That’s why the Antitrust investigates McDonald’s in Italy
What emerges from the Antitrust bulletin. Here are the details on the investigation opened by the Guarantor on McDonald's. Hypothesis: abuse of economic dependence between the fast-food giant and its affiliates
The Antitrust will exploit the management of McDonald's franchisees in Italy.
WHAT THE ANTITRUST HAS DECIDED
The Guarantor for competition and the market has in fact opened an investigation against the fast-food giant, hypothesizing an abuse of economic dependence. Confirmed, therefore, the rumors of Reuters of days ago.
THE TIMES OF THE PROCEDURE
The procedure decided by the authority chaired by Roberto Rustichelli must be completed by December 2022.
THE NUMBERS OF MCDONALD'S
There are currently 615 McDonald's outlets in Italy and 85% are not owned by the fast food giant. According to the data reported by the company, 93% of the more than 38 thousand stores around the world are regulated by franchise agreements.
THE ANTITRUST BULLETIN
In relations with McDonald's affiliates, the Antitrust Authority notes an "excessive imbalance of rights and obligations", reads the authority's weekly bulletin.
THE AFFILIATES
Among the disputed characteristics there is the obligation, in fact, to accept the terms of the affiliation "before having had detailed knowledge" and also the stipulation of long-term contracts, as well as the difficulties of the franchisee in leaving, recovering the own investments.
THE CLAUSES
The contracts stipulated by McDonald's with the Italian affiliates would in fact contain coercive clauses on prices, promotions, supplies, stocks and financial management that could constitute elements of abusive conduct.
THE ASSUMPTIONS OF THE GUARANTOR
From the content of the reports received by the authorities, it emerges that McDonald's has imposed "a commercial and management organization designed on its own needs, through the application of a series of pervasive and binding clauses and operational indications, suitable for stiffening the corporate structure of the franchisee and to prevent him from independently managing his own business ". The obligation is also to "comply with the precise indications provided in terms of product prices, even beyond the provisions of the contract".
Furthermore, for the authority, "the economic conditions for entry and exit from the McDonald's system appear to be particularly onerous, which means that most of the investments of the affiliates translate into sunk costs for these entrepreneurs, to the benefit of the grantor, who can substantially finance its business by exploiting the financial resources of its franchisees, who invest their risk capital in the McDonald's system ”.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/perche-rustichelli-antitrust-indaga-su-mcdonalds-in-italia/ on Tue, 17 Aug 2021 06:54:11 +0000.