Uk Food Group

UK Food Group Briefing

UK Food Group

PO Box 100,

London, UK

SE1 7RT

Tel: + 44 (0)207 523 2369

Email: rachel@ukfg.org.uk

EU COMPETITION RULES AND FUTURE DEVELOPMENTS

FROM THE PERSPECTIVE OF FARMERS AND SMALL SUPPLIERS

COMMISSIONED BY THE UK FOOD GROUP TO THE

BRITISH INSTITUTE OF INTERNATIONAL AND COMPARATIVE LAW

March 2005

CONTENTS

1. Briefing remit 2

2. Summary of conclusion and recommendations 2

3. Competition law background 3

4. Merger regulation and cross boarder alliances 4

5. UK Merger regulation 6

6. European Competition Law 6

7. Antitrust rules 7

~ Exemptions 7

~ Enforcement 7

~ The issue of 'dominant position' 8

~ Other countries experiences 9

8. Recent developments in European Law 9

a. Proposal for a Directive on Unfair Commercial Practices 9

b. Draft regulation on Sales Promotion 9

9. Possibilities for further legislation 10

a. European Code of Conduct 10

b. Below-cost selling 11

c. Action to limit supermarket developments 11

c. Action to limit supermarket developments 11

10. Conclusions and recommendations 12

11. About the UK Food Group, BIICL and further resources 14

1. BRIEFING REMIT

In July 2004, the UK Food Group (UKFG) asked the British Institute of International and Comparative Law (ICL) to prepare a briefing on the relevant EU legal framework. The UKFG requested that the briefing should also include proposals that could be of assistance to the UKFG network in developing an EU wide campaign calling for legislation to curb the power of supermarkets. Members of the UKFG along with others have lobbied in the UK for a statutory Code of Practice to regulate supermarkets in their dealings with suppliers.

This briefing note is intended for UKFG network members and other CSOs campaigning across Europe for more equitable polices for small farmers faced with increasing supermarket power in the food supply chain. Its aim is to provide a realistic assessment of the opportunities for CSOs to influence EU policy, and to also to provide information and analysis that could be of assistance to UK CSO's in their work to influence EU policy. Some material about the laws of other EU member states is included to assess EU and UK policies and to provide arguments in lobbying in the EU and domestic process. A draft of this report provided the basis of a campaign meeting in the UK in September 2004, and it's hoped that this analysis will provide a useful background to support CSO campaign initiatives across Europe.

2. SUMMARY OF CONCLUSION AND RECOMMENDATIONS

In the report, a strategy is set out which contains two main elements:

(1) the monitoring of mergers and the making of submissions on a regular basis, and

(2) monitoring developments in both European and national legislation and active participation in this respect too.

The aim of competition law is limited, and traditionally limited to the protection of consumer interests. Until the problem of 'buyer dominance' is recognised as a significant problem by the European Commission, there is little chance of farmers and small suppliers succeeding in actions for abuse of dominant position. The Commission is unlikely to take action to limit below cost selling, introduce a code of conduct or limit retail floor space.

In our view, it is the law of merger regulation (at both EU and UK level) rather than European competition law (Articles 81 and 82 EC) that will be of most use to the UKFG and is in this area that our recommendations are based.

The first of the two main elements of the proposed strategy, (1) the monitoring of mergers and the making of submissions on a regular basis, would entail that the UKFG:

a. Intervene in retail mergers notified to the European Commission and notified to national competition authorities, particularly those notified to domestic competition authorities as a result of Regulation 1/2003 EU.

b. Intervene in other competition cases which are formally notified to the Commission, such as IRTS (International Retail and Trade Services) and similar cases.

c. Make formal and informal submissions to national competition authorities and government officials, either in response to official requests or on own initiative.

d. More generally the UKFG should get into the habit of making their views known to the authorities (especially DG Competition and Internal Market and the national competition authorities) on a regular basis. It is the experience of other lobbying groups that persistence pays off and eventually the Commission is likely to take account of the UKFG demands,

e. To assist with lobbying the Commission we recommend that the UKFG look for like minded organisations in Brussels and in other member states.

f. In general the UKFG needs to maintain a consistent line of argument, regularly intervening and promoting the same issues time and time again.

The second