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NMa: Dutch Beef Prices in Step with Europe

Following an investigation, the Netherlands Competition Authority (NMa) has concluded that the level of consumer prices for beef does not point towards price agreements within the beef production chain. From the development of prices on the market for slaughter cattle (the market on which abattoirs purchase cattle), NMa has concluded that the prices in the Netherlands correspond to a large degree with the development of prices in neighbouring countries. In addition, no evidence was found of mutually co-ordinated practices with consequent restrictions on competition.

From the investigation into the operation of the beef market (the market on which butchers and supermarkets purchase beef) it appears that costs have increased due to the various crises in the meat sector (BSE, foot-and-mouth disease). This is due, for instance, to the additional costs incurred for testing cattle for BSE. In addition, NMa ascertained that there was less likelihood that competitors on the beef market mutually co-ordinated their behaviour, for instance through price agreements, because to a large degree this is a European or even a global market. More than two-thirds of all the beef consumed in the Netherlands originates from countries such as Ireland, Argentina and Brazil. A large portion of Dutch beef production is intended for export to countries outside the EU. Price formation in relation to this portion is partly dependent on European market regulation (export subsidies).

The investigation into the formation of beef prices was carried out following a request by Mr Brinkhorst, the Minister of Agriculture, Nature Management and Fisheries, for an investigation into why the falling prices paid for slaughter cattle had not resulted in a fall in consumer prices.

The investigation into the functioning of the beef market is part of the investigation in relation to the application submitted by Stichting Saneringsfonds Runderslachterijen (SSR) [Foundation for the Restructuring of Beef Abattoirs] for the exemption of a restructuring scheme aimed at reducing slaughter capacity through the closure of a number of beef abattoirs. At the end of 2001, in an interim ruling, NMa informed SSR that there was little likelihood that the exemption would be granted. Following this, in relation to a similar restructuring scheme for pork abattoirs, the European Commission raised serious questions as to whether the restructuring scheme could be reconciled with competition law and an extensive investigation was started. A number of beef abattoirs, which were to be bought out under the restructuring scheme, decided not to wait for NMa's decision and ceased operations immediately. Partly for this reason, SSR withdrew its application for exemption on 8 February 2002.