AdC issues Statement of Objections to supermarkets and beverage supplier for price fixing, harmful to consumers

Press Release 18/2020 

AdC issues Statement of Objections to supermarkets and beverage supplier for price fixing, harmful to consumers 

The AdC – Portuguese Competition Authority issued a Statement of Objections to Modelo Continente, Pingo Doce, Auchan and the supplier of alcoholic beverages Active Brands for price fixing in supermarkets.

The investigation conducted by the AdC revealed that the supermarket chains used their commercial relationship with the supplier Active Brands (formerly a company of Gestvinus/João Portugal Ramos Group) to align the retail prices of most of the latter’s products, to the detriment of consumers.

Active Brands was, at the time, a supplier of wines and white drinks, including of well-known brands such as Licor Beirão and Porto Velhotes, among others of. The investigated practices took place between 2008 and 2017.

The Statements of Objections also includes one director of Active Brands.

If confirmed, the practice which in competition terminology, is called a hub-and-spoke, is very serious. It is a practice similar to a cartel in which the large retail chains do not communicate directly with each other, but instead use bilateral contacts with the supplier to guarantee through the latter that they all practice the same retail price in the market.

This practice is harmful to consumers because it deprives them of the choice, in terms of pricing, of the products they acquire in large retail chains.

The Statement of Objections now issued integrates the third set of “hub-and-spoke” cases investigated in Portugal.

In June 2020, the AdC issued Statements of Objections for the same practice to three food distribution groups and one supplier of packaged cakes and breads. A month later, the Authority issued a new S.O. to six supermarket chains and two suppliers of alcoholic and non-alcoholic beverages.

In March 2019, the AdC had already issued Statements of Objections to six large food distribution groups and three beverage suppliers for the same practice.

The AdC is currently pursuing more than ten investigations in the large food retail chains sector, some of which are still subject to investigative secrecy. The food sector represents a priority for AdC due to the weight it represents in household budgets.

The AdC emphasizes that issuing a Statement of Objections does not determine the final outcome of the investigation.  At this stage of the procedure, the undertakings are given the opportunity to exercise their rights of defence against the alleged infringements and possible applicable sanctions.

The Statement of Objections was issued on November 24, 2020.

November 27, 2020