Temporary derogation from the rules of art. 101 TFEU for the milk, live pants and flowers and potatoes sectors

On 4.05.2020 three implementing regulations (IRs) were published in the Official Journal of the EU, forming part of the European Commission’s package of measures for overcoming the Covid-19 crisis in the agricultural sector. The three regulations cover the milk and milk product sector (Commission Implementing Regulation (EU) 2020/599), potatoes sector (Commission Implementing Regulation (EU) 2020/593) and live plants sector (Commission Implementing Regulation (EU) 2020/594).

The exceptional measures of the European Commission are based on Article 222 of the Common Markets Organisation Regulation (CMO), which empowers the Commission to adopt temporary derogations from art. 101 TFEU in situations of severe market imbalances.

The adopted derogations allow farmers, farmers' associations, associations of such associations, recognised producer organisations, associations of recognised producer organisations and recognised interbranch organisations in the respective sector to self-organise and implement market measures at their level to stabilise their sector and in the respect of the functioning of the internal market for a maximum period of 6 months.

By means of the three IRs the Commission declares Article 101 TFEU temporarily non applicable to agreements and decisions concerning market withdrawals and free distribution, transformation and processing, storage, joint promotion and temporary planning of production in the potatoes and live trees and other plants, bulbs, roots and the like, cut flowers and ornamental foliage sectors and agreements and common decisions on planning the volume of raw milk to be produced, during a period of six months starting from the date of entry into force of the regulations.

Member States, including National Competition Authorities (NCAs), are entrusted to ensure that the agreements or decisions concerned by any of these IRs do not undermine the proper functioning of the internal market and strictly aim to stabilise the relevant sectors.

To this end, the IRs require that market operators notify NCAs and the competent authorities of the Member State having the highest share of estimated volume of production contemplated by the respective agreement or decision. The notification should be made as soon as the agreement or decision in question is concluded or taken. The notification should set the estimated volume of production covered by them. No later than 25 days after the end of the 6-month period an additional notification is to be filed with the production data actually covered by the agreement or the decision.

The competent national authorities on their part are to communicate to the European Commission the relevant information periodically. 

The Ministry of Agriculture, Food and Forestry (MAFF) is the enforcement body entrusted by virtue of art. 3 of the Law on the implementation of the common organization of the markets in agricultural products of the European Union, with the management and control of the collection and processing of market data to be sent to the European Commission. The MAFF is also the specialized body in the agricultural and food sector. The Commission for Protection of Competition (the CPC) is the national body entrusted with the enforcement of the European competition rules.

By virtue of the IRs the two bodies should be notified by the market players for their planned collective actions falling within the scope of the derogations. On their part, the MAFF and the CPC shall exchange information concerning the filed notifications within the 6-month period.

The CPC reiterates that all agreements and decisions that directly or indirectly lead to partitioning markets, to discrimination based on nationality or to fixing prices are excluded from the derogations.

If the notified agreements and decisions do not fulfil the conditions set by the three regulations, or no longer fulfil these conditions, Article 101(1) of the Treaty applies to these agreements and decisions.

The notification of an agreement or decision falling within the scope of any of the IRs may be made to the Ministry of Agriculture, Food and Forestry and to the Commission for Protection of Competition.