The Belgian endive case originated in practices adopted by French producers of Belgian endive between January 1998 and March 2012, when two predecessors of the CMO Regulation were in effect. These practices included setting minimum prices and operating a mechanism to withdraw endives from the market as a form of price support.
The French competition authority imposed fines for violation of the EU competition rules, but the French Court of Appeal annulled the fine on the ground that EU competition rules did not apply to the price mechanisms implemented by the endive producers. However, the Court of Appeal was unclear as to whether these mechanisms were permitted under the general derogations set out in the predecessors to the CMO Regulation, under the specific derogations or under a national regime that was in effect at the time.
On appeal, the European Commission took the unusual step of intervening before the French Supreme Court to challenge the Court of Appeal’s approach. The ambiguity of the Court of Appeal decision led the Commission to review each of the possible grounds in detail. The Commission argued that the general derogations did not apply, in particular because the producers’ price mechanisms were not necessary to achieve all of the CAP objectives, and these mechanisms related to price. The CMO Regulation’s predecessors required prior Commission approval for the general derogation to apply, and the producers had never sought or obtained the Commission’s approval. The Commission also argued that the predecessors of the specific derogations could not justify the price fixing mechanisms. This was because these mechanisms were not among the specific permitted conduct and producers could not extend the application of the specific derogations to other conduct by analogy. The Commission argued that setting minimum prices clearly exceeds the association of producer organizations (POs)’ legitimate authority.
The French Supreme Court referred two questions, about the interaction between the EU competition rules and the CAP, to the European Court of Justice (the ECJ). The French court asked whether agreements and concerted practices that would otherwise be illegal under Article 101(1) TFEU could be permitted if they are “linked to” the responsibilities of producer organizations under the common organization of the market in accordance with the CAP, even if they are not covered by any of the general derogations provided for in the predecessors of the CMO Regulation. If so, the French court asked whether producer organisations can fix minimum prices, coordinate on the quantities placed on the market or exchange strategic information, if these activities are aimed at the CAP objectives of stabilising producer prices and adjusting production to demand.
The European Commission and national competition authorities are expected to argue strongly before the ECJ that the derogations to the EU’s competition rules set out in the CMO Regulation must be interpreted narrowly, and no exceptions from those competition rules outside the derogations set out in the CMO Regulation should be recognized. The ECJ’s approach to these issues will create a precedent in this area. If the ECJ finds that the CAP’s objectives can override the EU competition rules, even outside the relatively narrow scope of the CMO Regulation, then the case may lead to a period of enhanced cooperation and coordination among EU agricultural producers.
It is more likely that this case will confirm the central role of the CMO Regulation for producer organizations to avoid the EU competition rules and underline the importance of the new Guidelines. The CMO Regulation and the Guidelines are summarized below.