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    30.01.2023

    European Commission launches public consultation on draft guidelines on application of exclusion from Article 101 TFEU for sustainability agreements in agriculture


    On 10 January 2023, the European Commission launched a new public consultation on the draft guidelines on sustainability agreements in agriculture (available at the following link) that are to be adopted by 8 December 2023.

     

    The initiative is part of the recent reform of the Common Agricultural Policy (so-called CAP Reform 2023-2027), which introduced - in certain cases - the possibility to exclude agreements that generally restrict competition from the application of Article 101 TFEU.

     

    Specifically, the Commission’s guidelines concern Article 210a of Regulation 1308/2013 or “CMO Regulation” (available at the following link), introduced by Regulation (EU) 2021/2117 of the European Parliament and of the Council of 2 December 2021.

     

    Article 210a excludes from the application of Article 101 TFEU (prohibition of restrictive agreements) those agreements, decisions and concerted practices that aim to apply a sustainability standard higher than mandated by Union or national law, provided that such agreements, decisions and concerted practices only impose restrictions of competition that are indispensable to achieve the following sustainability objectives:

    a) environmental protection, including climate change mitigation and adaptation, the sustainable use and protection of landscapes, water and soil; the transition to a circular economy, including the reduction of food waste; pollution prevention and control; and the protection and restoration of biodiversity and ecosystems;

    b) reducing the use of pesticides and antimicrobial resistance, by favouring the production of agricultural products in ways that reduce the use of pesticides and manage risks resulting from such use, even if limited, or that reduce the danger of antimicrobial resistance in agricultural production;

    c) animal health and animal welfare.

    The guidelines, on which undertakings are asked to comment, are intended to provide more certainty on such exclusion. In particular, among other things, they outline (i) the scope of the exclusion, (ii) the content of the assessment, to be carried out on a case-by-case basis, to identify any so-called indispensable restrictions, and (iii) the procedure for requesting an opinion from the Commission.

    • The scope of the exclusion is only limited to the agreements concluded by producers of agricultural products, either between themselves or with other operators involved in the agri-food supply chain;
    • Assessment is carried out through a four-stage test. The parties shall: (i) identify the obstacles that would prevent the parties from attaining the sustainability standard on their own and explaining why collaboration is necessary; (ii) determine the appropriate type of agreement (e.g. an agreement on price or quantity); (iii) identify indispensable restriction(s) to competition (e.g. an agreement on price can either fix the whole price, establish a minimum price or establish a price premium); and (iv) determine the appropriate level (e.g. the amount of the price) and duration of the restriction(s) in order to ensure that the option that is least restrictive to competition is adopted.

    In support of the undertakings concerned, the Regulation also provides for the right to request an opinion from the Commission concerning the compatibility of such agreements with Article 210a, from 8 December 2023.

     

    Said right is granted to  producers, associations of producers, non-producer organisations and interbranch organisations (if at least one of the members is a party to the agreement). In particular, producers and producer groups may request an opinion at any time, even before the implementation of the agreement.

     

    Upon receipt of the request (complete with all information, even if supplemented at a later stage), the Commission will have four months to assess the agreement.

     

    In any event, the Commission underlines that opinions will not be binding on the companies requesting them. However, the AGCM (and other national authorities), as well as national courts, will certainly be able to make use of them.

     

    Finally, the guidelines clarify that the Commission and national authorities have the right to stop or require amendments of the sustainability agreements if this is necessary in order to prevent competition from being excluded or where it is considered that the Common Agricultural Policy objectives are jeopardised.

     

    The public consultation is open to:

    • stakeholders from the agri-food supply chain, in particular primary producers, including producer organisations, processors, distributors, wholesalers, retailers, input providers, as well as inter-branch organisations gathering actors players from several stages in the supply chain, etc;
    • public authorities, in particular national competition authorities, ministries of agriculture and regional authorities;
    • consumer organisations;
    • organisations dealing with sustainability (offering/developing knowledge sharing, standards, certification, etc.).

    More specifically, the parties concerned are invited to provide their opinion on:

    a) whether the draft text exhaustively addresses the methods for applying Article 210a of the CMO Regulation to benefit from the exclusion. In particular, the European Commission is interested to know whether the draft guidelines address those points in a manner that is sufficiently clear and intelligible;

    b) the content of the text. In particular, the European Commission expects to obtain the stakeholder’s views and comments on how the draft guidelines detail the scope of the exclusion, the conditions for application of the exclusion, and the possibility for Commission’s intervention. The stakeholders are invited to provide their suggestions on how the text could be enhanced;

    c) the accuracy of the examples. The stakeholders are invited to provide their opinion on whether the examples are clear and realistic enough, and to propose ways to update the examples based, for instance, on their own experience.

    It is possible to participate in the public consultation by accessing the following link by the deadline set at Monday 24 April 2023. The consultation is currently available in English only; from early February 2023 a consultation in all official languages will be launched.

     

    This note is for information purposes only and is not, and cannot be intended as, a professional opinion. For further information please email Luca Toffoletti and Francesco Mazzocchi.

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