Seasoning-to-ice cream maker Unilever has been found in breach of Greece’s competition regulations.
The Hellenic Competition Commission concluded that the multinational food corporation used the scale of its margarine brands to impose unfair trading agreements on retailers and wholesalers in the country. The violations were said to have occurred over a period of years, between 2002 and 2008, prior to Unilever’s sale of its spreads unit.
In its ruling, the watchdog said Unilever’s Greek business, ELAIS-Unilever Hellas, adopted “abusive practices” that aimed to maintain or extend Unilever’s market leadership in the margarine segment. These practices included targeted rebates and banning the promotion of competitive brands.
The authority also found Unilever broke competition law by forcing wholesalers to accept “resale price maintenance, restriction of active and passive sales and non-compete obligation clauses”.
Concluding the investigation, the Hellenic Competition Commission handed out a series of fines totalling around €27m.
For its part, Unilever said that it does not share the Commission’s conclusions. Commenting on the ruling, a spokesperson for the company told FoodNavigator: “ELAIS-Unilever Hellas states that respectfully disagrees with the outcome and is going to review the rationale of the afore mentioned decision examining the grounds to appeal to the Administrative Court of Appeal.”
Unfair trading practices: who’s to blame?
The ruling comes as the European Commission mulls proposals to regulate trade relationships in the food supply chain.
Earlier this month, the European Committee on Agriculture and Rural Development (AGRI) backed a draft proposal from the European Parliament that aims to end unfair trading practices (UTPs) including late payments to suppliers and the cancelation of orders at short notice.
The regulation aims to protect agricultural producers and small- and medium-sized enterprises. However, the decision to include large corporations that manufacture leading food brands in the regulation has proven controversial.
EuroCommerce, the organisation representing European supermarkets and retailers, insists that the draft regulation fails to recognise the significant power that big brands exert in the supply chain, including over retailers.
Addressing the AGRI committee, EuroCommerce director general Christian Verschueren warned that the debate and vote in the European Parliament has moved the discussion towards a “witch hunt” against retailers and wholesalers.
“The Commission put forward a proposal aimed at protecting farmers and SME processors. In the course of parliamentary discussions, driven by slogans such as ‘fairness for all’, the directive as amended protects big food multinationals, and the debate has turned into a targeted and direct attack on legitimate negotiations between retailers and suppliers”.
A spokesperson for EuroCommerce told FoodNavigator that the Greek findings on Unilever demonstrate the “power of brands over retailers” and “the abuse of that in cases like this”. These brands do not need the protection of the UTP directive, EuroCommerce insisted.
If large food manufacturers are included in the UTP directive it would make enforcement actions by member states – already “immensely slow” – a “lot more difficult”.
Organisations representing European food manufacturers are, however, standing by their guns. A spokesperson for trade body FoodDrinkEurope told FoodNavigator: “We are of the opinion that an unfair trading practice is unfair for everybody, whatever the size of the supplier affected. Everyone benefits from a fairer food chain and EU rules should protect all suppliers in the chain and apply to all buyers.”