Proposal for a COUNCIL REGULATION ( EEC ) concerning inter­branch organizations and agreements in the tobacco sector
Date: 1991-10-24
Institutions: European Commission
Subjects: common organisation of markets, competition, professional association, tobacco

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) 

2 -

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). 

- 3 -

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. 

4  -

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; 

-  5 -

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; 

- 6 -

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) 

(c) 

(d) 

preparing  standard  contracts compatible with Community  rules; 

improving market  intelligence and  transparency; 

increasing  value added, particularly by means of marketing and 

research  into  new  uses  which  do  not  pose  a  threat  to  public 

health; 

- 7 -

(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. 

-  8  -

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. 

- 9 -

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. 

3. Agreements  and  concerted  practices which: 

- 10 -

-  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. 

-  11 -

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) 

(b) 

(c) 

knowledge of production  and  the market, 

definition of minimum  quantities, 

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. 

-  12 -

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. 

-  13 -

-  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, 

-  14 -

-  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]. 

-  15  -

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 

EN 

04  03 

Catalogue number : CB-CO-91-448-EN-C 

ISBN 92-77-76608-5 

Office for Official Publications of the European Communities 
Lr2985 Luxembourg