On 5 June 2020, the Competition and Consumer Protection Commission (CCPC) announced that it had found no evidence of a cartel between beef processors, following an examination prompted by complaints by beef farmers.
In 2019, the CCPC received a significant number of complaints from beef farmers, alleging that beef processors were operating a cartel. The majority of the complaints focused on five key issues:
- the similar base price per kilo being offered to farmers by all beef processors;
- the qualitative criteria applied by beef processors when offering ‘in spec’ bonuses;
- the importation of beef from foreign countries;
- the operation of feedlots; and
- a reported monopoly on offal processing.
The CCPC’s Examination
The CCPC undertook a detailed review of the information submitted by beef farmers, as well as taking steps to obtain further information. This involved meeting with beef farmers, industry experts and public bodies and consulting with the European Commission.
In its announcement concluding the examination, the CCPC stated that in order to prove the existence of a cartel, it needs ‘tangible proof’ of an agreement between competitors to coordinate their activities and that information showing that beef processors charge similar prices does not in itself constitute evidence of such an agreement.
With regards to complaints about ‘in spec’ bonuses, the CCPC found no evidence that the applicable qualitative criteria were in breach of competition law. Over 90% of Irish beef is exported and various cuts from the same animal can be sent to multiple locations. Assurances in relation to animal health and traceability are required, and in most instances the standards of the most demanding customer set the standard for all cuts of beef.
With regards to complaints that beef imports from other Member States were suppressing beef prices, the CCPC stated that imports in themselves are not anti-competitive and do not come under the remit of competition law.
Feedlots, which offer an alternative supply of beef to processors, were another cause of concern among beef farmers. Beef farmers alleged that beef processors were procuring beef from these feedlots in order to put downward pressure on beef prices at certain times of the year. The CCPC concluded that the feedlots represent a small proportion of beef production and were unlikely to cause material concerns.
The beef farmers’ final allegation was that a single firm holds a dominant position in the offal sector. A dominant firm is one which has the ability to behave independently of consumers, competitors and suppliers. It is not illegal for a firm to hold a dominant position, however, abusive conduct by a dominant firm is a breach of competition law. The CCPC identified a number of specialist operators in the offal sector. The CCPC concluded that these operators neither appeared to have a common ownership structure, nor did they engage in conduct that would raise suspicions of anti-competitive behaviour.
The CCPC is tasked with enforcing competition law. While certain practices may be perceived as unfair, that does not necessarily mean that they breach competition law. Assessing whether a practice constitutes a breach requires careful analysis of the practice in light of the detailed rules and case law of EU and Irish competition law.
Contributed by Elaine Egan