Bulgaria competition watchdog opens retail trade cartel investigation

Written by on May 25, 2016 in Business - Comments Off on Bulgaria competition watchdog opens retail trade cartel investigation
euro notes in a shopping trolley

Bulgaria’s Commission on Protection of Competition (CPC) has opened an investigation into whether four foreign-owned retail chains were acting in collusion to limit competition. The four chains affected by the investigation were Austrian-owned Billa, Germany’s Metro Cash & Carry and two chains owned by Schwarz Gruppe – Kaufland and Lidl.

In its decision, made at the regulator’s meeting on May 19, CPC said that the market share of retail chains in Bulgaria was on the rise since 2013, with Lidl opening its first supermarkets in the country, while other chains expanded their networks. The increased market share came despite the recent market exit of the Carrefour and Piccadilly chains, according to the regulator’s statement.

CPC said that the retailers’ focus on increasing the presence of their own house brands in the stores presented them with an opportunity to have a negative impact on the market through their price-setting processes. The retail trade business model already encouraged rival chains to employ very similar marketing and pricing strategies, while the fact that retailers used the same suppliers for their house brands provided an opportunity for indirect, but intentional, co-ordination, the regulator said.

Given those factors, there was an “objective necessity” to ascertain whether the largest retail chains engaged in illegal collusion with the goal of ensuring a “beneficial environment” for promoting their own house brands, a practice that would have a detrimental impact on competition on the fast-moving consumer goods market, the regulator said.

On the same day that the commission made the decision to open the investigation, it carried out on-site checks at the headquarters of Billa and Metro’s subsidiaries in Bulgaria. CPC’s cartel investigations usually take close to a year to complete, which means a ruling in this case is unlikely before the first half of 2017.

(Photo: Vera Reis/sxc.hu)



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