The findings of the Report in a nutshell

• The report highlights the most significant enforcement actions as well as market monitoring activities by the national competition authorities and the European Commission from 2004 to 2011.
• The authorities together investigated more than 180 antitrust cases in the food sector out of which approximately 120 investigations concluded with a finding of infringement, 60 cases are still pending. 
• In half of the cases, the competition authorities have detected horizontal infringements between competitors including price fixing, market and customer sharing and exchanges of confidential information. The cases relate to all levels of the supply chain, from the primary production over processing to the retail level. 
• Vertical anti-competitive agreements (i.e. between market players on different levels of the supply chain) account for approx. 20 % of all cases, prominent examples include issues concerning resale price maintenance and exclusive purchasing agreements.
• Abusive conduct by dominant companies account for a further important part of the cases, focusing on anti-competitive strategies such as tying, the refusal to supply and unjustified contractual obligations.
• The competition authorities' investigations extended to all sub-sectors of the food sector with a certain focus on cereals, dairy products, meat, poultry and eggs, sugar and confectionary, alcoholic drinks, coffee and multi-products.
• In addition to these enforcement actions, the competition authorities carried out 103 market activities monitoring on food related issues, of which 10 are ongoing.
• Some of these monitoring actions have looked at the food supply chain and agro-food sector as a whole whilst others have focused on specific product  markets such as milk and dairy, fruit and vegetables as well as cereals. The largest number of monitoring  activities related to  the retail sector.
• The various national competition authorities have identified a number of critical issues where in future even more stringent enforcement actions may be expected. Issues specifically highlighted concern for commercial relations between suppliers and retailers, the high concentration in the retail sector and atomistic structures of agricultural primary production.
• The report stresses that the European Commission and the national competition authorities have cooperated closely on food issues and will continue to take action to tackle inefficient market structures and anti-competitive behaviour.

What does it mean for your business?

• The ECN's recent report is a clear warning sign. The competition authorities will continue to intensify their scrutiny, and the risk of becoming involved in competition law investigations has increased substantially for all market participants along the supply chain.
• The authorities tend to apply stringent rules and in some cases have contested practices traditionally applied throughout the industry. With regards to the relation between suppliers and retailers, specific caution should be paid to practices concerning suggested resale prices, to promotion activities and category management. Companies should also be aware of the very substantial and increasing risks of information exchange and should ensure competition law compliant activities in business associations.
• The report also sheds a light on opportunities specifically for companies active in primary production. The competition authorities advocate a consolidation of the agricultural sector and recommend pro-competitive mechanisms such as entering into cooperatives and other efficiency-enhancing forms of cooperation.
• Experience shows that not all market players in the food sector have sufficient awareness of the risks and opportunities present under the competition rules. In the light of the ongoing investigations and the expected increasing scrutiny of the sector, it is crucial to ensure that the company's workforce is well aware of competition law implications and the risk resulting from anti-competitive behaviour. Management should be entirely up to date regarding the recent developments and should consider the impact that competition law has on a number of strategic options.

How we can help

Bird & Bird has a dedicated international Food & Beverage group. Our lawyers genuinely understand the dynamics, issues and opportunities prevalent in the Food and Beverage sector. We are able to provide practical solutions and various benefits to our clients in relation to all relevant legal issues. Compliance with EU and the different national competition rules is essential for the Food and Beverage sector. To ensure that their distribution structures, commercial agreements and supply and pricing policies comply with competition and anti-corruption rules, we work closely with our clients to help them prepare for, and steer them through, competition investigations and defend them against cartel and abuse of dominance claims. We also assist in mergers and acquisition transactions and advise on contentious and non-contentious work.

Please click here to download our Food & Beverage brochure.