European Parliament calling for an investigation of large supermarkets

Several members of the European Parliament called (1) “upon DG Competition to investigate the impacts that concentration of the EU supermarket sector is having on small businesses, suppliers, workers and consumers and, in particular, to assess any abuses of buying power which may follow from such concentration”. Moreover they requested  (2) “the Commission to propose appropriate measures, including regulation, to protect consumers, workers and producers from any abuse of dominant position or negative impacts identified in the course of this investigation”. See here.

Although the members of parliament (MEPs) recognised that not all of the Member States have legislation on large retailers, they asked for the above mentioned actions. Moreover they even got to worry that “squeezes on suppliers have negative knock-on effects on both quality of employment and environmental protection”.

Probably some of these concerns have a solid foundation supported by evidence, but the issue might get complicated. DG Competition is not like the Office of Fair Trading or the Hungarian NCA, the Gazdasági Versnyhivatal. DG Comp is not responsible for enforcing consumer protection legislation. So the first request above would have been better placed if it was addressed to either the European Commission  or to an other DG that might be more concerned about consumer protection instead of consumer welfare. Moreover regarding the first request, abusing buyer power seem to be a concern in EU competition law only if it is an abuse of a dominant position (that has a special meaning in competition law) or if it can somehow fit into the other provisions on competition.

Regarding the second request the core of the problem is the same, namely that it is hard to see on which relevant markets might large retailers be in a dominant position according to Article 82 (some special circumstances might come up and support maybe regional dominance somewhere).

And lastly, environment protection and quality of employment are legitimate concerns, but not under competition law (environment protection could have relevance, but only limited, but the case for employment protection is more weak).

Hungary does have a legislation on large retailers, the Act on Trade. Although the NCA was concerned and opposed the legislation at the time of adoption, but nevertheless it  became responsible for enforcing it. In principle the act prohibits the abuse of significant market power but that is not equated with a dominant position in the competition act. There is a procedure ongoing against TESCO under the Act on Trade for a suspected abuse of significant market power.

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