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German Federal Cartel Office Launches Sector Enquiry into Food and Luxury Food Retail Market

Posted in Cartel Enforcement

by Martina Maier and Philipp Werner

The German Federal Cartel Office (FCO) announced yesterday that it has launched a sector inquiry into food retailers.  The FCO will focus its study on foodstuffs and luxury foodstuffs without explicitly naming particular goods in its press release but broadly stating that the enquiry will only focus on “selected product groups”.  According to the official statement from the FCO, which is only available in German, the authority seeks to improve its “understanding” of the relationship between retailers and suppliers.  The FCO plans to have a close look into the market power of the large retailers.  The assessment will also focus on “whether and to what degree the leading retailers enjoy a purchasing advantage over their competitors”.

The retailer market in Germany is very concentrated, with only four large retailers holding about 85 percent of the market.  The FCO thus plans not only to shed light into the  buyer power of the large retailers but will also focus on whether the “consolidation process” in the retail market has also led to a concentration in the procurement markets to the benefit of the largest retailers.

The sector enquiry should, according to the official statement from the FCO, support its analysis of the food purchasing market which is currently being investigated following dawn raids at the premises of more than 15 companies on the retail and the manufacturing level of branded products, mainly foodstuffs, on suspicion of co-ordinated retail price-fixing, in January 2010.

If the FCO will start an investigation into individual companies in the food retail market and how the sector enquiry will affect the investigation into branded goods, started in January 2010, remains unclear.  The case draws parallels to the UK where the Office of Fair Trading launched several market investigations and market studies into the UK food retailer and manufacturer markets.