The Spanish Competition Authority affects the tangerine sector

01 October 2013

Carlos Maldonado

On 4 July 2013, the Spanish Competition Authority -pursuant to a complaint filed by the farmers' association "Asociación Valenciana de Agricultores" ("AVA-ASAJA")- fined Nadorcott Protection S.A.R.L. ("NPS"), Carpa Dorada S.L. ("CD") and Club de Variedades Vegetales Protegidas ("CVVP") for setting up and implementing a traceability system aimed at restringing sales of Nadorcott tangerines. Nadorcott tangerines are also known as the favoured tangerine and it is one of the most valued tangerines in the market due to the fact that it produces a large quantity of fruits per tree, it does not have seeds inside and it offers a long period of conservation on the tree and in cold-storage.

On 23 June 2003, NPS signed a contract with CD ("partnership agreement"), which had been created by four competing producers of the Nadorcott variety of tangerines. These undertakings are competitors of each other and Geslive, an economic group formed by leading plant breeders active in Spain. The contract was aimed at granting CD the exclusive license of growing this variety of tangerines in Spain and Portugal.

Based on this, Geslive called for a regularization process, and new license agreements were signed. Due to the regularization process, a traceability system on the fruit was implemented aiming at ensuring its identity and origin in the market. The traceability system implied different obligations to licensees. CVVP was created in December 2008 assuming Geslive's functions. Furthermore, CVVP Statutes included the obligation for the members of CVVP to commercialize fruit only with members of CVVP.

The Spanish Competition Authority considered that the traceability system restricted competition. In particular, it stated that the system implied that the producer that did not have the means to package and sell its fruits freely. The producer was also required to send an annual report updating the information on planting, a sales report of the campaign detailing the amount of fruit produced or marketed and their list of distributors and packagers.

Hence, the information required from producers and distributors under the agreements was able to control the production and price of the fruit. Furthermore, creation of CVVP strengthened such competition restrictions since the fruit could only be marketed amongst CVVP members. It also implied that producers and packagers had to join the CVVP in order to access the product.

In conclusion, according to the Spanish Competition Authority, the traceability system restricted competition due to the exploitation of licenses and information exchanges. The largest fine -amounting to almost 5 million euros- was imposed on CVVP; NPS and CD were also sanctioned with small fines.