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The Competition Authority (AdC) announced on Monday the highest fine that it has imposed on companies that operate in the national market, and which is undoubtedly among the highest applied by the regulatory authorities in Portugal. According to the regulatory authority, fines totaling € 303.7 million will be imposed on Auchan, Intermarché, Lidl, Modelo Continente, Pingo Doce, and also the Central Beer Society (SCC) and Primedrinks.
The fines shot up in two processes that have common actors. The alleged practice of indirect leveling of prices for beverages through two suppliers common to the different supermarket chains is questioned, which lasted since 2007 and which, according to the AdC, even led to the destruction of evidence by the suspects. The fines also cover an SCC administrator and a business unit director at Modelo Continente.
“Companies can request the Competition, Regulation and Supervision Court to suspend the execution of decisions if they show that it causes considerable damage and provide an effective guarantee in its replacement,” says a statement from the AdC.
The application of the fines now announced is aimed at penalizing a practice known in regulatory jargon as “hub-and-speak.”, and that distinguishes the cases in which a single provider ends up acting as a link that encourages price leveling between the different supermarket chains, to guarantee a higher profit margin and prevent the appearance of lower prices.
northone of the AdC experts state that the prices of Sagres, Heineken, Bandida do Pomar and Água do Luso beers will be agreed between 2008 and 2017. This process involves Auchan, Intermarché, Continent Model, Pingo Doce, It’s in SCC, as a supplier of beverage brands. Even in this process, fines are provided individually for a SCC administrator and business unit director of Modelo Continente.
In the second “case”, the alleged price concert was based on the brands marketed by Primedrinks, which include wines Esporão and Aveleda, as well as The Famous Grouse or Grant’s whiskeys, or Hendrick’s gin and Stolichnaya vodka.
“Everyone involved benefits from the alignment and the concerted price increases. Only consumers are harmed, “says AdC referring to the alleged scheme. Modelo Continente, Pingo Doce, Auchan and Intermarché, Lidl and Cooplecnorte (owner of the E.Leclerc brand) are the retail brands involved in this process. According to the AdC, pricing continued between 2007 and 2017 and “also aimed at the gradual and progressive rise in prices in the retail market.”
For being involved in both the first and second processes, Modelo Continente, Pingo Doce, Auchan and Intermarché are sanctioned in legal accumulation with fines from a single tender.
Modelo Continente is the entity sanctioned with the highest fine, 121.9 million euros. Pingo Doce follows with a fine of 91 million euros; Auchan with 22.2 million euros; Intermarché with 19.3 million euros, Lidl with 10.5 million euros and Cooplecnorte (E.Leclerc) with just over 2 million euros. The Central Beer Society was sanctioned with 29.5 million euros and Primedrinks with 7 million euros.
The director of Modelo Continente involved must pay a fine of 2,000 euros, while one of the directors of Sociedade Central de Cervejas has been sanctioned with a fine of 16,000 euros.
AdC recalls that this is the “first conviction in Portugal for a concerted practice of indirect fixing between distribution companies through the coordination of suppliers”.
The regulatory body also recalls that the fines were determined, based on what is established by the Competition Law and without forgetting the duration and severity of the practices now sanctioned.
The AdC recalls that there are more cases of hub-and-radios investigated: there are currently 7 charges in progress that involve most of the supermarket chains that operate in Portugal and that, in addition to beverage suppliers, also involve suppliers of bread and cakes. packaged, personal care, beauty and cosmetic products.
“These two decisions do not exhaust the ongoing investigations of the AdC in Large Distribution. The AdC carried out raids in the premises of 44 entities during 2017, the results of which were incorporated into 16 administrative procedures, more than a dozen of which in this sector ”, concludes the entity that regulates competition.
