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Romanian Competition Council fines 4 retail chains
A few days ago, the Competition Council of Romania fined four retail chains and over 20 of their suppliers nearly 35 million euros. According to a news release, in 2005-2009, the retailers Metro, Real, Selgros (owned by the German group REWE) and Mega Image colluded to set retail prices and conduct during sales campaigns, which led to higher consumer prices.
The Competition Council has also managed, for the first time, to change the national legislation in this field, as its president Bogdan Chiritoiu told Radio Romania: Bogdan Chiritoiu: “The investigation itself was rather difficult. There were a number of things that we did for the first time, and this slowed it down a little, not to mention the efforts of some of the lawyers to protract the investigation. We even needed an amendment of the legislation, in order to hinder the lawyers’ efforts to drag out the investigation. This is a substantial fine for an industry where turnover is very large, but profit margins are generally low. Obviously, if they do that again they risk getting new penalties, but according to our information as soon as we started the investigation these collusion practices stopped.”
According to the news release issued by the Competition Council, the institution found that “retail prices had not been set according to market rules, based on demand and supply, but instead the supplier and retailer had set a minimum price or a fixed price. This practice leads to higher prices for the end consumer, because the retailer cannot reduce prices below the limit agreed with the supplier.” As for the conduct of companies during sales campaigns, the contracts or agreements between some retailers and suppliers included a clause under which suppliers were not allowed to offer discounts in more than one retail chain at a time.
This prevented the access of clients to the same discounted products, and implicitly lower prices, in competing stores at the same time. “The decision to discount products or not, in competing retail units, must rest with the supplier,” the news release also reads.
Selgros Cash&Carry denies the accusations of the Competition Council, which fined the company 6.6 million euros, and says it is waiting to see the grounds for the decision in order to start court proceedings against it. The same is true for the soft drinks producer Tymbark.
At the end of last year, the Competition Council started another investigation into presumed violations of the national and EU competition rules by other retail chains in Romania, namely Auchan Romania SA, Carrefour Romania SA, Romania Hypermarche SA, which manages the Cora chain, Kaufland Romania and their suppliers. During the investigation, the Competition Council carried out a series of unannounced inspections, and the documents provided by various companies are currently being analysed as part of the investigation procedures.
Also at the end of last year, the government endorsed a Memorandum providing for the set up of a system for monitoring consumer prices. The project will be carried out jointly by the Romanian Consumer Protection Association, the National Authority for Consumer Protection and the Competition Council. The “Consumer Price Monitor” will be an on-line platform, which is to post prices for a constant basket of goods and services, on a weekly basis.
On one hand, the project is aimed at keeping consumers informed on the latest market developments, helping them to spot the best bargains, and on the other hand it is designed to foster competition between various sellers.
According to the Competition Council, the latest measures are part of a European tendency to monitor the retail food market more closely. Moreover, amendments are to be made to the Competition Law, allowing individuals to cooperate with the relevant authority during investigations over companies that fail to comply with competition rules. Company that cooperates during investigations are to benefit from a leniency policy.
Bogdan Chiritoiu: ”Romania, like any other EU country, applies a rule that grants immunity to the first company that comes with evidence about an undetected violation of competition laws. That company will be exempt from fines or other sanctions, which will only be levelled against the other companies involved. What we try to do now is to extend this principle to natural persons and encourage individuals who have knowledge about any law infringement in this field to cooperate with the relevant institutions." The Council’s investigations last year mainly targeted food retailers, but were soon extended to cover the area of bid rigging, mass media and the energy market.(Source: balkans.com)