Bulgaria's competition watchdog, the Commission for the Protection of Competition (CPC), has drafted guidelines on how farmers can work together and form co-operatives without breaking competition rules, its press office said. The aim is to give producers a stronger position against big buyers and, in the long term, to ease the pressure on food prices.
CPC chairman Assoc Prof Rosen Karadimov presented the draft to the commission's Public Council. The council's members include the nationally recognised employers' organisations: the Association of Industrial Capital in Bulgaria, the Bulgarian Industrial Association, the Bulgarian Chamber of Commerce and Industry and the Confederation of Employers and Industrialists in Bulgaria. Also on the council are the trade unions KNSB and Podkrepa, the Bulgarian National Association "Active Consumers" and experts.
The guidelines draw on the CPC's sector analysis of the food market. It found structural problems: production is split among many small producers, and the players along the supply chain hold unequal positions.
"When production is very fragmented, individual farmers have limited ability to defend their economic interests," Karadimov said. He said forming co-operatives is one way to overcome that weakness.
The document lists what EU law allows, and which EU rules and special regimes permit certain forms of co-operation in farming. It also sets out the limits, so that co-operatives are not used to hide agreements and practices that harm competition. It covers both joint work by individual producers in producer organisations and co-operation between firms at different stages of the supply chain.
The draft explains the conditions under which such organisations can plan production, offer their members' output for sale and agree supply deals, including at one price for the products covered. This lets farmers pool resources, cut costs and organise production and sales better, which is the aim of the guidelines.
"Our task is to show how these options can be used within competition law," Karadimov said. He asked Public Council members to send in their opinions and recommendations on the draft. A wide public consultation with interested parties in the sector will follow.
On the same day, Maya Manolova, chair of the Consumer Protection Commission, sent the CPC chairman a complaint about breaches of the Protection of Competition Act. The consumer watchdog found them during checks at outlets of some of the big retail chains. Its material shows the chains apply different mark-ups, meaning a different margin on top of the purchase price, for different suppliers in the same product category, such as dairy products, fruit and vegetables.