Answer:

Agricultural agreements are generally subject to community legislation on competition, which regulate and in some cases prohibit sales at prices below production costs. The exceptions are cases where the effects of such agreements are confined to within the boundaries of a member state. (For details, see: EC regulation 1184/2006) Sale of agricultural products at prices below production costs is contrary to article 82. of the EC Agreement. The existence of the following conditions needs to be established for this to be the case: 1. It has to be proved that the enterprise in question is superior in terms of market power and that, 2. the price is below average variable cost or between average variable cost and average total cost and evidence is available that pricing was intended to displace competitors from the market.