AN OPINION by an adviser to the EU's top court has rejected an attempt by Irish beef producers to reduce the number of abattoirs, because it restricts competition.

The advocate general to the European Court of Justice (ECJ) focused on an agreement among beef producers to allow some firms to leave the slaughtering market, a move aimed at tackling over-capacity.

The opinion was given after the Supreme Court referred the matter to the ECJ. The opinion is non-binding and the ECJ will rule in six to nine months. However, in the majority of cases, the advocate general's opinion is upheld by the court.

The advocate general said the 2002 agreement drawn up by the country's biggest beef producers, known collectively as the Beef Industry Development Society, restricted the freedom of firms which would remain in the slaughtering industry and those which would leave.

"I consider that the withdrawal of the processors from the market and the agreement not to use their processing plants are capable in principle of restricting competition between the stayers on the market," he said.

The deal, drawn up by beef producers such as AIBP, Dawn Meats and Repak, compensated firms leaving the industry in return for their agreeing not to re-enter the business for two years, not to use decommissioned plants for beef processing for five years and to sell their equipment only to the "stayers".

Compensation would come from loans which would be repaid through levies imposed on firms remaining in the industry.

"The arrangement represents the 'buying off' of competition," said the opinion.

The agreement among beef producers was drawn up after a 1998 government report showed overcapacity in slaughtering would lead to less profits in the beef processing industry.

The 32 existing abattoirs work an average of three days a week and the plan was to reduce the numbers by 25 per cent.

"With overall production remaining constant, greater competition would exist between participants in a market with high overcapacity than in a market with lower (or with no) overcapacity," said the opinion.

The 2002 deal was challenged by the Competition Authority, but this was dismissed by the High Court in July 2006.

The Competition Authority then appealed to the Supreme Court.