Scrutinising competition in the food sector – Gómez-Acebo & Pombo

Concerns over market concentrations and dependence between suppliers and retailers is prompting deeper competition analysis

 

The creation of a Food Task Force by the European Commission has increased the competition scrutiny on food and supply chains, refelcting a deeper analysis at national level, says Miguel Troncoso Ferrer, Partner with Gomez-Acebo & Pombo; with Spain’s Comisión Nacional de la Competencia (CNC) notably active.

Last November, the CNC published a report on the retail sector that raised concerns over some large supermarket and distribution groups active in Spain.

“There is a general concern about the concentration of buying power in the sector within Member States and across the EU as a whole. The CNC has been looking particularly at market concentrations and the penetration of large supermarkets’ own brands,” says Troncoso Ferrer.

The CNC Report identifies a series of competition issues over the middle term which, it says, will require more scrutiny; including whether retailers’ promotion of own brands may force other suppliers off the shelves and out of business, the relative bargaining power of distributors, and practices around pricing and payments.

“There are concerns about the ‘economic dependence’ of some in the market, but despite the breadth of the CNC’s concerns, we have seen investigations like this conducted in markets such as the UK by the Office of Fair Trading that – although deep-rooted – ultimately produced little hard evidence of anti-competitive activity.”

Nonetheless, operators need to take seriously take the CNC’s concerns as well as the rising pressure on the EC to act. The European Parliament has already expressed concerns over the impact of inflation on food prices. This means there is a strong desire to promote greater competition across the sector, cautions Troncoso Ferrer.

“The CNC is active and there remains the sense that the EC does not want to assume jurisdiction unnecessarily over what have to date been largely vertical or national issues – yet there may come a time when it feels it has to.”

Scrutinising competition in the food sector – Gómez-Acebo & Pombo

Garcia-Sicilia

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