Competition questions the legality of the cap on the price of Díaz's food

The specific details of the government plan led by Vice President Yolanda Díaz to limit the prices of certain basic foods in the shopping basket are not yet known. In fact, according to the public statements of some colleagues from the Council of Ministers of the Minister of Labour, this last idea is still being debated within the Executive. And the scope of the measure in this regard remains to be seen. However, the idea that already squeaks in the ear of the liberalized markets that the economy uses to promote competition. Thus, although the Government already has inputs from the large distribution associations, with whom it will meet next Monday together with the Minister of Consumption, Alberto Garzón, and has even received the "interest" to address the measure by a of the main operators, Carrefour, with which it already held talks last Thursday, the legal aspect of the proposal is not clear. To begin with, Spain has its own legislation that restricts this possibility of agreeing on prices for certain goods, and even more so if this agreement is made between the main market operators. "The legislation prohibits agreements between operators as long as they restrict competition," say Competition sources consulted by ABC about Vice President Díaz's proposal. It should be remembered that both the Law for the Defense of Competition and the Treaty on the Functioning of the EU 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 price agreement prohibited by article 1 of the LDC and article 101 of the TFEU, which Competition must monitor, investigate and sanction. In fact, from the National Commission of Markets and Competition (CNMC), they doubt the legality of this plan to limit prices in the food sector. "Among others, agreements between companies aimed at fixing prices, which could constitute a cartel," they point out. “An agreement to fix maximum prices, although it may very occasionally lead to the containment of prices of some products in the very short term, in fact determines a standard or scale for fixing prices which, eventually, leads to higher prices, less innovation, less investment and a negative alteration of the competitive structure of the market. There is a decrease in price competition by companies, which will normally bid for that maximum price, and not others below the ceiling, "says Competition. Related News standard No Is it really possible to limit the prices of products in the shopping cart as Yolanda Díaz proposes? MLC The proposal of the Minister of Labor has generated great controversy and many experts doubt its legality This aspect is highlighted precisely by the affected companies. As explained by the employers, this operation that the Government intends to carry out with the Ministries of Labor and Consumption at the head of the negotiations, would be unthinkable from the perspective of the private sector. “If three business associations sat down tomorrow to agree on a price setting, we would have an immediate complaint of competition for violating market regulations,” point out sources in the sector. Thus, the CNMC asks to carefully assess the effects of any public intervention in terms of prices since "it will monitor, inspect and sanction any agreement that companies may agree on." It is for this reason that the distribution companies asked to sit at the meeting on Monday (there will be Asedas, Anged and Aces, as well as consumer associations) with Díaz and Garzón to Competition. The sector fears a wake-up call from the CNMC or much more serious reprisals such as the millionaire fines that could be imposed if they understand that the price limit has been agreed between different operators. At the moment, neither of the two ministers of United We Can plan to summon the supervisor, hiding behind the fact that they appeal to the will of the large companies in the sector to apply the limitations. Blow to small businesses From Competition they also warn of the impossibility for small and medium businesses to apply this type of measure. "It can lead to 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," say the sources consulted by ABC. However, Díaz sent a contradictory message on Thursday by exclusively asking large stores to cap prices, because small businesses "cannot afford it." And as Competition points out, it is precisely the limitation of the shopping basket by supermarkets that can lead to fewer sales for neighborhood stores. The Spanish Confederation of Commerce (CEC) also warned this Friday after showing its "absolute rejection" of the measure and asking the second vice president to incorporate her sector into Monday's talks. For this association, this approach "exerts a pull effect on consumers to buy in large chains to the detriment of local businesses that cannot compete on margins or bear the costs," they stressed. Its president, Rafael Torres, reminded Díaz that in small businesses they have been lowering margins and containing prices for months, but the solution to help the consumer «an end to which we are totally committed should not in any case go through a measure that directly harm local businesses» says Torres. In any case, the dynamics of the market will be the one that lowers prices without the need for intervention. From Caixabank Research they point out that the future prices of agricultural raw materials such as wheat or corn in international markets already point to a reduction in inflationary pressures.

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