31. august 2005
Journal nr. 3/1120-0301-0382/FI/LD/PR
The Council meeting 31 August 2005
At the September meeting the Danish Competition Council granted clearance to four producers of forage for mink. The four producers intend to make agreements and amendments to their regulations to expand the fight against plasmacytosis. The producers are organized as cooperative societies owned by the mink farmers.
Plasmacytosis is an infectious disease that can hit mink. This disease can cause in-creased death rate (especially among the puppies), decreased fertility and poorer quality of the pelt and the disease is therefore causing a loss to the mink trade. An order concerning the fight of plasmacytosis has been issued, but the measures pre-scribed in this order have not been sufficient to fight the disease.
The disease is found on mink farms throughout the country, but the fight against the disease has been rather successful in most of Denmark but North Jutland. The reason for this is not quite clear, but the fact that there are many mink farms in North Jutland may play a role.
The mink trade has continuously tried to accomplish rather strict measures to fight the disease among the mink farmers in North Jutland voluntary. Eradication has proven rather efficient in other parts of the country. However, it has not been pos-sible to convince all of the farmers in North Jutland that they should participate in the fight against plasmacytosis.
Eradication on some but not all of the infected farms in a certain area is meaning-less. Therefore the majority of the farmers in North Jutland has decided to force all farmers to participate in the eradication when a farm is infected. If a farmer refuses to participate, the forage supply to that farmer will be brought to a stop.
Furthermore it has been decided to establish some kind of insurance to offer the farmers a certain amount for each breeding animal that he loses by eradication and a certain amount for each puppy that dies in the period birth to June 15th if the death is caused by plasmacytosis. The prices for forage sold to farmers in North Jutland will be raised by up to 5 øre per kg to finance this insurance.
The notifying parties have requested a negative clearance according to section 9 of the Competition Act, alternatively a clearance according to section 8 subsection 1. The notifying parties have also requested a non-dominant clearance according to section 11, subsection 2, alternatively a clearance according to section 11, subsec-tion 5.
On the market for production and distribution of forage for mink in North Jutland the notifying forage producers hold a collective dominant position caused by the relations to “The Association of Mink Farmers in North Jutland” as well as by the notified agreement. The farmers from North Jutland cover 35% of the Danish mink fur production.
The Danish Competition Authority considers that the notified agreements imply elements that are restrictive to competition for farmers as well as for forage pro-ducers. The provisions in question are the increase of the prices of mink forage. The competition is restricted for the forage producers, because they cannot com-pete on that part of the price, and competition is restricted for the mink farmers be-cause they are forced to buy the insurance. These restrictions are appreciable and embraced by the provisions of section 6, subsection 1 and for that reason a negative clearance cannot be granted.
On the other hand, the notified agreements fulfil the provisions of section 8, sub-section 1 as the notifying parties have proven that the provisions concerning in-crease of prices and the fact that the farmers are forced to participate in the insur-ance arrangement do not go further than necessary.
As the notifying parties hold a collective dominant position, it is not possible to grant a non-dominant clearance according to section 11, subsection 2.
On the other hand, The Danish Competition Authority considers that a possible re-fusal to supply to farmers who refuse to follow the rules for expanded fight against plasmacytosis will not be contrary to the provisions of section 11; subsection 1, as the reasoning for the refusal to supply is considered objective, impartial and rea-sonable. A mink farmer who does not want to participate in the eradication inflicts an increased danger of infection on other farmers. In addition, such behaviour in-flicts a risk on the forage producers that they will carry the infection to other mink farmers whereby such a producer will seem less attractive. In this consideration The Danish Competition Authority lays stress on the fact that the farmers have the possibility to participate in an insurance arrangement whereby the loss from the eradication is compensated.