Antitrust Bites - Newsletter
December 2023Guidelines from the Commission for sustainability agreements in agriculture
On 7 December 2023 the European Commission adopted Guidelines on the exemption from the application of Article 101 TFEU for sustainability agreements of agricultural producers pursuant to Article 210a of Regulation (EU) No 1308/2013. This provision provides for an exemption from the application of Article 101(1) TFEU for agreements, decisions and concerted practices related to the production of or trade in agricultural products wherein producers set higher sustainability standards than (EU or national) applicable laws, and delegates to the Commission the adoption of guidelines on the conditions for applying the exemption.
The Guidelines first outline the subjective scope and the products covered by the exemption under Article 210a. To qualify, an agreement – whether horizontal or vertical – must meet the following criteria: (i) at least one of the parties should be a producer of agricultural products; (ii) the agreement must have as its object the production of, or trade in, certain categories of agricultural products, as listed in Annex I of the TFEU, excluding fishery and aquaculture products.
Regarding the material scope of application of Article 210a, specific sustainability objectives have been identified that justify the exemption. These objectives are divided into three categories:
- environmental objectives, including climate change mitigation and adaptation, protecting and sustainably using landscapes, water and soil, transitioning to a circular economy, pollution prevention and control, and the protection of biodiversity and ecosystems;
- agricultural production methods aimed at reducing the use of pesticides and associated risks, or that reduce the danger of antimicrobial resistance;
- animal health and welfare.
To qualify for the exemption, the sustainability agreement that the parties commit to must establish a sustainability standard that: (i) aligns with at least one of the three categories of objectives; (ii) leads to either tangible and measurable results or, where that is not possible, to observable and describable results; and (iii) is more stringent than what is required by EU or national legislation.
The Guidelines further clarify that sustainability agreements may involve any kind of competition restriction, provided that the restriction is essential to achieve the legitimate sustainability objective pursued, also explaining how to practically assess whether a specific competition restriction is indispensable.
Finally, the Guidelines contain provisions aimed at defining the ex-post intervention powers of national competition authorities. On this point, the Guidelines clarify that, in cases where the implementation of a sustainability agreement results in, inter alia, unreasonable consumer prices or the removal from the market of a product for which there is significant consumer demand, competition authorities may order the termination or modification of sustainability agreements.
The Commission allows companies to request an opinion on the compatibility of their sustainability agreements – which must nonetheless comply with the Guidelines – with competition law.
The European Commission adopts two regulations on de minimis state aid
On 13 December 2023, the European Commission has adopted Regulation (EU) No. 2023/2831 and 2023/2832 amending, respectively, the general rules for de minimis state aid – i.e., aids not exceeding certain amounts over a specific period of time – and the specific rules for de minimis state aid granted to undertakings providing services of general economic interest.
The main changes introduced by the two regulations include:
- increases in the ceilings for de minimis aid which can be granted to a company by EU Member States over a three-year period. In particular, for “ordinary” de minimis aid the amount is increased from EUR200,000 to EUR300,000, whereas the amount is increased from EUR500,000 to EUR700,000 for aid granted to undertakings providing services of general economic interest;
- the introduction, as of 1 January 2026, of an obligation for Member States to transmit the information pertaining to de minimis state aid granted to a central register set at national or EU level, in order to reduce the administrative burden and the reporting obligations on companies;
- as regards the “general” regime, the introduction of safe harbours for financial intermediaries to further facilitate aid in the form of loans and guarantees no longer requiring a complete pass on of the advantages from the financial intermediaries to the end beneficiaries.
The updated regulations will enter into force on 1 January 2024 and will apply until 31 December 2030.
Restrictions on online sales: the French Competition Authority finds a restrictive agreement by object
With a decision issued on 11 December 2023, the French Competition Authority sanctioned the French group Mariage Frères – one of France’s leading manufacturers of premium teas – for putting into place a vertical agreement restrictive of competition by object consisting, among other things, in the provision in the general terms and conditions of sale (GTC), transmitted to distributors when a customer account is opened and accepted by them, of a prohibition on selling its products through the online channel.
The French Authority noted that, although Mariage Fréres had amended the GTC in 2019 by providing for the possibility for distributors to enter into a separate contract dedicated to online sales, distributors who had requested authorisation to sell its products on the Internet would be met with a “categorical refusal”, which Mariage Fréres justified on the grounds of the need to preserve the prestigious image of its products.
In assessing the restriction in the decision, reference is made to the principles expressed in the Coty case - law according to which, as interpreted by the French Authority, restrictions on online sales are compatible with competition law if they are objectively justified by the need to preserve the image of luxury and prestige of the products concerned “in the context of a selective distribution system” and provided that they are applied in a non-discriminatory manner and do not lead to an absolute prohibition to sell the products on the Internet.
The Authority concluded that since Mariage Fréres had not adopted a selective distribution system, it could not invoke the need to preserve the image of its products as a legitimate justification for the prohibition. On this basis, the Authority held that the restriction could not be objectively justified and legitimate according to the criteria of the Coty case - law. In view of the perceived harmfulness of the conduct – considering, among other things, the growth of online sales in the sector – the Authority held that the restriction constituted an agreement restricting competition by object.
UK competition authority issues its first informal guidance on Green Agreements
For the first time since the publication of the Green Agreements Guidance in October 2023, the Competition and Markets Authority of the UK (CMA) has published a response under the so-called open-door policy, whereby companies wishing to enter into an environmental sustainability agreement can seek guidance from the CMA on their proposed agreement if there is uncertainty on the interpretation and application of the Guidance.
In this case, Fairtrade Foundation submitted a request for informal guidance in relation to its new “Shared Impact” initiative, which aims to enhance sustainability in food supply chains by providing contractual stability to Fairtrade producers through long-term supply agreements in order to provide them with the security to invest in sustainable practices, including agricultural practices that reduce the environmental impact of production.
In particular, the Shared Impact initiative requires retailers to commit to purchase on an annual basis – in case the retailer does not already have a 100% Fairtrade category commitment – additional Fairtrade products (bananas, coffee and/or cocoa) from selected suppliers. Retailers, who may in any case continue to purchase bananas, coffee and/or cocoa elsewhere, will be required to make public their commitment, which will last between three and five years, freely choosing the product category and terms of purchase to which they will adhere. Products will be sourced from a locally selected group of producers to whom Fairtrade is committed to ensuring that the sourcing process will not result in producers being overly dependent on one retailer, providing additional security and stability.
The CMA considered that the initiative is unlikely to raise competition concerns on the basis of an overall assessment of the markets potentially affected, considering both the effect on competition between retailers and between producers, and the legal and economic context.
