The Bundeskartellamt has concluded its assessment of the model presented by representatives of German milk producers involved in the agricultural policy project "Agrardialog Milch". The model proposed an agreed financing concept in favour of the raw milk producers. In the milk producers’ view, this is necessary because the raw milk prices are not sufficient to cover their costs.
The average milk production costs for agricultural businesses are determined throughout the agricultural sector. With the Agrardialog Model, raw milk prices are desired to be balanced retrospectively. Subsequently, the surcharges would then be constantly adapted based on a binding clause in contracts between producers, dairies, and food retailers. The model was developed to be effective in financing the transformation of the local domestic sector.
Given the intended implementation of the project, the model presented by Agrardialog would have resulted in an industry-wide increase in milk prices, and the model itself does not meet the sustainability criteria. Consequently, consumers buying milk and dairy products in retail stores would in the future not have the possibility to switch to other retailers offering cheaper products.
Bundeskartellamt has also expressed its recommendations on the subject in two investigations it has recently concluded, although cooperation between agricultural producers often has the privilege of being exempt from competition law. Accordingly, producers can bundle their offers, negotiate collectively, and punch their weight. However, if they agree on price components, this exceeds the boundaries of competition law.
With the entry into force of Article 210a of the Regulation allowing the joint organization of agricultural products markets, the legal framework regarding sustainability in the agricultural sector has changed. Accordingly, under certain conditions, it is still possible for sustainability initiatives to be exempted from competition law. However, 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.
(Bundeskartellamt – 25.01.2022)
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