Letter to farmers in the United Kingdom:
To stop you buying agrochemicals where they are cheapest,in order for them to maximise their monopolist profits on the UK market (and the rest of Europe), multinational producers and some distributors united within the British Agrochemicals Association Ltd judicially reviewed the Ministry of Agriculture, Fisheries and Food 's interpretation of EC Council Directive 91/414 concerning the marketing of plant protection products.
The Court of Justice of the European Community gave its judgement on 11 March 1999 given the number C-100/96 in relation to the following: Marketing authorisation Plant protection product imported from an EEA State or a third country Identical to a plant protection product already authorised by the Member State of importation Assessment of identical nature Member States' power of assessment.
The Court has ruled clearly in favour ofparallel imports.
A plant protection product can indeed be introduced lawfully into a Member State through a fast registration procedure if it:
-unless that is precluded by considerations concerning the protection of human and animal health and of the environment.
-if not identical in all respects to a product already authorised within the Member State of importation, at least shares a common origin with that product in that it has been manufactured by the same company or by an associated undertaking or under licence according to the same formulation.
Parallel importing, that is the importation of a product through channels other than those arranged between the manufacturer of the product and its authorised distributors, is generally considered to promote price competition in a market.
Not surprisingly, parallel imports are opposed by some manufacturers, which seek to engage in significant price discrimination by geographic area.
Parallel importstake place when there are significant price differences for the same product in different markets. In agrochemicals, the CEJA, the European Council of Young Farmers, has recently published on its web site (http://www.ceja.org/study.htm) a study of input prices in the agricultural sector in the European Union: "The largest differences in price, on average, appeared in the plant protection sector ."
Parallel importersmake their purchases in the national markets where goods are cheapest, and import them into countries with higher prices. This price competition for the same good is an advantage for consumers. Parallel imports can be an important source of price competition for many goods. There is particular interest in pharmaceuticals and agrochemicals. Those products have a large and captive customer base and high profit potentials and their distribution is heavily regulated in every country. The world market for food and health products are dominated by fewer than ten Multinational Enterprises (MNEs) and this number is declining rapidly.
Producersengage in a variety of techniques to stop parallel imports, such as restrictive contracts with distributors, regulatory barriers with national authorities (France, for instance, recently received a letter of warning from the Commission following a complain filed by the Association of Users and Distributors of Agrochemicals in Europe AUDACE [http://www.audace-ass.com]. The French government was, and still is, refusing to release application forms for parallel imports of agrochemicals, prosecutes parallel importers and even imposes higher rates of VAT for parallel imported goods). MNEs also claim that parallel imports violate territorial restrictions on patent, copyright or trademark rights under intellectual property laws.
International law: In general, parallel imports are permitted under International agreements on intellectual property. The technical issue is the so-called "exhaustion" of an intellectual property right, which is also sometimes referred to as the "first sale doctrine." Under the theory of the "first sale" or the "exhaustion of rights," the owner of intellectual property cannot control the resale of a legally purchased good, and parallel imports are legal.
Under the WTO/TRIPS rules, countries are permitted to decide for themselves how to handle parallel imports. The key section of the TRIPS is Article 6, Exhaustion, which reads: For the purposes of dispute settlement under this Agreement, subject to the provisions of Articles 35 and 46 nothing in this Agreement shall be used to address the issue of the exhaustion of intellectual property rights." Regional trade agreements such as NAFTA or the European Union have their own rules regarding parallel imports.
In the EU, these issues have for the most part been framed in terms of article 30 of the EC Treaty dealing with the free movement of goods. The Commission has fought consistently against the industry's ever growing demand for Intellectual Property (IP) protection probably not so much because of any opposition to IP rights per se, but more that any outcome that might be perceived to partition the market would run counter to the underlying goal of a single common market. The jurisprudence of the ECJ consistently supports the Commission's position.
Future issues:The legal settlement of the dispute between the Industry and parallel importers of agrochemicals, which constitutes C-100/96, will not automatically translate into a more competitive agrochemical market if other issues are not tackled. Indeed many more issues pertaining to restrictive agreements, vertical restraints (see ADALAT Bayer Case [now under appeal to the European Court of First Instance]) IV/34.279/F3 proceedings under article 85 of EC Treaty), etc. have yet to be settled through litigation. AUDACE has already pointed out various practices that violate the principle of free movement of goods. One such practice is the new status given by MNEs to privileged distributors, concentrating the supply of essential chemicals in fewer hands. Another example is where a producer abandons its national registration or amends product formulation in order to stop a parallel import registration.
Your help and your commitmentare crucial if AUDACE is to become an effective counter weight to MNEs lobbying and monopolistic activities. A broad membership base and personal involvement are essential for the association to challenge monopolist powers effectively at every level of national and international, economic, institutional and political life.
Do call me on +32 (69) 89 14 18 (facsimile +32 (69) 89 14 15 -email@example.com) to receive written information about the association and find out how to join.
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