16 July 2014
Competition Enforcers focus on the Food Sector
Practice Group(s):
By Scott S. Megregian, Sebastián Romero Melchor and Jennifer P.M. Marsh
Antitrust,
Competition & Trade
Regulation
The European competition authorities have become extremely proactive in investigating
and punishing anti-competitive practices in the food sector in recent years. In the final
week of June alone, substantial fines were imposed in relation to milk (€70 million),
poultry meat (€39.9 million) and canned mushrooms (€32.2 million). At an EU-wide level,
the European Commission specifically created a ‘Food Task Force’ in 2012 designed to
scrutinise food markets and promote EU competition law enforcement in relation to food
supply chains. It subsequently launched an extensive study on ‘Choice and Innovation in
the Food Sector’ which is due to be published in early October 2014.
Food, Drugs, Medical
Devices and
Cosmetics (FDA)
Competition Investigations in the Food Sector
The practical implications of this policy focus are clear: companies in a large and growing
number of food markets have been investigated and heavily fined for anti-competitive
practices. In recent years the European Commission (the “Commission”) has conducted
investigations into various markets in the food sector, including retail food packaging,
shrimp, beer, sugar, carbonated soft drinks and bananas.
Competition in the food sector has also become a priority on the agendas of the national
competition authorities of the EU Member States. Investigations range from probes into
companies growing potatoes in Germany, to pig slaughter houses in France, dairy
processing companies in the UK and supermarkets in Italy.
Some Member States have taken a more active role in addressing anti-competitive
conduct in the food sector. Germany, for example, seems to have taken the driving seat
in this campaign. Its Federal Cartel Office has worked tirelessly in investigating a variety
of specific sub-markets. For example, coffee roasters were fined for having fixed endcustomer prices, while producers of ice-cream, frozen pizza and pet food were severely
fined for having illegally shared sensitive information. Most recently, on 15 July 2014, the
Federal Cartel Office announced that it had imposed fines totalling €338 million on a
number of sausage manufacturers for price-fixing.
Policy
The competition regulators have not been alone in their focus on the food sector; other
EU institutions have regularly voiced their concerns regarding competition in this sector.
For example, in January 2012, the European Parliament passed a Resolution on the
‘Imbalances in the Food Supply Chain’ asking the Commission to tackle abusive and
unfair trading practices in the sector.
The food sector has also been high on the agenda of different Directorates General
(DGs) within the Commission. For example, DG Enterprise and Industry has established
the High Level Forum for a Better Functioning Food Supply Chain to implement a
roadmap of initiatives to improve the competitiveness of the agro-food industry in
cooperation with the stakeholders. The Forum has produced Principles of Good Practice
in vertical relations in the food supply chain, currently being implemented on a voluntary
basis. In January 2013, DG Internal Markets and Services adopted the European Retail
Action Plan and, as part of it, a Green Paper on unfair trading practices in the businessto-business food and non-food supply chain. On 15 July 2014, it adopted a
Competition Enforcers focus on the Food Sector
communication encouraging Member States to improve safeguards for smaller food
producers and retailers.
Finally, DG Competition’s study on ‘Choice and Innovation in the Food Sector’ is
intended to provide the Commission with a basis for exploring and determining policy
options. The resulting report will examine whether increased concentration or other
factors like private label and socio-demographic characteristics have hampered choice
and innovation in the European food supply chain.
Future Trends
It is clear that intense competition law enforcement in the food sector is set to continue
and intensify. It is therefore essential that all players in the food sector educate and equip
themselves to minimise their exposure to serious legal, financial and reputational risks.
Indeed, in May 2013 Competition Commissioner Joaquin Almunia commented: “As to the
role of competition policy, let me repeat that we will continue to watch food and
consumer-goods markets closely. In the current conditions, keeping these markets free
from illegal and harmful anti-competitive practices is a litmus test for us.”
Authors:
Scott S. Megregian
Sebastián Romero Melchor
Jennifer P.M. Marsh
scott.megregian@klgates.com
+44.(0).20.7360.8110
sebastian.romeromelchor@klgates.com
+32.(0)2.336.1906
jennifer.marsh@klgates.com
+44.(0)20.7360.8223
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