2. Outline
• A reflection on recent policy and case law trends
in the sector
• What is the ECN and how is the work of its
members relevant?
• What are the implications for food and drink
companies?
3. Recent Policy Initiatives (1)
• European Commission antitrust “task force” for
food sector
– two year “mission” from January 2012
– established as a result of continued calls for
scrutiny of retail markets
– complements rather than replaces national
competition authority investigations
4. Recent Policy Initiatives (2)
• Food and retail sector as a specific focus for the
ECN
– ECN stands for European Competition Network
– Nature of food markets tends to be
local/national rather than Europe wide
– so enforcement activity predominantly
national rather than at pan European level
– special food sub-group
5. Report of the ECN food sub-group (1)
• Published May 2012 in response to:
– European Parliament calls for explanations of
action taken to address volatility of
commodity markets
– Concerns about rising food prices
– Perceptions of a malfunctioning food supply
chain
6. Report of the ECN food sub-group (2)
• Statistics from 2004 to 2011:
– 180 antitrust investigations; 1300 mergers;
100 sector enquiries (“robust” enforcement)
• Anti competitive activity across the supply chain:
– price fixing; market sharing; unlawful
information exchange; resale price
maintenance; exclusionary conduct
7. National food-retail – a matter of
perennial interest? (1)
• Power struggle between large retail and food
suppliers a recurring political issue
• Repeated calls from European Parliament for
inquiry into the retail sector
• 2008 resolution requiring DG Comp to
investigate the impact of the supermarkets
• 2010 saw establishment of the High Level Forum
for a Better Functioning Food Supply Chain
8. National food-retail – a matter of
perennial interest? (2)
• Recent (2010/2011) national investigations in:
– Germany – Finland
– Spain – Hungary
– Belgium – Italy
– Bulgaria – Latvia
– Czech Republic – Portugal
– Denmark
• Exercise of market power -v- “unfair trading
practices” stemming from unequal bargaining
power
9. Cartel investigations 2012 (1)
• Fruit and vegetables (Hungary)
• Bread (Spain)
• Cotton (Spain)
• Beer (Austria) €1.1 million
• Flour (France) €242.4 million
• Milk (Cyprus)
• Bell peppers/shallots (Netherlands) €23 million
10. Cartel investigations 2012 (2)
• Beer (Spain)
• CO2 for soft drinks (Spain)
• Purchase of raw milk (Spain)
• Confectionery (discounts/rebates to retailers)
(Germany) €2.4 million
• Poultry (Greece)
• Watermelon* (Hungary)
* also involves investigation of territorial sales restrictions
14. Implications (1)
• The more competition authorities look, the more
they find …
• … so they will keep on looking
• Communication across the ECN has the potential
to trigger a domino effect across Europe
15. Implications (2)
• Companies could be sitting on time bombs …
• … which could explode in the event of
investigation
• How confident are companies that their own
businesses are competition law compliant?
• How confident are directors that they don’t face
the risk of disqualification?
• New OFT guidance on penalties – a timely
reminder of the OFT’s deterrence objective
16. Implications (3)
• Consolidation opportunities continue to arise in
the current economic climate
• In an M&A context need to be alive to successor
liability principle
– buy the shares
– buy the liability
• Extra care needed in terms of due diligence and
contractual protection
• Immediate compliance review required post
completion
17. Conclusions
• The food sector has been a fertile source of
competition law infringements
• There are pressure points up and down the
supply chain which may tempt companies to
collude
• The authorities show no signs of turning out the
spotlight
• A good time for companies to take stock, re-
assess their risks and ensure their compliance
measures are robust
