Ingen diastitel

1
1. Competition law applicable to
Agricultural Co-operatives in the EU 2. Merger
within Danish Co-operative Slaughterhouse
Industry
2

• Co-operatives are associations and not
  enterprises
• They own and run enterprises
• Competition laws and regulations only deal with
  enterprises
• The single farmer - standing alone - will always
  be in a week position on the market - this is the
  reason for the agricultural policy
• Co-operatives often have restrictions for the
  members obligation to deliver, notice for
  leaving the co-operative, etc.

3
(No Transcript)
4
(No Transcript)
5
Article 81(1) prohibits agreements, decisions or
practices which may affect trade between Member
States and which have as object or effect the
prevention, restriction or distortion of
competition within the common market. Article
82 contains a ban against improper advantage of
a dominant position.
6

• The derogation in regulation 26
• Article 81(1) shall not apply to agreements,
  decisions and practices of farmers, farmers'
  associations, or associations of such
  associations
• belonging to a single Member State
• which concern the production or sale of
  agricultural products or the use
  of joint facilities for the storage, treatment or
  processing of agricultural products,
• and under which there is no obligation to charge
  identical prices,
• unless the Commission finds that competition is
  thereby excluded or that the objectives of
  Article 39 of the Treaty are jeopardised.

7

• EU-cases
• 1975 Sugar, Frubo
• 1979 Dutch rennet
• 1986 Meldoc
• 1991 Campina
• 1992 Danish fur
• 1994 DLG
• 1995 Coberco
• 2003 Milk Marque

8
DLG-case 1994 Provisions in the statutes of a
cooperative (even if the cooperative has a
dominant position on the market) are not caught
by the prohibitions in Article 81(1) and 82, so
long as the provisions are restricticted to what
is necessary to ensure that the cooperative
functions properly and maintain its contractual
power in relation to producers.
9

• Coberco-case 1995
• The actual agreement may fall within the
  derogation
• provided for in Regulation No 26 only if the
  agreement
• providing for them concerns a co-operative
  association
• belonging to a single Member State, does not
  cover prices
• but concerns rather the production or sale of
  agricultural
• products or the use of joint facilities for the
  storage,
• treatment or processing of such products, and
  finally does
• not exclude competition or jeopardise the
  objectives of
• the common agricultural policy.

10

• Conclusions in the Milk Marque - case
• Member States can apply national competition law
  to
• a cooperative in a powerful position on the
  national market
• -It is not allowed to undermine or create
  exceptions or to
• impede the working of the machinery in a common
• organisation of the market
• -Such measures may not compromise the objectives
• of the common agricultural policy as set out in
  Article 33(1)
• -Contradictions between the various objectives
  laid down
• in Article 33 EC must be reconciled where
  necessary,
• without giving any one of them so much weight as
  to render
• the achievement of the others impossible

11

• US Capper Volstead discussion
• foreign producers as members?
• foreign cooperative owners?
• non producer ownership?
• board position or other voting rights?

12
Co-operatives can not be regarded in the same
way as private undertakings in national and
EU-competition regulations. Provisions in the
statutes of a cooperative are not caught by the
prohibitions in Article 81(1) and 82, if they
are restricticted to what is necessary to ensure
that the cooperative functions properly and
maintain its contractual power in relation to
producers. There are good reasons for
obligations between the members and the
association (the co-operative) or between
co-operatives.These obligations are protected by
the derogation in regulation 26
13
Danish Co-operative Slaughterhouse Industry

• Danish Crown is created by two mergers in five
  years and is today
• the largest slaughterhouse in EU and the second
  largest in the world
• the largest meat processing enterprise in Europe
• largest eksporter of meat in the world

G9 dec. 2002
14
(No Transcript)
15

• The merger Danish Crown/Vestjyske Slagterier 1998
• Commitments to the Merger Task Force
  (EU-Commission)
• obligations for members
• permission to sell 15 of the pigs to
  competitors
• resignation of membership with 12 months notice
• slaughter capacity
• slaughtering for competitors (1000 pigs/week)
• selling of a pig slaughterhouse (10.000
  pigs/week)
• collaboration in Danske Slagterier etc.
• no coordination of prices
• protection of minorities
• changes of ownership in common daughter
  companies

16

• Merger Danish Crown/Steff Houlberg 2002
• Commitments to the Danish Competition Council
• obligations for members
• permission to sell 20 to competitors
• open membership
• slaughter capacity
• slaughtering for competitors
• selling of a pig slaughterhouse (10.000
  pigs/week) with a subvention of 3.2 Mio Euro to
  the buyer
• processing industry
• selling of a processing capacity of 12.000 tonnes
• obligation to supply competing processing
  industry (10 years)
• distribution
• obligation to distribution to the Danish
  retailers
• no restrictions on sold facilities

17
The co-operatives in a merger are left to the
tender mercies of the Merger Task Force, which
can make arbitrary conditions for accepting the
merger. Appeal to the Court of Justice is
time-consuming. Are commitments - offered by
the parties - adequate in the specific
situation? If the Commission considers that the
derogation in regulation 26 does not apply, then
the procedure in regulation 26 should be used.
This procedure is not relevant if the parties
offer themselves commitments to eliminate
consequences of the merger.
18
Experience from the Commissions handling of
mergers Knowledge of co-operatives could be
better Mergers between co-operatives are dealt
with on easier terms than mergers between
private undertakings Necessary commitments
offered by the parties might in some cases
seem unnecessary or very little relevant
Definition of the relevant market
19
Conclusions There is a need for the
co-operative derogation and it has an important
political influence in the competition
policy Cooperatives are not enterprises but
associations between farmers Structures of
agricultural co-operatives must be adapted
according to the development of the market and
the competition situation Competition
provisions and their administration should not
hinder a sound development of agricultural
co-operatives in the future.
20

• Competition authorities should also realise that
  co-operatives
• are important for the competition situation.
• Co-operatives are an important element in the
  competition on
• the European market
• It gives market players with another background
  and a
• better connection in the whole chain form table
  to stable
• with better possibilities for the farmers to
  adapt to the
• fluctuations of prices and other changes in the
  market.

21
Will competition authorities and legislation have
a good understanding of these needs in the
future? How can the cooperatives themselves draw
attention to their special characteristics and
special demands to the legislation and
administrative practice on competition? What can
we do ourselves and what can COGECA do to give a
better understanding for this?