An 80 million króna fine for collusion regarding the retail pricing of meat and processed meat products that the meat processors had pre-labelled for Haga (so-called pre-labelling).The background to the case is that in December 2010 the Competition Authority published a decision reporting infringements by, on the one hand, the Bonus stores, and on the other, Sláturfélag Suðurlands, Reykjagarður, the Meat Processing Plant of Kaupfélag Skagfirðinga, Norðlenska, Kjarnafæðis and Kjötbankans in contravention of Article 10 of the Competition Act through a restrictive co-operation on prices. The companies did this through bilateral agreements or concerted practices in connection with the retail pricing of meat and processed meat products that the meat processors had price-marked for Bónus.
These companies requested to settle the matter with the Competition Authority. On that basis, the Competition Authority made use of The Competition Authority invoked the Competition Act and reached a settlement with each of them. The settlements included, among other things, the companies admitting breaches of the Competition Act and paying a total of 405 million krónur in fines.
Síld og fiskur and Matfugl requested conciliation talks with the Competition Authority, but these talks did not result in an outcome. The Competition Authority therefore had to take a position on the companies' actions in a separate decision, and this is done in a decision published today.
Provisions of competition law prohibit manufacturers and retailers from consulting with each other on resale prices (vertical price-fixing). The case involved an extensive examination of, among other things, email correspondence. Herring, Fish and Game Birdat Bónus. This data shows that on the one hand Síld og fiskur and Matfugl and on the other hand Bónus had close cooperation on Bónus's retail prices and discounts from them. This involved much greater cooperation than simply communications about the labelling of meat and processed meat products. Were these excerpts Herring, Fish and Game Birds capable of causing competitive harm to the public. It is considered appropriate to impose a fine of 80 million króna on Langasjó ehf. (the parent company of Síldar og fisks and Matfugl) for the offences.
The evidence shows, inter alia, that this consultation resulted in consumers being misled in relation to the pre-labelling of meat products. It was held consultation on each the „marked price“ what it should be and how much of a discount should be given from that price, ranging from 10% up to a 40% discount. However, it is clear that the marked retail price was never available to consumers and was therefore not a genuine price reduction. The Competition Authority has therefore issued specific instructions to Síldar og fisks and Matfugl with a view to strengthening competition. These are the same type of orders that apply to the meat processing companies that previously settled with the Competition Authority, see press release from 14.12.2010. This includes, among other things, Sild og fiskur og Matfugl shall cease all interference with retail prices, discounts from retail prices and the retail mark-up of food retailers, and shall cease to label meat products with retail prices.
The settlement in question from 2010 has led to significant changes in the food market, as from 1 June 2010, Haga's stores stopped accepting all pre-labelled meat products, and the meat processing companies stopped such labelling for all their customers. Following this, some companies have, of their own accord, discontinued pre-labelling, e.g. the Cheese and Butter Company. The Consumer Authority has established specific rules to ensure that retailers' price labelling is adequate, see Regulation No. 563/2011. Today's decision by the Competition Authority ensures that Síld og fiskur and Matfugl also make the necessary changes to their operations. Further information about these changes is available find here.
In May 2008, the Competition Authority published a report on supplier trading agreements and other forms of business cooperation in the food market. The report found that competition in the sale of pre-packaged meat products was limited. In this context, it was noted, among other things, that the price difference for pre-packaged products in supermarkets was much smaller than for other products. In its price surveys, ASÍ has repeatedly pointed out that this small price difference demonstrates limited price competition and is primarily a result of pre-labelling. After the aforementioned changes came into effect, on 27 June 2011, ASÍ conducted a price survey which showed that the price difference between supermarkets on products that were previously pre-labelled had increased significantly. The Competition Authority hopes that its decision today will further increase competition in these important consumer markets.
See the decision for details No. 36/2011.
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