On 9 September 2015, in his first State of the Union address, European Commission President Jean-Claude Juncker called for a review of the power wielded over food markets by groups of retailers and the “need to break some retail oligopolies”.  Against the backdrop of recent protests in both the UK and Belgium in relation to falling milk prices, Juncker has called for European and national competition authorities to take a closer look at the structure of the market. [1]  

His comments raise interesting questions about the powers available to competition authorities to address perceived problems in the food and drink sector.

National competition regulators, and indeed the Commission, may choose to employ tools such as market studies and sector inquiries to ascertain whether the food sector is functioning in consumers’ interests.  These inquiries, such as the Commission’s wide-ranging E-commerce sector inquiry (read our briefing here), are undertaken when there are indications that a sector is not operating as it should.  Previous Commission sector inquiries have resulted in numerous infringement proceedings.  They are a tool commonly used in the UK.  Interestingly, the UK regulator (initially the Monopolies & Mergers Commission and after it the Competition Commission) has twice looked at the groceries market, in 2000 and 2008.  Whilst its more recent findings were not a clean bill of health for the sector, its remedies were fairly limited.  There have also been a number of cartel investigations in the UK groceries market, the outcomes of which have been mixed at best for the regulator.   Therefore, it will be fascinating to see whether the new UK regulator, the Competition and Markets Authority, has the appetite to revisit the issues.  The groceries market is one of a handful that has received repeated scrutiny over the years, and it is not unheard of for regulators to revisit markets in which problems are perceived.

It is important to note that the Commission is not focused solely on retailer behaviour but on any competition problems that it perceives exist in the market. Earlier this year, the Commission stepped into a French legal battle to assert its view that EU competition law trumps EU agricultural policy, and the latter cannot be used to justify price fixing by producers. Using its power to submit observations in national court cases where an important point of EU law is at stake, the Commission intervened in a case before the French Supreme Court between French endive producers and the Autorité de la Concurrence, after endive growers and associations, which maintained minimum prices for 14 years, had their price fixing fines overturned by the Paris Court of Appeal. Their fines were overturned on the basis that the EU’s Common Agricultural Policy allows producers to group together to increase bargaining power with food retailers. In its opinion, the Commission maintained that the Court of Appeal should not have applied rules that contradict EU competition law.  It is clearly the Commission’s view that any form of price coordination is not a legitimate means of protecting food producers against the perceived power of the retailers.

What is clear is that the retail/food sector is an area of concern for Mr Juncker and retailers (at least in some jurisdictions) can expect to receive some scrutiny.  All businesses operating in the sector should in any event ensure that their practices are competition law compliant, to reduce the risk that any market or sector inquiries trigger competition enforcement activity.