Retailers must be wary of any anti-competitive implications of purchasing alliances which they enter into. The European Commission’s readiness to launch anti-trust investigations into any such alliances clearly emphasises the importance for competitors to weigh carefully the implications of same.
Purchasing alliances between retailers are becoming increasingly common in Europe’s grocery retail sector. Such alliances usually aim at the enhancement of the purchasing power of retailers with the intention of securing better deals from suppliers, particularly in so far as price and choice is concerned. Such lower prices and greater choice should in turn translate into greater benefits for the consumer. However, retailers at tiles also use such alliances to collude on their retail sales activities such as agreeing on retail prices or dividing markets between themselves. This in turn gives rise to anti-trust implications, to the detriment of consumers themselves. Market developments in recent years, such as the growth in the number of alliances and the changes in partners in alliances, have enhanced the opportunities and risks of such collusion.
With the precise aim of halting anti-competitive conduct emanating from a purchasing alliance, the Commission has recently launched a formal antitrust investigation to assess whether two French groups of retailers, Casino Guichard-Perrachon (Casino) and Les Mousquetaires (Intermarché), have coordinated their conduct in the market in such a way as to breach EU competition rules. EU competition rules clearly prohibit both horizontal and vertical agreements and concerted practices which may affect interstate trade within the EU and which have the object or the effect of preventing or restricting competition.
There is no legal deadline for the Commission to conclude an antitrust investigation
Casino and Intermarché are two of the largest chains of groceries retail shops active in France. In November 2014, they set up a joint venture for the joint procurement alliance of their branded products, INCA. In February 2017 and May 2019, the Commission carried out unannounced inspections at the premises of these two retailers as part of its own-initiative inquiry into possible collusion between them through purchasing alliances. Of particular concern for the Commission is the fact that Casino and Intermarché could have, through their alliance, coordinated their activities on the development of their shop networks and their pricing policy towards consumers.
There is no legal deadline for the Commission to conclude an antitrust investigation and its duration depends on various factors, including the complexity of the case, the extent to which the companies concerned cooperate with the Commission and the exercise of the rights of defence.
Nonetheless, though the outcome of this particular investigation is far from seeing the light of day, the Commission has made it amply clear that it will not be impressed by arrangements concluded among retailers which are used as a smoke screen to achieve anti-competitive objectives. The partitioning of markets and the coordination of pricing policies are high on the Commission’s blacklist insofar as competition is concerned and any agreements which have the object or effect of achieving such objectives will be thoroughly investigated and eradicated.
Mariosa Vella Cardona M’Jur, LL.D., is a freelance legal consultant specialising in European law as well as competition law, consumer law, data protection law and intellectual property law. She is also a visiting examiner at the University of Malta.