Unfair trade practices to the detriment of Sardinian shepherds are worth little in Rome, where the Antitrust Authority has sentenced F.lli Pinna and five other dairies to derisory fines. Adding to the fires of summer 2021 is the frustration of injustice and impunity of sheep cheese producers who for years have abused their bargaining power to the detriment of farmers.
Coldiretti-which bears the greatest responsibility for the crisis of sheep farming in Sardinia (1,2,3)-is obviously silent. We are rooting revolt for the emancipation of farmers and ranchers from the parasites of Palazzo Rospigliosi, but above all to assert clear rules and severe penalties against the marauders of the supply chain.
Unfair trade practices to the detriment of Sardinian herders, Antitrust investigation
The Competition and Market Authority. (AGCM, Antitrust Authority)-following the protests of Sardinian farmers in revolt against the below-cost quotations of their raw milk- on 14.2.19 declared the opening of an investigation against the Consortium for the Protection of Pecorino Romano PDO Cheese and 32 dairies registered therein. In order to verify whether they had actually charged their suppliers prices below production costs, in violation of Article 62 of Law 27/2012. (4)
From fanfare to facts AGCM does not seem to have taken any account of the detailed analysis we provided on raw material and finished product quotations, domestic and foreign sales. (3) The speculation to the detriment of Sardinian shepherds was so grotesque that policymakers chose to ignore it. And the Antitrust Authority narrowed the investigation to only six Sardinian dairies-Pinna, Mattana, Murtas, Frau, Aresu, and Picciau-and then imposed de minimis administrative fines of between 2 and 10 thousand euros on them.
F.lli Pinna, outlaw 95.2 percent of Sardinian shepherds’ supply agreements
The ‘Più Sardegna’ association and the ICQRF had reported to the AGCM the commercial piracy of F.lli Pinna Industria Casearia S.p.A. to the detriment of Sardinian shepherds. And it was enough to look at 1425 supply relationships, between 2019 and the first half of 2020, to note how 95.2 percent of them were outlawed:
– 1210 out of 1425 farmers were delivering sheep milk ‘on trust’, without even having a contract,
– the few contracts were in the vast majority void (194 out of 215) due to lack of the object (quantity and/or price),
– various contracts were for a period of less than 12 months, without F.lli Pinna having collected the farmers’ consent as required.
Violations of Italian laws
Article 62 of Law 24.3.12 no. 27 stipulates that contracts concerning agri-food commodities (with the sole exception of those concluded with the final consumer) must be concluded in writing and contain a number of essential elements that include:
– duration of supply. Not less than 12 months, in the dairy sector, unless expressly waived in writing by the transferring farmer, (5)
– Price, quantity and characteristics of the product sold,
– delivery methods and payment terms. Payments must be made within 30 days end of month invoice date for perishable goods, 60 days for others.
Contracts should come with the principles of transparency, fairness, proportionality and mutual consideration of performance. Knowledge and prior understanding of all the essential elements of the provision are thus the basis for the protection of the weaker contractor.
Violations of EU rules
Reg. EU 1308/13 – so-called Single CMO (Common Market Organization) – in turn stipulates that every supply of raw milk in its territory must be the subject of a contract between producer and buyer, to be concluded in writing ‘prior to delivery‘. (6) The contract must include the following elements:
(i) price. Fixed i.e., to be calculated on the basis of factors stipulated in the contract (e.g., market indicators reflecting changes, volume and quality of deliveries),
(ii) volume of raw milk that can and/or should be delivered and delivery schedule,
(iii) duration, fixed or indefinite, with termination clauses,
(iv) terms and terms of payment. No more than 30-60 days after delivery, according to EU dir. 2019/633. (7)
(v) mode of collection or delivery of raw milk,
(vi) rules applicable in case of force majeure.
F.lli Pinna, ridiculous and late penalty from Antitrust.
It was not until 19.7.21-two and a half years after the Sardinian shepherds’ street demonstrations-that the ‘guarantor’ authority concluded its proceedings against F.lli Pinna Industria Casearia S.p.A. and five other Sardinian dairies.
Found to be in violation of Article 62.1, D.L. no. 1/2012 (or rather, of Law 27/21 that converted it) and
– ‘takinginto account the seriousness of the violation‘. 95.2 percent of outlawed supplies, it should be noted, and
– ‘of the work done by the enterprise to eliminate or mitigate the infringement‘. Caught with its hands in the shepherds’ pockets, the company went to great lengths to enter into the contracts, as stipulated by two Italian laws and an EU regulation,
– ‘as well as the economic conditions of the enterprise itself‘. A joint stock company with € 57 million in sales,
the Antitrust Authority determined the amount of the administrative fine in the total amount of €10,000. (8) An earful for F.lli Pinna Industria Casearia SpA, an incitement to crime for buyers of agricultural and food products, a resounding defeat for the production chain and the country-system.
Structural imbalance
The AGCM itself acknowledged a marked imbalance of bargaining power between dairies and farmer-shepherds, who process a perishable foodstuff and are forced to sell their daily production within a narrow time frame,
without being able to modulate the quantities according to demand and price trends.
Contributing farmers operate as sole proprietors, at most organized into small farms, with minimal employees and modest turnover. The individual herder has limited possibilities to change buyers, finding himself distributing milk in a limited territorial basin where there are few enterprises.
Conversely, dairies can use different suppliers of raw milk. And also resort – for non-PDO productions – to milk ‘from the Continent,’ including foreign milk. In this structural condition of objective weakness, farmers are easily blackmailed and at the mercy of recurring waves of raw milk price declines.
Justice or revolt
The Italian government has been put on notice by the European Commission, for its culpable delay in transposing the Unfair Commercial Practices Directive (EU dir. 2019/633). Minister Stefano Patuanelli then made a laconic press release, on 7/30/21, reporting on the preparation of a draft ‘decree-law’ that would, however, be submitted to the prior opinion of the Houses of Parliament, with the aim of overcoming the limits imposed by the ‘delegation law’. (9)
In fact, the Italian Parliament had delegated Palazzo Chigi to transpose theUnfair Trading Practices (UTPs) directive, assuming, among other things, some of its derogations contrary to EU law, as has already been reported. (10). However, someone needs to explain to Minister Stefano Patuanelli that a decree-law (unlike a legislative decree) is not bound by parliamentary delegation. And if EU Directive 2019/633 is not implemented in Italy right away-with no exemptions to the rights of farmers, ranchers and processors-there will be an uprising.
Dario Dongo and Elena Bosani
Notes
(1) Dario Dongo, Guido Cortese. There is milk and milk, the reasons of farmers in Sardinia. GIFT (Great Italian Food Trade). 12.2.19, https://www.greatitalianfoodtrade.it/consum-attori/c-è-latte-e-latte-le-ragioni-degli-allevatori-in-sardegna
(2) Dario Dongo. #PastoriSardi. GDO takes the field, first signs of understanding with industry. GIFT (Great Italian Food Trade). 17.2.19, https://www.greatitalianfoodtrade.it/mercati/pastorisardi-la-gdo-scende-in-campo-primi-segni-d-intesa-con-l-industria
(3) Dario Dongo, Guido Cortese. Sardinia, Antitrust investigates milk and pecorino cheese prices. Some market data. GIFT (Great Italian Food Trade). 19.2.19, https://www.greatitalianfoodtrade.it/mercati/sardegna-l-antitrust-indaga-sui-prezzi-di-latte-e-pecorino-alcuni-dati-di-mercato
(4) For more details see the freeebook ‘Article 62, a revolution?” by Dario Dongo, on Ebook “Article 62” – Il Fatto Alimentare
(5) Decree Law 51/2015(Urgent provisions on the revitalization of agricultural sectors in crisis), Article 2, Paragraph 2. V. https://bit.ly/3C2tQLq
(6) Reg. EC 1308/13, Article 148. See also MiPAAF Decree 15164/2012, at https://bit.ly/2UZNKGv
(7) Dario Dongo. Unfair trade practices, the EU directive 2019/633. GIFT(Great Italian Food Trade). 4.5.19, https://www.greatitalianfoodtrade.it/mercati/pratiche-commerciali-sleali-la-direttiva-ue-2019-633
(8) Antitrust. Measure 19.7.21 no. 29728, in Weekly Bulletin year XXXI, no. 29. https://www.agcm.it/dotcmsdoc/bollettini/2021/29-21.pdf
(9) Unfair practices, Patuanelli:“Commitment to eliminate 15 percent limit to penalize sales below cost of production.” MiPAAF. Press release, 7/30/21. https://www.politicheagricole.it/flex/cm/pages/ServeBLOB.php/L/IT/IDPagina/17239
(10) Dario Dongo. Unfair trade practices and the European delegation law, critical analysis. GIFT(Great Italian Food Trade). 4/24/21, https://www.greatitalianfoodtrade.it/mercati/pratiche-commerciali-sleali-e-legge-di-delegazione-europea-analisi-critica
Dario Dongo, lawyer and journalist, PhD in international food law, founder of WIISE (FARE - GIFT - Food Times) and Égalité.
Lawyer in Milan and Frankfurt am Main. An expert in family, juvenile and criminal law, she is now enrolled in a university master's programme in food law
