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Too much price increase in retail? The Cartel Office is now examining this

The Bundeskartellamt is dealing with the high food prices in Germany.

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Too much price increase in retail? The Cartel Office is now examining this

The Bundeskartellamt is dealing with the high food prices in Germany. "There are specific complaints that we are investigating," says Andreas Mundt, President of the Bonn Competition Authority. The aim is to determine the causes of the recent strong price increases. "We are following this with eagle eyes and have asked companies for information about the background," reports Mundt.

He does not want to say which providers have received mail from the cartel office. But it's about the trade, not the manufacturer. If a concrete suspicion arises, his authority will initiate appropriate procedures. "In principle, price increase procedures are possible in Germany," describes Mundt.

However, such procedures are not easy, the head of the authority emphasizes immediately. In addition, Mundt points out that not every price increase is a case for his house. "The Bundeskartellamt is not a price authority," he clarified when presenting the 2021/2022 annual report.

"We cannot lower prices by decision." Also, increases alone are not sufficient to be able to intervene. "We need an abusively inflated price." At the moment, however, there are many reasons for legitimate price increases, starting with geopolitical upheavals and supply chain problems to shortages and cost increases.

And this announcement applies not only to the food sector, but also to the fuel market. The Cartel Office has been observing this very closely for several years. "And we will continue to take a close look and provide information on how prices are developing and what will happen if the tax reduction ends on September 1st," promises Mundt.

"Because we know that competition doesn't work well in the industry." Because there are relatively few companies and they are mostly active from the borehole to the gas station, which gives them many options when it comes to pricing. The competition watchdog is currently observing prices and also volume developments at around 15,000 petrol stations in Germany.

At the same time, an investigation of the refinery and trading level is underway. "Until now, little has been known about what actually happens between buying crude oil and selling it at the gas station," explains Mundt, who announces the first test results for the fall.

However, it is well taken into account that refinery capacities were shut down during the pandemic, diesel volumes from Russia have been eliminated and important transport routes such as the Rhine are restricted by low water.

In any case, the Cartel Office is sensitized to the special crisis situation with the corona pandemic and the Ukraine war. “This changes competitive conditions. So we also have to adapt the application of competition law accordingly," says Mundt, citing the topic of cooperation as an example. Currently, for example, companies have asked to jointly counteract the impending gas shortage. Mundt does not want to give details or names.

In terms of content, the main focus is on joint procurement and cooperation in production in order to ensure production. "What would be forbidden in normal times, we temporarily allowed during the pandemic." And even now, the times are anything but normal. Mundt makes it clear that all exceptions for crisis-related cooperation must be limited in time, proportionate and not discriminatory for one of the partners. "We're in talks with the companies and tell them what works - and sometimes what doesn't work."

And the authorities take a very close look at this, emphasizes Mundt. "We will take consistent action against illegal agreements or abuse of market power." Recently there have also been significantly more procedures and searches.

In any case, in 2021 investigators only went out twice due to the pandemic, but in 2022 there were already 13 searches again. “The special circumstances during the pandemic have made effective cartel prosecution difficult in recent years.

But that's behind us," assures Mundt. The enforced handbrake in the cartel prosecution also had an impact on the fines. In 2021, the authority collected 105 million euros, for example because of agreements in the areas of satchels, headphones or stainless steel.

For comparison: in 2020 it was still 349 million, although there were also some procedures with high individual sums at that time. In the current year, the fines imposed have amounted to around 20 million euros.

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