BCA ceases investigation into purchasing alliance Carrefour & Provera
Satisfied by the commitments offered by Carrefour and Provera, on 28 April 2021, the Belgian Competition Authority (“BCA”), closed its investigation.
The investigation concerned a joint purchasing agreement concluded between Carrefour and Provera targeting Belgian "must-carry brands" from a total of 140 suppliers. As these brands are considered must-haves by consumers, suppliers of those brands have a certain degree of bargaining power towards distributors such as Carrefour and Provera. With the joint purchasing agreement, Carrefour and Provera aimed to increase their bargaining power vis-à-vis these suppliers.
The joint purchasing agreement more specifically organised the negotiation structure between Carrefour/Provera and the supplier in four so-called "nets":
the 1st net concerned direct discounts on invoices;
the 2nd net concerned discounts not granted directly on invoices (so they were invoiced to the suppliers);
the 3rd net concerned discounts, the granting of which was conditional on certain promotional services to be provided by Carrefour or Provera in their respective stores. These services were structured around 5 themes whereby Carrefour would agree with the supplier which promotional services would have to be provided by Carrefour and Provera respectively. This was done in practice through the use of a so-called scorecard which allowed to determine how much discount Carrefour and Provera would each receive from the supplier concerned. This scorecard also included an obligation on Provera to purchase at least 60% of Carrefour's national product range per type of store (small, medium and large); and
the 4th net concerned promotional efforts from the supplier directly in the stores of Carrefour and Provera. Discounts granted in this context benefitted consumers directly. Carrefour and Provera would continue to separately and independently negotiate the 4th net with the suppliers concerned.
On 6 May 2019, the BCA opened an ex officio investigation, suspecting this agreement could have anticompetitive effects specifically as a result of:
exchanges of sensitive information as a result of Carrefour negotiating and invoicing on behalf of Provera as well, enabling Carrefour to know among others Provera's forecast purchase figures and its promotional efforts in the context of the 3rd net; and
the scorecard, limiting the possibility for Provera to develop its own business strategy vis-à-vis suppliers and limiting the competition between Provera and Carrefour regarding their respective product ranges (which the BCA considers as an important element of competition vis-à-vis consumers).
To alleviate the BCA's concerns, Carrefour and Provera committed to transfer Carrefour's entire purchasing department to a separate legal entity (Interdis Belgium SA) where employees are subject to non-disclosure agreements and cooling-off periods. In addition, Carrefour and Provera committed to restrict direct exchanges of information between Interdis Belgium SA and Provera, creating 3 committees for that purpose. Carrefour and Provera also committed to ensure that negotiations regarding the 3rd and 4th net do not occur simultaneously.
The commitments also limit exchanges of information between Carrefour's accounting department and Provera, preventing exchanges of information regarding future sales.
Furthermore, Carrefour and Provera committed to abolish the scorecard system (including Provera's 60% product range obligation). As a result, the 3rd net was limited to Carrefour negotiating the financial aspects in return for a general obligation on Carrefour and Provera to provide a minimum of promotional efforts; the specifics of the promotional efforts will then have to be further specified between the suppliers and Carrefour and Provera respectively.
In its decision, the BCA considered these commitments to be proportionate and suitable to address the potential restrictions of competition, making them binding on Carrefour and Provera. As a result of this commitment decision, no formal infringement by Carrefour and Provera was formally established (and no fine could be imposed).
Should you need assistance, have any further questions regarding this client alert or competition law generally, please do not hesitate to contact any of the individuals listed or your usual contact at Simmons & Simmons.
