Банкеръ Weekly

Briefs

METRO HAS STUMBLED IN THE PROTECTION OF COMPETITION ACT

The Commission for the Protection of Competition (CPC) has imposed a BGN80,000 fine on Metro Cash and Carry Bulgaria EOOD. The reason for the stiff sanction is that the German company has taken advantage of its dominant market position, thus coming within the provisions of the Protection of Competition Act. The CPC was approached by the confectionery producer Sole Trader Vemira-93, which is a supplier to Metro malls in Sofia, Rousse, Plovdiv and Varna. Under the agreement between the chain of hypermarkets and Vemira-93, the latter is obliged to pay the so-called initial fee, entitling it to deliver its goods to the respective Metro malls. Initially, the fee amounted to BGN3,500 but with the expansion of the network of Metro hypermarkets within the country the chain demanded its hiking to BGN8,575.According to the CPC, the company has not set clear criteria for calculating the size of the fee. Thus, the buyer can set the amount of the fee to be paid by the supplier of confectionery without observing any rules, experts say. At the same time, Vemira-93 has been obliged to guarantee to Metro supply of its commodities at the most advantageous terms, without having the right to sell the same products to another trader at a more profitable price. In case the manufacturer of confectionery effected such a deal anyway, it had to immediately notify Metro and change the terms. In that way, Metro Cash and Carry Bulgaria EOOD has violated the rules of free and fair competition, stipulated in article 18, item 1 of the Protection of Competition Act, CPC's members point out in their ruling. However, Metro's troubles do not end here. The CPC has also judged that with its seven malls and about 35% market share, the trade chain holds a dominant position on the domestic market. This gives them grounds to believe that the provisions of article 17, item 1 of the anti-monopoly regulations have been vioalated as well. The law stipulates that there is dominant position when a single company has such a market force which enables it to hamper efficient competition on the market and be to a considerable degree independent of its rivals or suppliers. This independence is expressed also in the possibility for an enterprise to impose its own terms on its trade partners.

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