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November 02 2017
In a September 2017 decision, the Competition Authority ended an investigation into the exchange of prospective prices between pork meat producers, meat processors and slaughter houses with no finding of anti-competitive practice.
The Pork Exchange Association is a non-profit association composed of several pork producer associations, a meat processor association and a pork trader association.
From 2010, the Pork Exchange Association established a system of weekly meetings – the so-called 'table of quotations' – in order to set quotes for the sale of pork and Type E pork carcasses with 57% muscle.
The table of quotations was composed of legal persons – including associations designated by the Pork Exchange Association's members – of which 50% represented the supply-side of the market (ie, pork producers) and 50% represented the demand-side of the market (ie, slaughter houses and meat processors). The meetings could take place only when more than 50% of the designated members were present.
The weekly quotations:
The mechanism for overcoming the absence of an 80% majority included a nominal voting system in which each member would propose an alternative market price within a range of -€0.10 and €0.10 compared with the previous week's reference price. The final price would be the result of an average between the price of each representative group.
The Competition Authority became aware of this practice in 2012 and started an investigation. In 2016 the Competition Authority decided to initiate a separate infringement investigation.
In the course of 2016, the Pork Exchange Association decided to adopt new rules regarding how the table of quotations worked. The new rules were notified to the Competition Authority on August 7 2017 and included:
The Competition Authority acknowledged that:
Although the Pork Exchange Association's setting and disclosing of indicative guidelines may have constituted a decision by an association of undertakings, the Competition Authority found that this practice had no anti-competitive object or effect.
The authority considered the following aspects to support its conclusions:
While the type of information exchanged could support an infringement of competition law (in light of previous Competition Authority practice), the authority did not establish any anti-competitive object or effect. On the contrary, it identified a pro-competitive effect associated with reduced information asymmetries for purchasers and closed the case at the end of the first investigation stage.
In this case, the Competition Authority's approach appears to have been influenced by:
However, in a case from 2011, the authority had previously considered that meetings between the supply and demand sides of a market to discuss prices may facilitate collusion between purchasers, as such meetings would contribute to an exchange of information on existing and future prices (and should not be promoted by the government).
Two additional Competition Authority investigations involving pure information exchange schemes between competitors in the context of associations (ie, the Portuguese Association for Leasing, Factoring and Renting and the Association of Specialised Credit Institutions) were recently proposed to be closed following the acceptance of commitments by the investigated associations, which can be seen as an indication of the authority's more lenient approach to pure information exchange schemes.
For further information on this topic please contact Inês Gouveia at Morais Leitão Galvão Teles Soares da Silva & Associados by telephone (+351 22 616 69 50) or email (firstname.lastname@example.org). The Morais Leitão Galvão Teles Soares da Silva & Associados website can be accessed at www.mlgts.pt.
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