Last week in an informal opinion the NMa (Netherlands Competition Authority) gave its view on the proposed agreements between Dutch producer organisations of shrimp fishers for achieving the MSC (Marine Stewardship Counsel) Label. The certification programme and label from the MSC is recognition of and a reward for sustainable fishery. In its opinion the NMa said that only one of the proposed agreements for making shrimping sustainable came up against competition-law objections. While nearly all of the proposed agreements posed no problems, shrimpers may not make any agreements on catch limits, the NMa said.
André Andeweg, the NMa’s manager for competition in the agriculture sector and author of the informal opinion referred to above, was interviewed in the Volkskrant of 19 April 2011. He was asked whether fishers were prohibited from doing anything to strengthen their position on the market. André Andeweg said that shrimpers could indeed work together; they could ‘set up producer organisations that could each control at most 40% of a market’. André Andeweg said that such organisations could tell their own members ‘that production must be limited. But they may not make agreements with other producer organisations. Otherwise there will be no competition.’
In 1970 the European Union started regulating the market for fishery products via a so-called Common Market Organisation (CMO). This was originally part of the EU agriculture policy. The idea was to guarantee fishers stable prices and secure the supply for processing businesses and consumers.
The current CMO in the fishery and aquaculture sector is provided for in Regulation 104/2000 and Regulation 2318/2001. These regulations indeed enable shrimpers to set up producer organisations that have in particular the goal of achieving rational fishery practice and better marketing conditions for their members’ production. In this context, producer organisations may adjust production to demand, in particular by implementing fishery plans.
It is noteworthy however that Andeweg stated in the Volkskrant that a producer organisation may not control more than 40% of the market. This is not contained in the regulations cited above. Member states may only refuse to approve a producer organisation if this organisation occupies a dominant position on a certain market, unless this dominant position is necessary in order to achieve the objectives of the European agriculture and fishery policy. The question is whether a market share of 40% on a particular market results in the conclusion that the producer organisation has a dominant position. It is also relevant that it is not the NMa, but the Dutch Fish Product Board that assesses whether a Dutch producer organisation has a dominant position on a particular market. It is not inconceivable that the Fish Product Board may delineate the ‘particular market’ differently from the NMa.
According to the Volkskrant, André Andeweg is of the opinion that producer organisations may not make agreements with each other on production. That is not entirely correct. After all, the regulations mentioned above make it possible for producer organisations to set up an association. These do not necessarily have to be producer organisations from the same member state. Producer organisations from different member states may also set up an association.
In an earlier informal opinion from 2005 the NMa acknowledged that an association of producer organisations in the fishery sector can be assigned the same powers and duties as producer organisations. For instance, the NMa said, an association of producer organisations can ‘independently plan production and attune it to demand by implementing operational programmes that are prepared annually’. For the rest, the fact that an association of producer organisations must also be approved by a member state must not be lost sight of. Just as in the case of producer organisations, the association will not be approved if it has a dominant position, unless this dominant position is necessary in order to achieve the objectives of the European agriculture and fishery policy.
Since it must be assumed that the same powers and duties can be assigned to an association of producer organisations as to a producer organisation, the judgement of the Court of the European Union of 30 September 2009 in the case of France versus the Commission is relevant. It follows from this judgement that a producer organisation in the fruit and vegetable sector must be in charge of marketing. This means that a producer organisation must plan the marketing and also determine the marketing price. The president of the Trade and Industry Appeals Tribunal followed the Court’s approach in a decision of 22 June 2010. A producer organisation may not leave the marketing of the products to the members. Although both decisions relate to the fruit and vegetable sector, it must be assumed that the same applies for the fishery sector. Approved associations of producer organisations in the fishery sector must therefore be in charge of marketing. Catch quotas may also be imposed in this context. The competition rules do not stand in the way of this.
In the article in the Volkskrant, André Andeweg also mentions the NMa’s investigation into agreements among capsicum growers that may restrict competition. Capsicums belong to the fruit and vegetable sector. There is a common market organisation for fruit and vegetables as well. Like the common market organisation for fishery products, the common market organisation for fruit and vegetables enables the establishment of an association of producer organisations. An association of producer organisations, abbreviated as APO, has already been established in the fruit and vegetable sector: Kompany. Kompany is a cooperative association which has three agricultural cooperatives as members and which focuses on the sale of (exclusively) cucumbers. Although the NMa was asked for an informal opinion, the NMa has not given any substantive informal opinion on Kompany with respect to the question of whether the joint sale of cucumbers is at odds with competition law. The Product Board for Horticulture has nonetheless approved Kompany as an association of producer organisations. Since then Kompany has sold the cucumbers from the members of the affiliated agricultural cooperatives. Kompany plans production and is in charge of marketing.
In conclusion: competition law does not always restrict cooperation between producers. It is certainly important to take a close look at the rules, however. Producer organisations in agriculture and fishery may work together in an association, provided this association is approved by one of the member states and the rules are followed in the cooperation.
The fact that producers of agricultural and fishery products must actually work together more in the interest of Europe has, incidentally, been perfectly expressed by Mariann Fischer Boel, former European Commissioner for Agriculture and Rural Development in the ‘Reform of the fruit and vegetable sector’ brochure:
‘Our fruit and vegetable sector is under pressure. High levels of concentration among retailers and discount chains have enabled them to assume a strong role in the determination of market prices. Increasing competitive pressure from third country imports is only making matters worse. The high degree of fragmentation among producers that continues to characterise the fruit and vegetable sector prevents an effective approach to these problems. […] What should we do to tackle these problems? In the first place we must tackle the structural problems facing our sector and step up our efforts to counter fragmentation. Membership in the growers’ associations, which are the backbone of the fruit and vegetable sector, must be made more appealing.’