In its main report today, the German Monopolies Commission presented new data on market concentration and price developments in the food sector. They show problematic developments in prices and mark-ups. It is good that the Monopolies Commission will continue to investigate this. At the same time, we need stronger intervention by the German Federal Cartel Office. .
The Monopolies Commission’s analyses clearly show that there are very problematic developments in the food supply chains. The supermarkets’ and food industry’s mark-ups are rising, while farmers’ revenues are falling. Cost reductions are not being fully passed on to consumers. In 2022, prices in food processing rose faster than (marginal) costs. There were therefore higher price increases during this period of inflation. The data ends for 2022, so the report cannot answer how prices are currently developing. However, there was no price reduction in the food retail sector in any period between 2007 and 2022, even if there were price reductions in the upstream market.
Rising retail mark-ups. Graphic from the main report, p. 88
The findings are a clear wake-up call. We must finally recognize that we have a major power problem in the food sector. It is good that the Monopolies Commission will continue to investigate this. It was extremely cautious in its assessment of the results today. These interim results already show that there are serious problems in the food sector and in food retailing.
We will not be able to avoid stronger intervention by the Federal Cartel Office. The Federal Cartel Office should prepare a subsequent sector inquiry into food retailing in parallel to the forthcoming special report by the Monopolies Commission. This could then impose remedial measures up to and including unbundling.
The NGO alliance “Initiative Konzernmacht beschränken” had already called for a sector investigation by the Federal Cartel Office in a statement in January. The new data is a clear signal that the market situation has changed since the last sector inquiry in 2014. In the medium term, the question also arises as to whether oversight of abuse of dominance should be strengthened under competition law, particularly of exploitative abuse.
