On 4 May 2020 the European Commission announced temporary derogations from EU competition rules for milk, live plants and flowers, and potatoes sectors. The derogations are part of a package of exceptional measures implemented by the Commission to aid the agri-food sector during the coronavirus pandemic in Europe. The measures are expected to remain in place for six months and will apply to live plant and flower, and potato businesses as of 5 May 2020, and retroactively to the dairy sector as of 1 April 2020.

Who will be eligible to enter into previously prohibited agreements?

The hitherto prohibited agreements may now be concluded by farmers, farmers' associations, associations of such associations, recognized producer organizations, associations of recognized producer organizations and recognized interbranch organizations representing:

• the milk and milk products sector,
• the live trees and other plants, bulbs, roots and the like, cut flowers and ornamental foliage sector, and
• the potatoes sector.

Which agreements are to be partly excluded from the ban on anti-competitive agreements?

As a result of the derogation, businesses in the dairy, flowers and potatoes sectors will be allowed to take certain joint actions to stabilize the market. Players in the dairy sector will be allowed to conclude agreements on planning the volume of raw milk to be produced. Businesses in the live plants and flowers sector will now be allowed to take common decisions concerning market withdrawals and free distribution, joint promotion and temporary planning of production, while potato farmers will be allowed to take common decisions concerning market withdrawals and free distribution, transformation and processing, storage, joint promotion and temporary planning of production.

These agreements may not, however, undermine the proper functioning of the internal market, and in particular they may not lead to partitioning markets, to discrimination based on nationality, or to price fixing. The Commission announced it will be closely monitoring the markets to prevent any negative impact the new measures might have. Businesses will also have to report their actions to the competent authorities in their respective countries.

The derogations from competition laws were introduced under the Regulation establishing a common organization of the markets in agricultural products. Importantly, these are derogations only from the prohibition of anti-competitive agreements. Abuses of a dominant position, viz. unilateral anti-competitive practices by the largest market players, continue to be prohibited.

What is the derogation’s impact on the applicability of Polish competition law and related Polish regulations?

The new measures will have no impact on the applicability of the Act on Counteracting Unfair Use of Contractual Advantage by the Polish antitrust authority (UOKiK), whereas it is this regulation that the Polish authority has relied on recently to pursue certain activities of companies in the agri-food sector taken in connection with the coronavirus pandemic.

Also, the derogations are from EU competition laws. What this means is that, in theory, local agreements with no impact on trade between EU Member States may still end up challenged by the UOKiK. In practice, lobbying efforts are called for to persuade the Polish Council of Ministers to provide for analogous derogations or the UOKiK to announce its position on the applicability of Polish competition law in the circumstances considered here. As an alternative, the UOKiK may be consulted on a case-by-case basis. In fact, the UOKiK Chairperson encouraged just such consultations in a recent webinar, and this course of action was also recommended earlier still by the European Competition Network bringing together the European Commission and the national competition authorities in EU Member States.

We will continue monitoring the measures being adopted by the Commission. Please do not hesitate to contact us if you have any questions about the derogations discussed here.