Charcuterie cartel: Competition watchdog hits cold meats manufacturers with €93m fine

By Flora Southey contact

- Last updated on GMT

Pic: GettyImages/jenifoto
Pic: GettyImages/jenifoto

Related tags: cartel, Meat, Sausage, France, Competition law

Cooperl, Fleury Michon, Coop, Campofrio, and Nestlé are just some of France’s ham and cold meats players called out by the country’s competition regulator for participating in a cartel.

Twelve companies have been fined a total of €93m in France after breaching competition law, according to the Autorité de la concurrence​.

These include Cooperl Arc Atlantique, which owes €35,530,000, Les Mousquetaires which has been fined the second largest sum of €31,750,000, and in third place, Fleury Michon with €14,761,000.

The watchdog said anticompetitive behaviours have been revealed towards upstream and downstream markets over the period 2010-2013. The ruling, published 16 July 2020 and available here in French​, has been opposed by some thought to be embroiled in the cartel, and appeals are expected to follow.

Anti-trust negotiations upstream…

The competition regulator has accused cold meat companies of participating in a ‘concerted practice’ relating to the change in the price of ‘ham, flank removed’ – a cut known as jambon de mouille​ in French and bought by manufacturers to produce cooked hams –  purchased from slaughterhouses.

Four of the biggest groups in the sector have been embroiled in the issue: Campofrio (owner of Aoste and Jean Caby brands), Fleury Michon, Financière Turenne Lafayette (owner of Paul Prédualt, Madrange, etc.) and Monique Ranou owner Les Mousquetaires.

These businesses coordinated on the weekly price variation of ‘ham, flank removed’, noted the watchdog, “with a view to showing a united front in their dealings with slaughterhouses in order to be able to better resist requested price increases or obtain price reductions”.

The Autorité de la concurrence ​detailed how such coordination occurred in practice: “The cold meat manufacturers would contact each other individually by telephone before the start of negotiations with the slaughterhouses, usually on Thursday afternoons or Friday mornings, in order to adopt a common negotiating position.

“Once they had reached an agreement on the negotiating framework, bilateral negotiations with the pig slaughterhouses would start. During these negotiations, the cold meat manufacturers would defend their common position, with each manufacturer attempting to impose the agreed level of change. Throughout the negotiations, the cold meat manufacturers would inform each other in real-time by telephone about the status of the negotiations and the contracts they had concluded with the slaughterhouses.

“Once agreements had been concluded with two major slaughterhouses, the whole of the market would consider that the price change agreed by the contracting parties would constitute the reference change for the week ahead.”

…and downstream

Fines have also been issued to businesses accused of anticompetitive behaviour downstream. In particular, the watchdog said cold meat manufacturers engaged in practices designed to increase prices charged to the mass retail distribution sector for private labels and economy products.

The cold meat manufacturers concerted over the prices of cold meat products, including raw/dry products (sausages and dry sausages, salami, raw ham, chorizo, pavés, rosette, etc.) and cooked hams, pâtés, rillettes, and black pudding.

Exchanges between the accused companies took place over the phone and at ‘secret meetings’ in Paris and Lyon, where they expressed ‘the positioning of each competitor, the current or desired price increases and the results obtained in negotiations with the distributors’ for raw/dry meat products, the Autorité ​continued.

Whistle-blowers secure lower fines

“These practices are serious,” ​noted the watchdog. “They distorted the business relations between the cold meat manufacturers and slaughterhouses on the one hand, and mass-market retailers on the other.”

A total of €93m in fines has been handed out to companies implicated in the cartel, including whistle-blowers Campofri and Coop. By coming forward with information, Campofri and Coop applied for leniency from the watchdog in the form of exemption or reduced fines.

The competition authority decided against offering complete exemption, instead fining Coop €6,009,000 and Campofrio €1m. This is because Campofrio ‘failed to cooperate’ by revealing a meeting concerning raw cold meat products had been organised, and that one of its employees had attended.

Coop, on the other hand, did benefit from the ‘leniency plus’ procedure, by providing ‘unquestionable evidence’ to the Autorité​.

Companies plan appeal

Some businesses implicated in the Autorité​’s decision have been quick to dispute the fines. It has been widely reported, for example, that Fleury Michon and Cooperl plan to appeal the decision.

Fleury Michon said it denies having participated in an anti-competitive agreement relating to the purchase of raw materials from slaughterhouses, and that the watchdog has not taken account of the material it provided in its defence.

“Fleury Michon deplores the decision of the Competition Authority [even more so] as the financial penalty is particularly heavy and hits a weakened sector,” ​the business revealed in a statement.

“Fleury Michon will appeal this decision.”

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