Bundeskartellamt points out competition law limits in price arrangements in the context of sustainability agreements

Germany

German milk producers intended to introduce a new financing concept for raw milk producers (given that raw milk prices were not sufficient to cover the raw milk production costs). The new concept has been presented to the German Bundeskartellamt who ruled that the financing model is unacceptable under competition law.

According to the Bundeskartellamt, the new concept was limited to the paying of surcharges to raw milk producers. Those surcharges were to be passed along the supply chain right to the consumer. As a result, the Bundeskartellamt determined:

  • The economic interest in a higher level of income per se cannot justify the exemption of such an agreement from competition law.

  • The fact that the new concept is aimed at stabilising the farmers’ income is a not sufficient reason to justify the exemption.

  • The concept did not provide sufficient specific criteria for the production of raw milk, which took into account sustainability goals.

The Bundeskartellamt also considered the new EU legal framework for assessing initiatives to implement sustainability standards in the agricultural sector (i.e. Article 210a of the Regulation establishing a common organisation of the markets in agricultural products). It found that price-fixing agreements, which are not aimed at a higher sustainability standard than stipulated by European or national law cannot be exempted under the new provision.

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