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.

Parallel imports take 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 importers make 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.

Producers engage 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.

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 commitment are 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 - sdd@audace-ass.com) to receive written information about the association and find out how to join.