Sugar competition under microscope
The lack of competition in the sugar sector could become a particular target of European Commission competition authority action over concerns it could inflate confectionery and other food prices in the long term.
Although the unprecedented rise in prices in early 2008 has been deflated by the credit crunch, the Commission is still concerned that there are structural factors within Europe making food unnecessarily expensive. The key problem highlighted in a policy paper released before Christmas is lack of competition.
It notes, “While production in some food processing sectors, such as processed fruits and vegetables, remains highly dispersed, in other sectors, such as starch, sugar and dairy products, it is more concentrated.” Combining this with concerns about the increasing concentration of food retail into large companies, the Commission highlights potential competition problems such as the growth own-brand products; single branding’ obligations, where retailers are required to sell a single product; and tying practices’, where the purchase of a product is conditional on the purchase of another.
These “may have either pro-competitive or anti-competitive effects”, says the Commission. Its paper said there should be “a vigorous and coherent enforcement of competition at EU and national level [to] target those practices and restrictions that are particularly harmful.”
