AdC sanctions Auchan on prices to the Best detriment of consumers 2022

AdC sanctions Auchan on prices to the Best detriment of consumers 2022

The decision

The AdC (Portuguese Competition Authority) has sanctioned four supermarket chains – Auchan, E. Leclerc, Modelo Continente (SONAE Group), and Pingo Doce (Jerónimo Martins Group) – as well as the common supplier of food, home care and personal care products Unilever, for having participated in a scheme of price fixing on retail prices.

The AdC’s investigation concluded that through contacts established through the common supplier, without the need to communicate directly with each other, the participating distribution companies ensured the alignment of retail prices in their supermarkets. This conspiracy is equivalent to a cartel and is known in competition law terminology, as “hub-and-spoke”.

Such behavior eliminates competition, depriving consumers of the option of better prices, ensuring better levels of profitability for the distribution chain, including the supplier and the supermarket groups.

For more information on the case, please see the AdC’s website.

Background

In November 2021, the AdC issued a Statement of Objections for the current case and provided all companies the opportunity to exercise their right to be heard an to defend themselves, which was duly considered in the final decision.

The AdC’s Sanctions investigation determined that the behavior lasted for almost ten years – between 2007 and 2017 – and targeted several products in the food, home care and personal care areas, such as detergents, deodorants, ice cream, sauces and tea.

Since the unannounced inspections carried out in 2017 among large retailers, the AdC has sanctioned six supermarket groups and six other suppliers in similar hub-and-spoke cases. The sanctioning decisions issued between 2020 and 2022 have so far amounted to fines in excess of €645 million.

Sanctions

The sanction now decided resulted in a total fine of €132 million, distributed as follows:

The fines imposed by the AdC are determined by the sales turnover of the sanctioned company in the affected markets in the years of the sanctioned behavior. In addition, according to Portuguese Competition Law, fines cannot exceed 10% of the company’s turnover in the year prior to the sanctioning decision.

In setting the fine, the AdC takes into account the seriousness and duration of the infringement, the degree of participation of the companies in the infringement, the economic situation of the companies, among other circumstances. This is done in accordance with the AdC’s Guidelines on the Methodology to be Used in the Application of Fines [in Portuguese].

The sanctioning decisions may be appealed. The appeal does not suspend the execution of fines. Undertakings may request the Competition, Regulation and Supervision Court to suspend the enforcement of the decisions if (i) they demonstrate that it causes them considerable prejudice and (ii) they provide an effective guarantee in its place.

GSN