The CMO Regulation is long – 232 articles – and complex, covering all agricultural products listed in Annex I to the TFEU except fishery and aquaculture products. The CMO Regulation contains detailed provisions on market interventions, aid schemes for various sectors, associations of producer organizations (POs), associations of POs and so-called inter-branch organisations, which may among other things collect and publish market data, forecast production and prices, coordinate how products are placed on the market, explore potential export markets, and seek ways to restrict the use of animal health or plant protection products. The CMO Regulation also addresses competition rules and exceptional measures for market disturbances, animal diseases and health risks, specific problems and severe market imbalances and crisis reserves.
The CMO Regulation contains both general and sector-specific derogations from the competition rules.
The general derogation covers all agricultural products within the scope of the CMO Regulation and exempt from the EU competition rules agreements, decisions and practices (i) that relate to the production of or trade in agricultural products if they are necessary for the attainment of each of the CAP objectives (not only one or more of them) and (ii) of farmers, famers’ associations, associations of such associations, or recognised POs concerning the production or sale of agricultural products or the use of joint facilities for the storage, treatment or processing of agricultural products unless the CAP objectives are jeopardised.
The first limb of the general derogation thus applies to a wider range of undertakings, but the conditions for its application are stricter than for the second limb of the General Derogation. Neither limb of the general derogation applies to agreements, decisions and concerted practices that entail an obligation to charge an identical price or by which competition is excluded. Article 209(2) of the CMO Regulation states that no prior decision of the Commission or a national authority is required for the general derogation to apply; application is based on self-assessment by the producers. However, a producer claiming the benefit of the general derogation bears the burden of proving that the conditions for application of the general derogation are satisfied.
The specific derogations relate to three sectors: olive oil, beef and veal and certain arable crops. These derogations permit POs to negotiate contracts for the supply of relevant products and to engage in related activities without being caught by the EU’s generally applicable competition rules, subject to complex conditions. The Guidelines explain that these objectives must be achieved by generating significant efficiencies through the integration of activities in POs so that the POs’ activities will contribute to the fulfillment of the CAP objectives, including by pursuing an effective commercialisation strategy. The Guidelines discuss the type of activities that can create the significant efficiencies required to benefit from the derogation and give specific examples of situations in which such activities can create significant efficiencies.
A number of conditions must be satisfied for the specific derogations to apply while POs are negotiating supply contracts on members’ behalf:
- The PO must be formally recognised by national authorities.
- The PO must pursue one or more of the objectives of concentrating supply, placing members’ products on the market or optimising production costs.
- The integration of activities must generate significant efficiencies so that the PO’s activities overall contribute to the CAP objectives, as determined using one of two methods, a simplified method provided by the legislator or an alternative case-by-case assessment.
- The volume of a given product subject to negotiations by a particular PO must not exceed 15% of the total national production, in the case of arable crops and beef and veal, or 20% in the case of olive oil. The Guidelines give guidance on how to calculate the volumes marketed by farmers' organisations and how to check that they do not exceed the thresholds, taking into account notably natural variations over time. The Guidelines also explain how exceptional circumstances, e.g. a natural disaster, can be taken into account when calculating these volumes.
- Producers cannot be members of more than one PO negotiating supply contracts on their behalf, although producers can sell their products both through a PO and directly to the market.
- The PO must notify the volume of products covered by the negotiations to the competent national authorities.
In addition, the CMO Regulation includes a safeguard clause authorizing competition authorities to decide that an individual negotiation should be reopened or should not take place. The Guidelines clarify the situations in which the authorities may apply the safeguard clause.
Compared to the general derogation, therefore, the specific derogations have a narrower scope, in that they apply only to contract systems and related activities for olive oil, beef and veal and certain arable crops. They also apply only to activities of POs; not inter-branch organisations or other undertakings who may benefit from the general derogation. On the other hand, the conditions to apply the specific derogations may be easier to meet, and the assessment methods and notifications provided for give POs greater certainty.