CN02 - Belgian enforcer ends purchasing alliance probe with remedies

In its decision of 28 April 2021, the Belgian Competition Authority ("BCA") considered that the commitments offered by Carrefour and Provera under the purchase alliance probe were proportionate and suitable to address potential restrictions of competition. Following Carrefour's divestment offer, along with both companies' promises to only exchange information relating to their purchasing agreement, the BCA closed its ex officio investigation.

Key takeaways

• The decision confirms the BCA's strict approach towards information exchanges.
• Companies involved in purchasing alliances must be able to demonstrate that they have implemented sufficient and effective safeguards to avoid anti-competitive information sharing, which may require setting up separate legal entities.
• It is also important to be able to show that the purchasing alliance is capable of generating efficiencies which could be passed on to consumers.

In May 2019, the BCA opened an ex officio probe into a purchasing agreement concluded in 2018 between Carrefour Belgium and Louis Delhaize group's purchasing unit Provera (hereinafter referred to as "the Parties"). The agreement covered joint purchasing of national branded products from approximately 140 suppliers along with some value-priced products originally negotiated by Carrefour.

In its preliminary assessment, the BCA found that negotiation of purchasing conditions on behalf of both companies by Carrefour and the information exchanges resulting from the purchasing alliance would present significant risks of (sensitive) information exchange between the parties. The functioning of the purchasing alliance could also impact the suppliers' commercial strategies in the upstream market and the parties' commercial dynamics in the downstream market. The BCA therefore considered that these information exchanges together with the functioning of the purchasing alliance could constitute infringements of competition law.

To address the BCA's concerns Carrefour committed to divest its entire purchasing department to a separate legal entity, Interdis. Both parties also committed to ensure stricter supervision of information exchanges essential to the proper functioning of the alliance, whether these exchanges took place between the Parties themselves or between Interdis and the other Carrefour departments. The parties also committed to limit joint negotiations conducted through the purchasing alliance to strictly financial negotiations on the discounts that both companies will receive, ensuring that each party determines its own commercial strategy independently.

As the BCA considered that the commitments were proportionate and suitable to address the identified potential restrictions of competition, the Belgian enforcer made them binding upon the parties and closed the investigation. Therefore, the BCA did not take a position on whether or not the parties have infringed competition law.

The BCA's investigation should be seen in the general context of the increasing scrutiny of European competition authorities to the possible anticompetitive effects resulting from the purchasing alliances in the food retail sector. Although joint purchasing agreements have traditionally been seen as procompetitive insofar as they can lead to lower prices or better quality products or services for consumers, the recent increase in such alliances in the food retail sector has led to a high concentration of buyer power, which in turn raised concerns that this practice has in fact reduced retailers’ incentives to pass on the benefits of possible efficiencies to consumers.

With thanks to Uliana Kovaleva of Ashurst for her contribution.