High prices in markets have been a common topic of discussion among the public, with many suspecting that retail chains might be colluding on prices. The Commission for the Protection of Competition (KZK) has initiated proceedings against four major retail chains—Deleze, Mercator S, DIS and Univerexport—due to suspicions of collusion in setting prices for monitored products.
The Commission’s inquiry is based on allegations that these retailers entered into a restrictive agreement, which is prohibited under the Law on the Protection of Competition. Such agreements aim to significantly limit, distort, or prevent competition.
After extensive monitoring, the Commission discovered several concerning trends. From April 2023 to March 2024, the retail market in Serbia saw a value increase while experiencing a slight decline in volume. During this same period, retail price increases were nearly double the rate of inflation.
Examining a broader timeframe, from 2016 to 2023, there has been a notable rise in income and gross margins for these retail chains, reflected in their profit reports. Particularly troubling is that from April to September this year, the prices of eight staple products—milk, yogurt, oil, flour, sugar, eggs, coffee, and bananas—were found to be identical or very similar across all four chains, despite differing procurement conditions. Moreover, the total cost of a consumer basket, which includes 45 selected products, showed only slight differences between these retailers, with one store significantly cheaper, likely due to less favorable commercial conditions.
Professor Boban Stojanović from the Faculty of Economics in Niš remarked that the Commission’s actions could capture public interest, given the rarity of insights into the work of this independent regulatory body, which oversees abuses of dominant positions and market agreements that violate fair competition. He noted that the recent focus on high profit margins among traders may have prompted the Commission to act.
While welcoming the Commission’s efforts, Stojanović raised concerns about its independence. He suggested that government dissatisfaction might have influenced the Commission’s urgency, especially given upcoming public competitions for new Council members and the Commission’s president. He emphasized that past reports from the Commission have been infrequent and inconsistent, casting doubt on their regulatory effectiveness.
Stojanović also pointed out that previous decisions, such as a fine levied against “Atlantic Grand doo” and “Strauss Adriatic doo” for a restrictive agreement, followed by a later approval of a market concentration, suggest that more attention is needed on all links within supply chains.
He warned that high profit margins can lead to elevated retail prices, adversely affecting consumer living standards. In a competitive market, high prices typically reflect supply and demand dynamics, indicating a lack of sufficient competition.
To safeguard public interest, he advocated for a comprehensive analysis of the retail market, involving both traders and suppliers. Stojanović stressed that consistent enforcement of competition laws is crucial, although he acknowledged the presence of stronger interests in Serbia that could undermine such actions.
Responses from the retail chains
In response to the KZK investigation, both Deleze and Univerexport expressed their commitment to transparency and cooperation. Deleze confirmed that the Commission conducted an unannounced inspection at their headquarters and stated that they have always collaborated with the KZK to ensure compliance with regulations. Similarly, Univerexport emphasized their dedication to fair competition and transparency.
Potential penalties
Economist Dragovan Milićević noted that it is unlikely there is a formal written agreement among the chains; any collusion might be tacit. If valid evidence of anti-competitive behavior is found, the Commission could impose significant penalties, as defined by the Law on Protection of Competition. The maximum fine could reach up to 10% of a company’s annual revenue. Based on 2023 financial reports, potential penalties could amount to around €280 million across the four chains.
Impact on consumers
Dejan Gavrilović, president of the Consumers’ Association of Ektefifa, welcomed the KZK’s investigation, noting that it could lead to serious repercussions for retailers if price collusion is proven. He highlighted that consumer prices have been disproportionately higher than in neighboring countries, largely due to excessive trading margins.
Gavrilović expressed hope that the investigation might lead to reduced margins and foster genuine competition, ultimately benefiting consumers in the future.
