the CMO Regulation. Article 172a of the Omnibus Regulation also extended the existing derogation from competition rules for agreements in the sugar sector on value sharing mechanisms - to all agricultural sectors.

On the occasion of the adoption of the Omnibus Regulation, the Commission made the following statement concerning producer co-operation (at the end of the Regulation):

The Commission takes note of the agreement between Parliament and Council on the amendments to Articles 152, 209, 222 and 232. The Commission notes that the amendments agreed by Parliament and Council are substantial in nature and included without an impact assessment as required by point 15 of the Inter-Institutional Agreement on Better Law-Making. This leads to an unwelcome degree of legal and procedural uncertainty of which the impact and implications are not known.

As the changes to the Commission's original proposal taken together result in a significant change to the legal framework, the Commission notes with concern that some of the new provisions in favour of producers' organisations might have the effect of endangering the viability and wellbeing of small farmers and the interest of the consumers. The Commission confirms its commitment to maintain effective competition in the agricultural sector, and give full effect to the objectives of the CAP laid down in Article 39 of the Treaty on the Functioning of the European Union. In this context, the Commission notes that the amendments agreed by the co-legislators foresee only a very limited role for both the Commission and the national competition authorities to act to preserve effective competition.

The Commission's overall agreement on the "Omnibus" proposal, including the amendments agreed by Parliament and Council, is without prejudice to any future proposals the Commission may make in these areas in the context of the reform of the common agricultural policy for the post-2020 period and other initiatives which are specifically meant to address some of the issues touched upon by the text now agreed by the European Parliament and the Council.

The Commission regrets that the issue of the very limited role for both the Commission and the National Competition authorities to act to preserve effective competition has not been addressed in a satisfactory manner by the co-legislators, and expresses concern with the possible implications of this limitation for farmers and consumers. The Commission notes that the legal text must be interpreted in a manner consistent with the Treaty, notably as regards the possibility for the Commission and national competition authorities to intervene if a producer organisation, which covers a large share of the market, seeks to restrict the freedom of action of its members. The Commission regrets that this possibility is not clearly safeguarded in the legal text.

Directive on unfair trading practices (UTPs) in business-to-business relationships in the agricultural and food supply chain

On the 25 April 2019 the Directive on unfair trading practices (UTPs) in business-to-business relationships in the agricultural and food supply chain was formally adopted (see the full text here). Thanks to this act, the European Union improves the protection of farmers - as well as of small and medium and mid-range sized suppliers - and provides mandatory rules that outlaw certain unfair trading practices. These rules will complement existing rules in the majority of Member States as well as voluntary initiatives of the industry. Some Member States will have to adopt such rules and designate an enforcement body for the first time.

The UTP Directive is part of a wider approach of the Commission to countervail occurrences of UTPs and ineffective competition in the food supply chain. This also includes increased possibilities of producer cooperation as part of the Omnibus initiative that entered into force on 1 January 2018 as well as measures by the Commission to enhance market transparency.

The UTP Directive bans a number of clearly inefficient and unfair trading practices in the food supply chain to ensure fairer treatment for small and medium sized food and farming businesses. Smaller operators in the food supply chain, including farmers, often lack bargaining power in their bilateral relations with buyers and alternatives to get their products to consumers.

The directive provides for minimum harmonisation at EU level of certain unfair trading practices which are to be banned by Member States as well as minimum enforcement standards. It also requires setting up or assigning a national enforcement authority. This authority will be vested with the necessary powers to conduct investigations upon its own initiative or following a complaint, terminate and fine infringements. Parties filing a complaint will also be able to request confidentiality and anonymity to protect their position towards their more powerful trading partner. Inspired by the European Competition Network (ECN), the directive foresees a coordination mechanism between enforcement authorities to enable the exchange of best practices.

The unfair trading practices to be banned at all times (so-called "blacklist") includes:

  1. Payments later than 30 days for perishable agricultural and food products
  2. Payments later than 60 days for other agri-food products
  3. Short-notice cancellations of perishable agri-food products
  4. Unilateral contract changes by the buyer
  5. Payments not related to a specific transaction
  6. Risk of loss and deterioration transferred to the supplier
  7. Refusal of a written confirmation of a supply agreement by the buyer, despite request of the supplier
  8. Misuse of trade secrets by the buyer
  9. Commercial retaliation by the buyer
  10. Transferring the costs of examining customer complaints to the supplier

Other practices are permitted if they are subject to a clear and unambiguous upfront agreement between the parties (so-called "greylist"):

  1. The buyer returns unsold products
  2. Payment by the supplier for stocking, display and listing
  3. Payment by the supplier for promotion
  4. Payment by the supplier for marketing
  5. Payment by the supplier for advertising
  6. Payment by the supplier for staff of the buyer, fitting out premises

It is important to emphasise that in line with the Commission Impact Assessment, the directive avoids regulating efficient business arrangements that can be beneficial for both suppliers and buyers. For instance, it is not regulating clear upfront agreements between suppliers and buyers on prices and quantity because they are usually advantageous for both parties. Moreover, it also avoids protecting large processors and (brand) manufacturers through UTP regulations. This would not at all benefit farmers and risk reinforcing their bargaining power and may result in negative effects for consumers (higher prices and a reduction of consumption overall).

Finally, it is important to emphasise that UTP regulation has a scope that is different from competition law. Competition rules prohibit unilateral practices of a dominant operator and anti-competitive agreements between undertakings that affect the market overall. EU competition rules are not concerned with problems faced by small suppliers in the context of their bilateral contractual negotiations with stronger buyers which have no negative effects on the competitive process or on consumer welfare. Such contractual imbalances associated with unequal bargaining power, but which having no effect on the market overall, are addressed by UTP rules.

Studies on Producer Organisations

In June 2018 the Commission published a Study on Producer Organisations and their activities in the olive oil, beef and veal, arable crops sectors .

The study was commissioned by DG Competition to understand the implementation of these rules and how farmers organise themselves in these sectors in order to improve their position in the food supply chain. The report is the result of extensive data collection and analysis by experts from Ecorys and the Wageningen Economic Research.

The report presents unprecedented detailed information on producer organisations and their associations ("POs" and "APOs") in the olive oil, beef and veal, and arable crops sectors. The report provides for the first time an inventory of all organisations in these sectors in all Member States and an in-depth analysis of the activities of these organisations based on a survey conducted for a representative sample of more than 200 POs and APOs, covering approx. 400 000 farmers.

The report provides the following insights:

1) The study finds that POs in these sectors take an efficiency-based approach to integration as was required by Articles 169-171 of the CMO Regulation. POs engaged in commercialisation related activities also carry out other potentially “efficiency enhancing activities” (i.e. organisation of quality control, distribution and transport, input procurement, packaging, waste management etc.). When asked specifically about the reasons for carrying out other activities than selling products, most POs and APOs indicate that these other (non-commercialisation related) activities are meant to establish an improved position of the members in negotiations with buyers. In other words, POs themselves consider that establishing a good negotiating position requires integrating activities going beyond selling activities. About two thirds of the POs and APOs also report that they carry out efficiency-enhancing activities to reduce the costs of their members.

2) POs consider that the main benefits for farmers of integration in POs are market and price stability and reduced costs and economies of scale. To a lesser extent, POs report that their joint-activities ensure higher prices for producers (and as a corollary a fair standard of living for the members) and improved market access.

3) Overall, POs consider that their activities contribute positively to CAP objectives.

4) The study shows that there are many more non-recognised POs than recognised POs: the study finds that there are over five times as many non-recognised POs as there are recognised POs. About half of the non-recognised POs and APOs indicated that they were not aware of the possibility to obtain recognition under the CMO Regulation. Most POs that are aware of the possibility to be formally recognised, but have not applied for recognition, consider that the main reason for not applying is that the benefits of recognition are unclear.

In connection with the work on Guidelines, in June 2014 the Commission published a report on assessing efficiencies generated by producer organisations in the agricultural sectors. The report gives an overview of the existing empirical literature from the European Union and the United States that focus on the role of producer organisations in increasing productivity, increasing farmers' incomes and ensuring reasonable consumer prices. The report also contains case study evidence on producer organisations active in the beef and veal sector in Poland and in the arable crop sector in Romania.

Other work in the agricultural sector

The Commission's competition department works to ensure that all legislative proposals contribute to making agricultural markets more competitive and do not have anti-competitive effects. Together with the national competition authorities, the European Commission's competition department works to ensure that the competition rules are respected in the agricultural sector. The Commission has also adopted a number of decisions relating to mergers in the agricultural sector.

Past advocacy actions in the agriculture sector include a brochure which explains how co-operation between farmers can take place under competition rules.

Manufacturing

Commission fines AB InBev €200 million for restricting cross-border sales of beer

On May 13th 2019, the European Commission imposed a fine of €200 409 000 on AB InBev, the world’s biggest beer company, for having violated Article 102 TFEU.

Through market monitoring the Commission identified ex-officio that AB InBev abused its dominant position on the Belgian off-trade beer market. For a period of almost eight years it restricted supermarkets and wholesalers in Belgium from buying Jupiler beer products at lower prices in the Netherlands and importing them into Belgium. Jupiler is AB InBev’s most popular beer brand in Belgium, representing approximately 40% of the total Belgian beer market in terms of sales volume. AB InBev implemented four infringements with the overall aim to maintain higher prices and profits in Belgium. These practices included (i) packaging changes (removal of mandatory information in French from the product label and changing the design and size of its Jupiler beer cans), (ii) volume restrictions, (iii) making supplies conditional on limiting imports, and (iv) making customer promotions conditional upon not offering them to customers in Belgium (see the press release for more detailed information). Such practices restricting imports within the Single Market may also constitute an infringement of Article 101 of the Treaty if they are the result of an agreement or concerted practice between independent companies, whether a supplier is dominant or not.

See the register for more information about the case.

Retail

The Commission is also looking into an alleged infringement of EU antitrust rules that prohibit agreements between undertakings (Article 101 of the Treaty on the Functioning of the European Union) by some supermarket chains and some alliances of supermarket chains. The Commission, accompanied by national competition authorities, carried out several inspections at the premises of certain supermarket chains and alliances of supermarket chains, in France and Belgium. Inspections have been recently carried out at the premises of two major food retailers in France (see press release for more). The investigation concerns possible competition infringements linked to the commercial strategies of some supermarket chains and to the procurement by some supermarket chains and alliances of supermarket chains of a large range of everyday consumer goods.

Trends in retail

Since 2000 the retail landscape has evolved due to a combination of different factors on both the demand and supply side.

First, consumers have become more demanding in terms of food, both in terms of product variety and price. The economic and financial crisis of 2008 had a significant impact on EU consumers' purchasing power. Therefore, seeking lower prices has become a priority for many EU consumers. In addition, changes in household composition, an ageing population, increased interest in healthy food and increased environmental awareness have all had an impact on the food retail market in Europe.

Second, apart from the demand-side factors, the supply side also experienced significant changes. Modern retail developed strongly across the EU over the last decade, although big differences in the share of modern retail in total edible grocery still exist across Member States. Large modern retail chains (especially discounters) have been opening stores in their domestic markets and in other Member States, where they increased their market share. The top 10 European food retailers accounted for 26% of edible grocery sales in the EU in 2000, compared to 31% in 2011.

Finally, retailers' own brands or private label products have become more and more successful in Europe over the last decade. Private label market share increased across most product categories in most Member States.

Modern retail study

The Commission received complaints from operators in the food supply chain, as well as requests from the Parliament to investigate the impact of concentration in the chain. The complainants alleged that large operators, in particular large modern retailers, often impose detrimental conditions on their suppliers and as a result these suppliers are not able to invest in new products. They alleged that this had reduced choice and innovation in food products for European consumers.

In 2014, the Commission published a comprehensive study on the modern retail sector, (the "modern retail study") to measure how choice and innovation have evolved for consumers on the shop shelves over the decade before the launch of the study. The study also measured the evolution of a number of factors affecting the market and identifies which of these has driven choice and innovation in the EU food supply chain over the past 10 years.

Please note that the DG Competition's modern retail study has been revised since the conference on 2 October 2014 and that a new version was published on the website on 5 December 2014.  The new version of the report updates the results on the relationship between private label penetration and choice/innovation following refinements made to the econometric analysis."

The study was carried out by a consortium of Ernst & Young France, Cambridge Econometrics and Arcadia International between June 2013 and October 2014.

The results of the study were presented at a conference held in Brussels on 2 October 2014 and are available in the report "The economic impact of modern retail on choice and innovation in the EU food sector".

Press release - Speech by Director-General Alexander Italianer - Presentation

Executive summary of the retail study (FR version , the EN version is included in the study)

The study also includes six additional case studies which analyse the supply chain and the evolution of choice and innovation for certain agricultural products in several EU countries: tomatoes, apples, olive oil, milk, cheese and pork meat.

Follow-up on retail issues

Following the publication of the modern retail study in October 2014, the Commission ran a public consultation inviting stakeholders in the food industry to give their views and comments. Download all responses received (zip file).

One important part of the follow-up to the Modern Retail Study has been an investigation into the role of private labels, given that the Modern Retail Study suggested that private labels may have a strong negative relationship with innovation in a given category at the shop level. On numerous occasions throughout 2015 the Commission met on numerous occasions with representatives of retail and brand associations to seek their input and possible explanations for the relationship, and invited stakeholders to come forward with evidence on this subject. Various stakeholders submitted studies or anecdotal evidence. In addition, during the first part of 2016, the Commission worked with the Consortium who produced the Modern Retail Study to extract some further data on private labels and innovation. The Commission used this data to conduct some additional analysis into the nature of private labels. For a summary of the results of these investigatory steps, please see this presentation.