EU court refuses suspension of mancozeb phase-out

19:41 PM | April 7, 2021 | Sanjiv Rana

An EU court has refused a request from Indofil for the phaseout of the fungicide mancozeb to be suspended in the region until a lawsuit contesting its nonrenewal is resolved. Indofil had asked for interim relief on the basis that mancozeb is a major product for the company. However, in a ruling in March, the General Court of the European Court of Justice said that the company did not establish the seriousness or irreparable nature of the damage alleged in its case.

Mancozeb is due to be phased out in the EU by 4 January 2022 following the European Commission’s decision late last year not to renew its approval. UPL and Indofil, as members of the EU Mancozeb Task Force, contest the conclusions of the EU assessment. They took their case to the EU court in December, urging annulment of the non-renewal decision.

Indofil’s Dutch subsidiary lodged the separate case for a suspension of the phaseout program, claiming that, on the basis of the financial years 2018 to 2020, its losses amount to 100% of its turnover and 10% of the total turnover of the Indofil group. For the 2020 financial year, the Dutch subsidiary’s overall turnover was around €28.5 million ($33.7 million at the current rate) and the overall turnover of the Indofil group was around €283.0 million.

Furthermore, the company claimed that the damage would be irreparable because it would lose its market shares to competitors selling other fungicides.

While the Court acknowledged that previous cases have used the indicative threshold of 10% of turnover for assessing harm, it said that its analysis cannot be limited to that interpretation alone. The Dutch subsidiary was established with the sole object of selling mancozeb, and this is part of the “risks of the undertaking” of which the company “must accept the consequences”, the Court said. It also noted that the subsidiary’s sales in the UK in 2019 represented 3.4% of the EU market. If these sales are excluded because of the UK’s withdrawal from the EU, then the subsidiary’s EU sales would represent less than 10% of Indofil group’s turnover, the Court concluded.

Agrochemical companies operate in a highly regulated market and it was incumbent on Indofil to take account of the increased risk of a mancozeb ban, the Court pointed out. The subsidiary claimed that both it and its parent company had begun to diversify their activities from 2014 onwards. However, the Court said that it had not provided sufficient evidence to support that claim, nor demonstrated that its parent company would be unable to continue that investment.

The Court also rejected the claims of irreparable damage, saying that the company did not provide any evidence to support its claim. The company argued that the production of a new dossier to apply for mancozeb approval imposes a heavy financial burden, but it did not produce any evidence of the burden or of Indofil’s ability to bear it, the Court said.