The decision that gave rise to the Belgian Endives judgment was the French Competition Authority’s decision of March 6, 2012 fining a large number of organizations involved in the cultivation and sale of Belgian endives for participation in a complex and continuous cartel consisting of (i) an agreement on the price of endives through different mechanisms — such as disseminating a minimum price on a weekly basis, setting a “cours pivot” (central rate), establishing a trading exchange, setting a “prix cliquet” (reserve price) and misusing the withdrawal price mechanism; (ii) collusion on the quantities of endives placed on the market; and (iii) a system for the exchange of strategic information used for the purpose of price maintenance, with the aim of collectively fixing a minimum producer price for endives. According to the decision, this conduct allowed producers and several professional POs to maintain minimum sale prices between 1998 and 2012.
The producers argued that their conduct should be regarded as necessary for the attainment of the objectives of the CAP, but the French Competition Authority found that the specific derogations in Regulation 1234/2007 did not apply. The producers appealed to the Cour d’appel de Paris, which found for the producers, holding that the French Competition Authority had not established that the dissemination of minimum price instructions was necessarily and definitively prohibited, so that it had not been indisputably established that the producers had exceeded their authority as regards price stabilisation.
The French Competition Authority, supported by the EU Commission, appealed to the Cour de Cassation, which requested an ECJ ruling on whether conduct otherwise caught by Article 101 TFEU can be exempted if it is linked to responsibilities assigned to national agricultural organisations, even if the conduct was not specifically covered by an antitrust exemption; and if so, whether collectively fixing minimum prices, concerting on quantities placed on the market or exchanging strategic information could be exempted if they aim at achieving the EU policy objectives of stabilising producer prices and adjusting production to demand.
The ECJ interpreted the CAP exemptions from EU antitrust rules more broadly than in past judgments, The ECJ noted that a PO or APO may have recourse to certain forms of coordination and concertation to achieve the objectives of ensuring that production is planned and adjusted to demand, particularly in terms of quality and quantity; concentrating supply and placing on the market the products produced by its members; and optimising production costs and stabilising producer prices. According to the ECJ, practices necessary to achieve one or more of those objectives must also be exempt from Article 101(1) TFEU. In other words, the phrase “save as otherwise provided” in the article extending EU competition rules to the agricultural sector is not limited to the express derogations in Articles 176 and 176a of Regulation No 1234/2007 (now Articles 209 and 210 CMO Regulation).
On the other hand, the ECJ noted that the scope of the regulation’s antitrust exemptions is to be construed strictly, citing Milk Marque for the proposition that “the common organisations of the markets in agricultural products are not a competition-free zone. On the contrary, the maintenance of effective competition on the markets for agricultural products is one of the objectives of the common agricultural policy and of the common organisation of the markets”. In accordance with the principle of proportionality, moreover, the practices in question may not go beyond what is strictly necessary to achieve objectives assigned to the PO or APO at issue under the rules governing the common organisation of the market concerned.
The ECJ proceeded to discuss whether POs, APOs and professional organisations’ practices of intervening in the endive sector to collectively fix minimum sale prices, concert on the quantities placed on the market and exchange strategic information are exempt from Article 101(1) TFEU. The ECJ noted that Member States are required to recognise POs and APOs that specifically take responsibility for one of the objectives defined by CAP regulations. To be considered exempt from EU competition rules on the basis that it is necessary to achieve one or more CAP objectives, the ECJ said, a practice must have been implemented by an entity that is actually entitled to do so under the applicable CAP rules. An entity not recognised by a Member State as responsible for these objectives cannot benefit from exemption from Article 101(1) TFEU. That was likely to be the case for a number of professional organisations covered by the French Competition Authority’s decision, which did not appear to be recognised POs or APOs.
To be exempted, moreover, any such practices must remain within a single PO or APO. Indeed, the responsibilities for production planning, concentrating supply and placing on the market, optimising production costs and stabilising producer prices, which may be assigned to a PO or an APO, may relate solely to the production and marketing of that PO’s or APO’s members. Accordingly, agreements or concerted practices between POs or APOs go beyond what is necessary in order to fulfil those responsibilities and could not be exempt from Article 101(1) TFEU.
Concerning practices between their members, recognised POs and APOs must be responsible specifically for at least one of the recognised objectives. The ECJ noted that the objectives of ensuring that production is planned and adjusted to demand, concentrating supply and placing on the market the products produced by members, and stabilising producer prices necessarily entail the exchange of strategic information between individual members of the PO or APO concerned. Therefore, exchanges of strategic information between producers within the same PO or APO are liable to be proportionate if they are made for purposes of an objective assigned to that PO or APO and limited to information that is strictly necessary.
The objective of stabilising producer prices to ensure a fair standard of living may also justify coordination between producers in the same PO or APO with regard to the quantities of products put on the market. The objective of concentrating supply to strengthen the position of producers may also justify coordination of pricing policies, particularly where the PO or APO concerned has been assigned the responsibility for marketing all its members’ products.
By contrast, the collective fixing of minimum sale prices within a PO or an APO may not be considered necessary to fulfil the responsibilities assigned to them. Where it does not allow producers selling their own products themselves to sell at a price below those minimum prices, the ECJ said, this practice is not proportionate to the objectives of stabilising prices and concentrating supply, since it has the effect of further reducing the already low level of competition in the markets for agricultural products resulting from the formation of POs and APOs to concentrate supply.