Antitrust, here’s what McDonald’s swallowed
The Antitrust has closed the investigation, started last year, against McDonald's for alleged abuse of economic dependence. Here's what happened
The investigation launched by the Antitrust against McDonald's Development Italy LLC (Mcdi) closed with commitments, accepting the proposed commitments.
Now, reports the Competition and Market Authority (Agcm), the new contractual standard allows to limit the gap of rights and obligations that is created between the licensee and his network of franchisees.
WHAT WAS HAPPENED
As Start had written, the procedure concerned some conducts implemented by Mcdi towards its affiliates, managers of the McDonald's-branded network of restaurants, which consisted in imposing a set of conditions and obligations suitable to unduly condition the entrepreneurial activity and to compress it. unjustified profit margins.
Following the complaints presented by three franchise operators, in August 2021 the Authority declared that a series of pervasive and binding clauses on prices, promotions, stocks, supplies and purchases, financial management, among others, could be considered elements of abusive conduct.
WHAT MCDONALD'S RISK
If McDonald's was found guilty of violating Italian antitrust rules, the Authority had already warned that it could face a fine of up to 10% of its global turnover.
With the majority of its stores operated by franchisees, franchising is an important business model for McDonald's, which posted sales of $ 23.2 billion last year.
The company has 640 restaurants in Italy, mainly managed under franchising by 140 licensees and, according to what is reported on its website, employs 27,000 people in our country.
THE INTERVENTION OF THE AGCM
"The alleged abusive conduct taken into consideration during the start-up – reads the Agcm press release – concerned, in addition to a series of clauses included in the rental contracts of the company branch and / or franchising and the conditions applied to the affiliates during and at the end of the negotiation relationship, also some behaviors adopted in the period preceding the signing of the contract ".
“In particular, – explains the Antitrust – Mcdi's management of the pre-contractual phase seemed to deprive future affiliates, already at the time of signing the contract, negotiating power and choice alternatives”.
THE CASE IS SOLVED
Now, the Authority has deemed suitable the commitments proposed by Mcdi to remove the competitive concerns connected to all the profiles of abuse of economic dependence hypothesized in the start-up procedure, thus recalibrating its relationship with the affiliates in the area, with fewer constraints and more protection.
In fact, the Agcm believes that "the entire management of the pre-contractual phase has been significantly modified, in order to ensure full awareness – by aspiring affiliates – of the contents of the agreement they will sign, as well as the obligations and commitments, in addition to profitability, linked to the management of a Mc Donald's restaurant, also reducing the costs incurred for training activities ".
WHAT MCDONALD'S IS COMMITTED TO DO
The Agcm also explained that the new contractual standard proposed by Mcdi is able to significantly limit the gap of rights and obligations that is created between the licensee and his network of franchisees at the same time as the establishment of the affiliation relationship.
Furthermore, the clarifications that Mcdi undertook to include in the contracts, especially with reference to the recognition of the licensees' autonomy in terms of commercial policies and choice of suppliers, were deemed suitable to guarantee franchisees an adequate margin of autonomy in their choices. entrepreneurial.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/antitrust-mcdonalds/ on Fri, 01 Jul 2022 13:11:09 +0000.