COMMISSION OF THE EUROPEAN COMMUNITIES 
COM(91) 338 final 
Brussels, 24 October 1991 
Proposal for a 
COUNCIL REGULATION (EEC) 
concerning inter-branch organizations and agreements 
in the tobacco sector 
(presented by the Commission) 

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EXPLANATORY MEMORANDUM 
I. In early November 1990 the Commission submitted to the Council a 
communication on inter-branch organizations and agreements In 
agriculture (Doc.SEC(90)562 final). That document sets out the 
Commission's thoughts on inter-branch organizations in the framework 
of the common agricultural policy. In the light of the Member 
States' reactions and of an analysis of actual economic needs, the 
Commission has undertaken to submit proposals by product groups. 
Furthermore, when the agricultural prices and related measures were 
adopted for the 1991/92 marketing year, the Council considered, as 
regards tobacco, that a system of inter-branch agreements providing 
in particular for the possibility of extending the rules of such 
agreements is vital to ensure sound management of the market in 
tobacco. In conclusion the Council called on the Commission to study 
the matter with the closest attention with a view to submitting a 
suitable proposal to It before 30 September. 
II. The definition of rules for tobacco inter-branch organizations is an 
additional aspect of the reform of the market organization. 
Greater flexibility in the institutional instruments for market 
management must go hand in hand with the development of a flexible 
structure for consultation and cooperation between the various groups 
concerned with production, processing and marketing of tobacco. Such 
inter-branch cooperation is especially necessary if dispersion of 
supply is to be reduced, production curbed and quality 
diversification promoted the better to satisfy market requirements 
and consumer demand, in particular for less harmful varieties. Such 
action must also aim to encourage a qualitative improvement in 
varieties and in products marketed. 
The proposal thus defines the inter-branch arrangements which may 
contribute towards better operation of the market organization by 
achieving the abovementioned objectives. 
The proposal provides for the possibility of extending to non-members 
the rules adopted by inter-branch organizations. However, this 
possibility is strictly limited to certain particular measures which 
are of general Interest to the sector as a whole. They aim in effect 
to provide better knowledge of the market and its foreseeable trend 
and to define minimum standards regarding the quality of varieties 
and marketing conditions (packaging and presentation). 
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II. While such inter-branch arrangements must be developed on the basis 
of the initiative of those In the trade themselves, It must also 
provide appreciable guarantees vis-à-vis Its members, other socio­
economic groups concerned, including consumers, and the Community as 
a whole. 
A recognition procedure undertaken by the Member State in the 
territory where the inter-branch organization is established or by 
the Commission where the organization conducts measures at the inter­
regional level in the territories of several Member States or at 
Community level must ensure that the organization is representative 
of the professional categories it groups and that it pursues 
objectives compatible with the operation of the market organization 
and complying with the general principles of Community law. 
A general obligation to give prior notice of agreements and concerted 
practices must permit the Commission to ensure that the 
organizations' activities comply with the conditions laid down by 
Community regulations and in particular do not affect intra-Community 
trade and competition significantly, or in a way which is out of 
proportion with the benefits which the continuation of their action 
is expected to achieve. 
The guarantees must be further reinforced in the case of a draft 
extension of the rules to non-members. A suitable publication of the 
draft must permit on the one hand all the socio-economic groups 
concerned, including organizations representing consumers, to defend 
their legitimate interests and on the other hand, the Member States 
concerned to submit their comments. Furthermore, a specific 
Commission decision must be taken on the basis of an in-depth 
examination of the grounds and of all the repercussions of the draft. 
In such a case the requirements regarding representativeness which 
organizations within the geographical scope of the extension are to 
meet must be made stricter. In any case, the extension must be 
refused where it results in particular in eliminating competition 
from a substantial part of the market or adversely affecting the 
freedom of trade and the operation of the market organization. 
The procedures laid down in this proposal must enable the objectives 
laid down for Inter-branch activities to be fulfilled and the 
legitimate interests of all the socio-economic groups concerned to be 
guaranteed. 
The proposal for a Regulation submitted to the Council has no 
financial impact. 
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Proposal for a 
COUNCIL REGULATION (EEC) 
concerning inter-branch organizations and agreements 
in the tobacco sector 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European Economic Community, 
and in particular Articles 42 and 43 thereof, 
Having regard to the proposal from the Commission,1 
Having regard to the opinion of the European Parliament,2 
Having regard to the opinion of the Economic and Social Committee,3 
Whereas the medium- and long-term prospects for the Community and world 
agricultural markets require certain instruments of the common 
agricultural policy to be revised in order to restore market balance; 
whereas such adjustments, directed principally at increasing the 
flexibility of the market support instruments, require the operators 
concerned to change their economic behaviour to take better account of 
the actual market situation; 
Whereas inter-branch organizations established by operators as 
individuals or in groups, and representative of the various trade 
categories involved in production, processing and marketing in the 
tobacco sector are likely to contribute to better account being taken of 
the market situation and to encourage changes in economic behaviour 
intended to improve knowledge and organization of production, processing 
and marketing; whereas some of their activities may contribute to 
improving market balance and so help achieve the objectives in Article 39 
of the Treaty; whereas the measures which may constitute such a 
contribution by inter-branch organizations should be defined; 
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Whereas in view of the above, it appears appropriate to grant specific 
recognition to bodies which can demonstrate their proven 
representativeness at regional, Inter-regional or Community level and 
which take positive action in pursuit of the objectives mentioned above; 
whereas such recognition should be granted by the Member State or by the 
Commission depending on the scope of the activities of the inter-branch 
organization; 
Whereas to support certain activities of inter-branch organizations which 
are of particular interest in the light of the current rules concerning 
the common organization of the market in tobacco, provision should be 
made for the rules adopted by an inter-branch organization for its 
members to be extended, subject to certain conditions, to all non-member 
producers and groups in one or more regions; whereas non-members should 
also be made liable to pay all or part of the subscriptions Intended to 
cover the non-administrative costs incurred in pursuing such activities; 
whereas this procedure should be implemented in a way which guarantees 
the rights of the socio-economic groups concerned, in particular the 
rights of the consumer; 
Whereas other activities of the recognized inter-branch organizations may 
be of general economic or technical interest for the tobacco sector and 
so be of benefit to all persons active in the branches in question, 
whether or not they are members of the organization; whereas in such 
cases it appears reasonable to make non-members liable to pay the 
subscriptions intended to cover the costs, other than administrative 
cost8, arising directly from performance of the activities In question; 
Whereas, in order to ensure correct operation of the scheme, there should 
be close cooperation between the Member States and the Commission, which 
should also have permanent monitoring powers, particularly as regards 
recognition of inter-branch organizations operating at regional or inter­
regional level and the agreements and concerted practices adopted by such 
organizat ions; 
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Whereas there should be provision for publication, at the beginning of 
each year, of a list of the organizations recognized during the previous 
year, a list of the organizations whose recognition has been withdrawn 
during the same period and the rules which have been extended with an 
indication of their scope, for the information of the Member States and 
other Interested parties, 
HAS ADOPTED THIS REGULATION: 
Article 1 
This Regulation lays down the conditions for the recognition and activity 
of inter-branch organizations operating in the sector covered by the 
common organization of the market in tobacco. 
Article 2 
Inter-branch organizations which: 
1. comprise representatives of the economic activities relating to 
production of, processing of and trade in tobacco; 
2. have been set up on the initiative of all or some of their constituent 
organizations or associations; 
3. are pursuing a number of the following activities at regional level, 
in a number of Community regions or throughout the Community, taking 
account where appropriate of consumer interests: 
(a) contributing to enhanced coordination of the placing on the 
market of leaf or baled tobacco; 
(b) preparing standard contracts compatible with Community rules; 
(c) improving market intelligence and transparency; 
(d) increasing value added, particularly by means of marketing and 
research into new uses which do not pose a threat to public 
health; 
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(e) redirecting the sector towards products which better meet 
market and public health requirements; 
(f) carrying out research into methods permitting reduced use of 
plant health products and guaranteeing product quality and 
soi I conservât ion; 
(g) developing methods and instruments for improving product 
quality at the production and processing stages; 
(h) certifying seed and seedling quality and monitoring product 
qua I Ity; 
shall be recognized under this Regulation. 
Article 3 
1. On application, Member States shall recognize inter-branch 
organizations established in their territory which: 
(a) carry out their activities at regional or inter-regional level 
within the territory; 
(b) show a degree of representativeness to be determined in the 
light of the sphere of action and the branches represented; 
where an inter-branch organization is inter-regional In scope, 
it must provide proof of minimum representativeness in respect 
of each of the grouped branches, in each region covered; 
(c) pursue a number of the activities referred to in Article 2(3); 
and 
(d) do not themselves undertake the production, processing or 
marketing of the products covered by the common organization 
of the market referred to in Article 1. 
2. Prior to recognition being granted, Member States shall notify the 
Commission of the inter-branch organizations which have applied for 
recognition and provide all necessary information on the branches of 
economic activity which they encompass, their representativeness, the 
activities undertaken and any other information required for 
consideration of the application. 
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The Commission may oppose recognition within 60 days of notification 
by the Member State. 
3. Member States shall withdraw recognition: 
(a) if the conditions laid down in this Regulation cease to be 
met ; 
(b) if the Inter-branch organization contravenes one or more of 
the prohibitions listed in Article 7(3), without prejudice to 
criminal proceedings which may be brought under national law; 
or 
(c) if the inter-branch organization fails in its obligation to 
make the notification required under Article 7(2). 
Member States shall notify the Commission immediately of decisions to 
withdraw recognition. 
Article 4 
1. On application the Commission shall recognize Inter-branch 
organizations which: 
(a) carry out their activities throughout or in part of the 
territories of several Member States, or throughout the 
Community; 
(b) have been established under the national legislation of a 
Member State or under Community law; and 
(c) satisfy the provisions of Article 3(1)(b), (c) and (d). 
2. The Commission shall notify applications for recognition to the Member 
States on whose territories the inter-branch organization is 
established and in which it carries out its activities. Following 
such notification, the Member States concerned shall have two months 
within which to make their comments. 
The Commission shall take a decision on recognition within three 
months of receiving the application and all necessary information. 
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3. The Commission shall withdraw recognition of the organizations 
referred to in paragraph 1 in the circumstances referred to In Article 
3(3). 
Article 5 
The Commission shall publish in the "C" series of the Official Journal of 
the European Communities the names of the inter-branch organizations 
recognized, together with a statement of the economic sector or the area 
in which they operate and the activities pursued within the meaning of 
Article 2. Withdrawals of recognition shall also be published. 
Article 6 
Recognition of an inter-branch organization shall imply authorization for 
it to carry out the activities referred to in Article 2(3) subject to the 
conditions laid down in this Regulation. 
Article 7 
1. Notwithstanding Article 1 of Council Regulation No 261, Article 85(1) 
of the Treaty shall not apply to the agreements and concerted 
practices of recognized inter-branch organizations intended to 
implement the measures referred to In Article 2(3). 
2. Paragraph 1 shall not apply unless: 
- the agreements and concerted practices have been notified to the 
Commission, and that 
- within three months of receipt of all the details required the 
Commission has not found that the agreements or concerted practices 
are incompatible with Community rules. 
The agreements and concerted practices may not be implemented until this 
period has elapsed. 
1 OJ No 30, 20.4.1962, p. 993/62. 
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3. Agreements and concerted practices which: 
- may lead to the partitioning of markets in any form within the 
Community; 
- may affect the sound operation of the common organization of the 
market; 
- may create distortions of competition which are not essential in 
achieving the objectives of the common agricultural policy pursued by 
means of Inter-branch activity; 
- entail the fixing of prices or quotas without prejudice to the 
specific provisions of Community rules; 
- may create discrimination or eliminate competition in respect of a 
substantial proportion of the products in question; 
shall in any case be declared contrary to Community rules. 
4. If, following expiry of the three-month period referred to in the 
second indent of paragraph 2, the Commission finds that the conditions 
for applying this Regulation have not been met, it shall take a 
decision declaring that Article 85(1) of the Treaty applies to the 
agreement or concerted practice In question. 
That decision shall not come into effect earlier than the date of 
notification to the inter-branch organization concerned, unless that 
organization has given incorrect Information or abused the exemption 
provided for in paragraph 1. 
Article 8 
1. Inter-branch organizations may request that certain of their 
agreements or concerted practices be made binding for a limited period 
on individuals and groups In the economic sector concerned which are 
not members of the trade branches which they represent, in the areas 
In which the branches operate. 
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In order for their rules to be extended, Inter-branch organizations 
must satisfy a level of representativeness to be determined. Where the 
proposed extension of the rules is of inter-regionai scope, the inter-
branch organizations must prove they possess a minimum degree of 
representativeness, in respect of each of the grouped branches, in 
each region covered. 
2. The rules the extension of whose scope is requested must have been in 
force for at least one year and must relate to one of the following 
object ives: 
(a) knowledge of production and the market, 
(b) definition of minimum quantities, 
(c) the utilization of cultivation methods compatible with the 
protection of the environment, 
(d) the definition of minimum standards of packing and 
présentât ion, 
(e) the certification of seed and seedling quality and the 
monitoring of quality. 
3. Extension of the rules shall be subject to approval by the Commission 
in accordance with the procedure laid down in Article 9. 
Article 9 
1. In the case of rules laid down by inter-branch organizations 
recognized by the Member States, the Member States shall publish, for 
the information of the socio-economic groups concerned, the agreements 
or concerted practices which it is intended to extend to non-member 
individual operators or groups in a particular region or group of 
regions. 
Those concerned shall have two months in which to submit their 
comments. 
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2. At the end of the period referred to In the second subparagraph of 
paragraph 1 and prior to taking a decision, the Member States shall 
notify the Commission of the rules which they intend to make binding 
and supply all appropriate information. Such notification shall 
include all the comments received following publication In accordance 
with paragraph 1 and an evaluation of the application for extension. 
3. The Commission shall publish In the "C" series of the Official Journal 
of the European Communities rules the extension of whose scope is 
requested by inter-branch organizations which It has recognized under 
Article 4. Following publication, the Member States and the socio­
economic groups concerned shall have two months in which to submit 
their comments. 
4. If the rules the extension of whose scope is requested are "technical 
rules" within the meaning of Council Directive 83/189/EEC1, they 
shall be notified to the Commission in accordance with Article 8 of 
that Directive at the same time as the notification provided for In 
paragraph 2. 
Without prejudice to paragraph 5, where the conditions for delivery of 
a reasoned opinion under Article 9 of Directive 83/189/EEC are met, 
the Commission shall refuse to approve the rules the extension of 
whose scope has been requested. 
5. The Commission shall take a decision within three months of 
notification by the Member State in accordance with paragraph 2 and, 
where paragraph 3 applies, within five months of publication in the 
Official Journal of the European Communities of the application for 
extension of the scope of the rules. 
The Commission shall in any case take a negative decision if it finds 
that the extension: 
- prevents competition in a substantial part of the common market; 
1 OJ No L 109, 26.4.1983, p. 8. 
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- restricts freedom of trade; 
- Jeopardizes the objectives of the common agricultural policy or 
those of any other Community rules. 
6. The rules whose scope is extended shall be published in the Official 
Journal of the European Communities. 
7. When, pursuant to this Article, rules are made binding on non-members 
of an inter-branch organization, the Member State or the Commission, 
as appropriate, may decide that individuals or groups which are not 
members shall pay the organization all or part of the subscriptions 
paid by members, to the extent that such subscriptions are not used to 
cover the administrative costs of applying the rules or concerted 
practices. 
Article 10 
1. Where one or more of the activities referred to in paragraph 2 are 
pursued by a recognized inter-branch organization and are in the 
general economic interest of those persons whose activities relate to 
one or more of the products, the Member State which has granted 
recognition, or the Commission, where recognition has been granted 
under Article 4, may decide that individuals or groups which are not 
members of the organization but which benefit from those activities 
shall pay the organization all or part of the subscriptions paid by 
its members to the extent that such subscriptions are intended to 
cover costs, other than administrative costs, directly incurred as a 
result of pursuing the activities in question. 
2. The activities referred to in this Article shall relate to one or 
other of the following objectives: 
- research to add value to the products, in particular through new 
uses which do not pose a threat to public health, 
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- studies to improve the quality of leaf or baled tobacco, 
- research into methods of cultivation permitting reduced use of 
plant health products and guaranteeing conservation of the soil and 
the environment. 
3. The Member States concerned shall notify the Commission of decisions 
which they intend to take under paragraph 1. Such decisions may not 
take effect until three months have elapsed from the date of 
notification to the Commission. The Commission may within this time 
limit call for the rejection of all or part of the draft decision if 
the general economic interest relied upon does not appear to be well 
founded. 
4. Where the activities of an inter-branch organization recognized by the 
Commission pursuant to Article 4 are in the general economic interest, 
the Commission shall notify its draft decision to the Member States 
concerned, who shall have two months from receipt In which to submit 
their comments. 
Article 11 
Any measure by the Member States or the Commission imposing a 
subscription on individuals or groups which are not members of an inter-
branch organization shall be published in the Official Journal of the 
European Communities. The measure may not take effect until two months 
have elapsed from the date of publication. 
Article n 
Detailed rules for the application of this Regulation shall be adopted in 
accordance with the procedure laid down in Article 23 of Regulation (EEC) 
No [ex Reg. 727/70]. 
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This Regulation shall be binding in its entirety and directly applicable 
in all Member States. 
Done at Brussels, For the Council 
The President 

ISSN 0254-1475 
COM(91) 338 final 
DOCUMENTS 
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Catalogue number : CB-CO-91-448-EN-C 
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