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Corn-agreement in the agricultural sector

27. august 2003

Journal nr.3/1120-0301-0278/lt/jf/FI The Council meeting 27. August 2003

The Competition Authority has received a notification of a “payment agreement from 2001 regarding corn, peas and oilseed rape” between Dansk Landbrug and Dakofo. Reviewer has requested for a comfort letter, alternatively an exception according to section 8 (1).

Dansk Landbrug is an industrial organisation of Danish farmers, while Dakofo is an industrial organisation for feedstuffs in Denmark and has more or less all feeds companies as members.

The corn agreement makes up the frame for the farmers payment agreement with their feed company regarding corn, peas and oilseed rape. It contains a number of conditions, defining the basic quality in each single sort of corn, oilseed rape and peas as well as instruction on how the price should be regulated for. In this way the agreement include a number of quality criteria’s such as water content, protein, foreigner sort etc. all depending on crop and the wanted characteristics of the corp. Furthermore defines conditions about sampling, warehouse rent and storage shrinkage.

The Competition Authority finds that the criteria of quality are to be regarded as reasonable and objective. The criteria have been chosen on the basis of end buyers wishes. Furthermore a part of the criteria also can be found in the rules about EU- intervention buying. Superior the regulations in the rules makes it easier for farmers and as well as for feeds companies to compare prices and price offers. This increased transparency promotes competition.

The Competition Authority does neither not find that the separate conditions in the agreement all ready are included in section 6 (1) in the Competition Act. Quality regulation (the fixed additional charge or price reduction for variations from basis quality) cannot be attributed as a competition restrictive purpose. The conditions encourage the farmer to deliver corn of good quality and thereby to obtain a high settling.

Neither the conditions about sampling, warehouse rent nor storage shrinkage can, according to the evaluation of The Competition Authority, be ascribed such effects that the agreement is included in section 6 (1) in the Competition Act. On this basis The Competition Authority has given a comfort letter to Dansk Landbrug for this agreement.