Farmers Union reports Mercadona, Lidl and Bonpreu for fixing milk prices

Catalonia's Farmers Union and the Spain-wide Union of Farmers' Unions have reported three supermarkets – Mercadona, Bonpreu and Lidl – to Spain's competition commission (CNMC) for sharing the same retail price on their respective store brand UHT cow's milk cartons for at least four years. 

They filed their first complaint in June of last year and have extended it several times as the situation has persisted. 

At a press conference on Wednesday, union representatives criticized "the abuse of power by large distributors," which they say infringes competition law. 

"This pattern of price alignment is behavior that does not respond to market logic. It is inexplicable that different companies with different cost structures have the same price unless they set prices based on each other," said Albert Poch, a lawyer from the firm Redi who has advised the unions. 

Meanwhile, Bon Preu group shared a statement denying any knowledge of any "judicial case." The company also said that it has "never negotiated with its competitors to have the same retail price."

Fines up to 10% of turnover 

The CNMC will have to decide if it detects anti-competitive practices and open a case to investigate the reported practices, which the unions say amount to a "covert cartel." 

If the commission decides to fine the distributors, penalities can reach 10% of turnover. 

Lowest in Europe 

Although a complaint has been filed against three companies, the problem can be seen across the whole sector. Supermarkets paid farmers an average of 46 cents per liter of milk in 2022, the lowest figure in Europe. 

"We ask that the regulatory framework be complied with and that Mercadona, Bonpreu, Lidl and, by extension, all those who commit the same infractions, be sanctioned," said Marc Xifra, head of the Farmers Union's dairy cattle sector. 

According to the union, price fixing damages "the weakest link" in the food chain, the milk producers, weakening the bargaining power when establishing the price for the product and forcing "the closure of many farms, which in normal market conditions would be profitable." 

In Catalonia, the number of producers has fallen from more than 1,200 in 2001 to fewer than 400 in March 2023. "If we continue with this trend in 10 years there will be zero," warned Xifra. 

In Spain, 60% of milk is sold as store brand or own brand, half of which is sold by Mercadona. Together with Lidl and Bonpreu, they have set a lower-than-normal selling price to the public, according to the unions.