AGCM

PRESS RELEASE

AGRI-FOODSTUFFS: ANTITRUST AUTHORITY LAUNCHES SECTOR INQUIRY INTO THE ROLE OF ORGANIZED LARGE-SCALE RETAIL TRADE

Analysis of the sector's competitive dynamics in terms of their impact on final pricing.

Antitrust Authority investigation into the role of Organized Large-scale Retail Trade (GDO – Grande Distribuzione Organizzata) in the agri-foodstuffs supply chain: the Autorità Garante della Concorrenza e del Mercato has decided to conduct an in-depth study on the competitive dynamics of this sector due to their impact on final pricing.
The analysis will explore the degree of competition that exists between different GDO groups, the contractual dynamics that determine the purchase and sales conditions for agri-foodstuff products and the contracting behavior of large-scale retailers while establishing purchasing conditions with suppliers.
According to the Antitrust Authority, modernization of the mass retail sector has increased concentration levels as well as the inter-business sharing of certain business functions (affiliate relations, consortia, group and mega-group purchasing organizations, etc.). This phenomenon is capable of altering the dynamics of competition, mostly because of how the heightened influence of group purchasing organizations has significantly increased the contracting power of GDO companies in their relations with small- and medium-sized manufacturers. The Antitrust Authority has also received reports of phenomena in which GDO retailers ask manufacturers for contributions (irrespective of purchase quantities and prices) for exhibition, promotional and distribution activities. A parallel intensification of direct competition between distributors and their own suppliers has been taking place through private labels.

Rome, 06th November 2010