Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Competition in Consumer Goods Markets Is Key for Turnaround of European Economy: Almunia, (May 14, 2013)

By John W. Arden, J.D., LL.M.

Competition in the consumer goods market is vital to leading Europe out of its economic doldrums, said EC competition chief Joaquin Almunia yesterday in a speech to the ECR Europe Annual Conference in Brussels.

“As the crisis moved from the U.S. to Europe, it has revealed some serious structural flaws in our model which have been there for a long time,” according to the Vice President of the EC Commission for Competition Policy. “In a sense, the emergency situation has focused our minds. We can now see better where the problems are and fix them.”

The large scale efforts to put the economy back on track depend on the ability to enhance "economic dynamism" in a number of key industries, including the food and retail industries represented by ECR Europe.

"It is clear that fair and keen competition in these markets is vital if we are serious about leading Europe out of this downturn," said Almunia. "And apart from their economic size, your sectors are also vital because they are part of the daily lives of the vast majority of ordinary Europeans."

A 2012 report showed that the European Commission and the EU national authorities have been very active in the "food and retail supply chain," according to the official. Between 2004 and 2011, the EC and national authorities conducted more than 180 investigations, nearly 1,300 merger reviews, and more than 100 market-monitoring actions.

"All levels of the supply chain were involved," he noted. "Processing accounted for about one third of all the cases recorded, followed by retail with 25% and manufacturing with 16%." The bulk of the actions were against cartels between processors or manufacturers, which can cause prices to rise for consumers and business partners.

"Just think that a cartel among pasta producers uncovered in Italy had led to a 50% increase in wholesale prices and 35% in retail prices over a period of three years," Almunia remarked.

National authorities carried out a large part of the work in the period covered by the report, but the European Commission has not been idle. The Commission has investigated cartels among beer producers and banana retailers, among other businesses. There are ongoing cartel probes in the shrimp and white sugar sectors. Almunia also cited the Commission’s price fixing cases—both traditional cases in which producers set prices for their resellers and cases in which prices are agreed to by suppliers and retailers—and "questionable exchanges of information." He has created a Task Force to monitor the food supply chain and alleged anti-competitive practices at the European level.

The competition chief described the European Retail Action Plan, which aims to "eliminate the obstacles that still hamper the creation of a genuine Single Market in retail." The Retail Action Plan addresses practical issues, such as working-skills information, access to innovation, and the emerging new forms of payment. It also helps consumers fight waste and stay better informed through a database of information on prices, quality, and sustainability of goods and services.

"I know I am preaching to the choir here, because you have been working on some of these issues through the ERC platform," he said.

The initiative is producing results, according to Almunia. Last year, a number of organizations representing stakeholders agreed to an enforcement mechanism that is starting to be implemented. "The Commission supports this self-regulatory initiative."

In parallel to this voluntary program, the Commission is exploring other solutions to combat unfair trading practices. In January, it issued a Green Paper on unfair trading practices in the business-to-business food and non-food supply chain in Europe. The Commission is concerned about unfairness when there is unequal bargaining power between a buyer and seller. Almunia has initiated a study on the impact of the modern supply chains on choice and innovation in food products. The study should be available by the end of the year.

Almunia also discussed the problems of concentration in the food and retail sectors and private-label products.

"At bottom, competition control is about consumer welfare," he concluded. "We will show to the people that competition control can bring real benefits when they most need them and bring benefits they can touch first-hand."

News: Antitrust