European Commission probing two retailers for possible collusion

“Buying alliances between retailers have become a key component of grocery supply chains. They can bring lower prices to consumers for food and personal care brands that they purchase,” said Commissioner Margrethe Vestager, in charge of competition policy. “Such benefits can, however, disappear quickly if retailers use these alliances to collude on their sales activities. The Commission will, therefore, investigate if Casino and Intermarché have coordinated their activities in an anticompetitive way.”

Casino and Intermarché are two of the largest chains of groceries retail shops active in France. In November 2014, they set up a joint venture for the joint procurement alliance of their branded products, INCA.

The Commission said it is “concerned that Casino and Intermarché went beyond the purpose of their alliance and engaged in an anti-competitive conduct.” In particular, the Commission said it will investigate “whether Casino and Intermarché coordinated their activities on the development of their shop networks and their pricing policy towards consumers.”

If proven, this coordination may breach EU competition rules on anticompetitive agreements between companies (Article 101 of the Treaty on the Functioning of the European Union). The Commission said it will now carry out its in-depth investigation as a matter of priority. The opening of a formal investigation does not prejudge its outcome.

Case background

In February 2017 and May 2019, the Commission carried out unannounced inspections at the premises of Casino and Intermarché as part of its own-initiative inquiry into possible collusion between retailers through purchasing alliances.

In its Guidelines on horizontal cooperation agreements, the Commission notes this type of buying alliances usually aim at the creation of purchasing power, which can lead to lower prices or better-quality products or services for consumers. To the extent that such benefits are passed on to consumers, retailers’ alliances may have a positive effect.

Alliances, however, can also give rise to competition concerns. Notably the multiple contacts between retailers can lead them to collude on their retail sales activities. Market developments in recent years, such as the growth in number of alliances and the changes in partners in alliances, have enhanced the opportunities and risks of such collusion.

The Commission has informed the companies and the competition authorities of the member states it has opened proceedings in this case.