What do French endive producers have to do with Brexit?

An antitrust conversation with… Richard Whish QC

Video | May 2017 | 00:07:23

Video Details

What do French endive producers have to do with Brexit?

Mark Simpson: Richard, I want to discuss with you the French endive case. This is a decision of the French competition authority that was referred to the EU Court of Justice and, very recently, Advocate General Wahl handed down his opinion in the case to guide the Court in its consideration and judgment. The endive is, of course, sometimes referred to as an endive, incorrectly I am told, it’s a Belgium whitloof which is quite popular in salads, and also as I understand it, a winter side-dish in many European countries. It does seem that French producers of endive and associations of producers had in place a series of arrangements which allowed for the setting of minimum prices, the sharing of information concerning prices actually negotiated with retailers and other buyers and such things as provisions for the destruction of crops in years of overproduction. And one of the key purposes of this arrangement seems to be to increase the buying power of producers and to stabilise the market. I think this case aside from the very interesting vegetable was quite interesting because it raises a number of issues. Firstly, what some people sometime see as a tension between agricultural policy in Europe and competition law. Secondly, I wonder if there are any interesting observations in there in terms of information exchange because the arrangements provided for a very developed series of information exchange and many of our clients are always saying that they need to be, and we advise them that they need to be, very careful with information exchange. And, thirdly, whether any points in here that might be of interest in the context of Brexit. Richard, do you want to start with giving us a little bit of context here?

Richard Whish: Well yes, I mean I would suggest that we should keep very calm in relation to this opinion. Let’s not forget it is simply an opinion of the Advocate General and we’ve got to wait to see what the Court of Justice will say in due course, but this is specifically about the Common Agricultural Policy (CAP) and the extent to which competition principles apply within the CAP and Advocate General Wahl begins his opinion in paragraph 1: “the common agricultural policy in European competition policy both pillars in the construction of Europe may appear at first sight to be difficult to reconcile” and in paragraph 5 he says that basically the CAP has precedence over competition policy - that’s simple and straightforward and this case is examining the consequence of that precedence of the CAP over competition policy. So, we really need to read everything in that context.

Mark Simpson: Turning to the question of information exchange. Some people have cottoned onto this opinion as suggesting that there may be a change of approach and that it may be permissible to exchange information on pricing, real pricing, pricing achieved by individual producers and individual farmers. Is there anything in that?

Richard Whish: Well, no I don’t think there is except in so far as a purchasing organisation within the agricultural sector is trying to achieve its objectives of promoting stability in the sector, stability in terms of price and production, but other than that, I don’t think there’s any variance in existing principles whatsoever.

Mark Simpson: I want to take a slight change of tact now. You might recall last time we spoke, we spoke about Brexit and the likely effects on competition law and competition policy in the UK from Brexit. I just wondered whether there might be anything in the context of this endive case of relevance to Brexit. Obviously post-Brexit the common agricultural policy is unlikely to apply in the UK, but do you think there is anything relevant here that comes out of this case?

Richard Whish: Well I think it is very relevant, yes, because at the moment, in this case, there are certain practices which would be out of the scope of Article 101 in so far as they are there to pursue the objectives of the common agricultural policy. Schedule 3 of our legislation - the Competition Act has an exclusion for CAP matters in order to maintain consistency with the law of the EU. On Brexit day plus one the CAP ceases to apply, I assume, therefore, that the exemption that we have in the Competition Act also will cease to apply and this becomes totally new territory, where at the moment there is no experience in current UK competition law and policy whatsoever to address the kind of issues that were being addressed in this case.

Mark Simpson: And what about what the court might eventually decide in this case? It’s likely to be before Brexit actually occurs given I think we are probably three or four months away from a judgment, it may be a little bit longer. Post-Brexit, how is this case going to apply in the UK, do you think it will have direct application after Brexit?

Richard Whish: Well, I assume it will not because we will have withdrawn entirely from the jurisdiction of the European Court of Justice. What I look forward to finding out, and I have no idea what the answer to this is going to be, is what will our UK government have to say about the agricultural sector? Because this whole panoply of regulation and rules and so on that’s existed for 50 plus years will cease to apply from Brexit day.

Mark Simpson: And, what about the future of Section 60 of the Competition Act? Because this case also, to me, put in mind the fact that at the moment there’s a requirement that the authority and the courts in the UK must ensure consistency with the case law of the ECJ. This would be an interesting decision relating to French producers in relation to an industry that doesn’t really exist in the UK.

Richard Whish: Well, look, I mean there’s lots to be said over Section 60. My understanding is that one of the possibilities is that the Great Reform Act will import all existing jurisprudence of the Court of Justice into UK law and give it the status of Supreme Court judgments, so we can forget Section 60 for those purposes. Established jurisprudence may be maintained in this country. As for Section 60 itself in the Competition Act, clearly, there can’t be a duty to maintain consistency with future jurisprudence because we will have left the EU. That manifestly has to go. The Brexit Competition Law Working Group, of which I am a member, in its provisional conclusions was suggesting that maybe to maintain stability and continuity, we might propose that there should be a ‘have regard to’ provision that competition authorities and courts should have regard to jurisprudence, but I have to say that we are, to some extent, rethinking that at the moment and actually asking the question, does there need to be a Section 60 at all? It’s something that is under debate.

Mark Simpson: Well thank you very much Richard, that’s very interesting.

Richard Whish: Thank you.

In the context of the French endives cartel case and AG Wahl’s opinion, we highlight the tension between agricultural policy in Europe and its role in competition law. More specifically, we discuss how the case illustrates certain issues that will need to be considered in the UK post-Brexit.