European Court to rule on beef production case

THE European Court of Justice is to issue a preliminary ruling today on a long-running legal case between the Competition Authority and beef producers over reforms to reduce overcapacity in the sector.

An advocate general of the court will deliver a legal opinion, which will give an indication whether a scheme by beef processors to compensate firms to leave the industry is contrary to EU competition laws.

The case was referred to the court after a Supreme Court ruling in 2007 as a result of proceedings taken by the Competition Authority against the Beef Industry Development Society (BIDS) and beef processor Barry Brothers (also known as Carrigmore Meats) in Conna, Co Cork.

The Supreme Court has asked for the guidance of Europe’s top court on issues in an appeal by the Competition Authority against an earlier High Court ruling.

The case arose from a study commissioned by the Government and the beef industry in 1998 which found there was significant overcapacity in the industry, particularly in the processing sector and specifically in slaughtering and de-boning.

The report recommended the number of processors should be reduced from 20 to between four and six. It also proposed that the surviving processors, who were known as “stayers”, should pay compensation to other processors who would close down their businesses.

The country’s 10 largest beef processors, including AIBP, Dawn Meats and Kepak, formed BIDS, which devised a plan to reduce capacity by 25%, or 420,000 animals, per annum.

Under the rationalisation scheme, it was agreed that BIDS would provide the “stayers” with loans to pay compensation to processors who were quitting the industry.

In return, beef processors leaving the business would undertake not to sell their equipment to anybody other than “stayers”. They also agreed a non-compete clause for two years.

However, the Competition Authority notified BIDS in June 2003 it considered the agreement to be contrary to EU anti-competition legislation.