capping food prices is prohibited

Any agreement between operators to set maximum prices on some foods is prohibited by law, the National Commission of Markets and Competition (CNMC)following the recent initiative of the Vice President of the Government, Yolanda Díaz.

The CNMC has thus positioned itself before the meeting that will be held next Monday by the Vice President and the Minister of Consumer Affairs, Alberto Garzonwith consumer organizations and distribution employers to deal with their initiative to limit the prices of staple foods of the shopping basket in the face of the impact of inflation.

According to the agency, both the Law for the defense of competition and the Treaty on the functioning of the European Union “expressly prohibit agreements or recommendations for fixing prices or other commercial conditions that restrict or distort competition“.

“The setting of maximum prices between operators, even under the auspices or encouragement of public authorities, is a prohibited price agreement” by these regulations, the CNMC has pointed out.

The Commission has highlighted that has the obligation to monitor, investigate and sanction any agreement that companies may agree on, and has advised to assess “carefully the effects of any public intervention in terms of prices.”

In his opinion, an agreement to fix maximum prices, even if it is punctual, determines a standard or scale for fixing prices that “eventually leads to higher prices, less innovation, less investment and a negative alteration of the competitive structure of the market “.

The CNMC has warned of the possible reduction in price competition by companiesas well as the impossibility of small and medium-sized operators to follow this type of measures in economic contexts similar to the current one.

These measures can “carry a strengthening of the large market operators to the detriment of the rest, with long-term negative effects on the competitive structure of the market and, therefore, on consumers”.

The body has explained that the large distributors, due to their greater financial muscle, bargaining power and business diversification, may be in a situation of face the sales at a loss that the agreed ceilings may imply.

Small distributors, at a disadvantage, may end up disappearing in a context like the current one, marked by high production costs, so that competition is eliminated, “a fact that always harms consumers,” according to the CNMC.

The National Commission for Markets and Competition has recalled that public regulation of prices normally has “counterproductive effects and the effects of regulation in the medium and long term must be carefully weighed”

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