Eight supermarkets ordered to stop joint offers

Eight supermarkets have been ordered by the Office of Fair Competition (OFC) to stop distributing a joint promotional leaflet, issued in local newspapers and advertising reduced items, but will independently continue with their special offers.

Retail Marketing Ltd chairman Jonathan Shaw, who coordinates the marketing of the leaflets, strongly denied allegations by the OFC of "price fixing agreements", explaining that "there is no agreement on the buying of stock items, which would also be directly related to cost and supply of goods sold in these supermarkets".

Price fixing is an attempt by suppliers to control the market, Mr Shaw explained. It is usually associated with higher prices, whereas the leaflet offers benefits and reduced prices to the consumer.

In bringing special offers to consumers, the eight supermarkets felt they had acted in conformity with the laws of competition.

In view of the OFC's "unfair" stand, Retail Marketing Ltd and the eight supermarkets affected by the decision, through their legal adviser, Aaron Mifsud Bonnici, have complained in writing and asked the OFC's director general to immediately refer his decision for investigation by the Commission of Fair Trading.

Retail Marketing Ltd had explained to the OFC, on several occasions, that the primary objective of the leaflets was the financing of a joint advertising campaign, that the prices in the leaflet were of a promotional nature since they were being advertised for a short period and that the promotional agreement did not lead to any profits that were above normal for the supermarkets involved.

Mr Shaw said the directors of Retail Marketing Ltd and of the supermarkets had attended meetings with the OFC, explaining the method of operation and asking for guidelines.

It was, therefore, "surprised and concerned" that the OFC had accused the company of "price fixing" and imposed its orders.

The OFC of the Consumer and Competition Division, which falls under the Competitiveness and Communications Ministry, informed the eight supermarkets of its decision on Thursday.

In a letter, it said the investigation into the legality of the leaflet, advertising the special offers, was spurred by complaints from another company involved in the management and operation of supermarkets.

It said the agreement leading to the printing and distribution of the four leaflets breached articles of the Competition Act.

The supermarkets were also ordered by the OFC to withdraw offers that were advertised on September 26 and were valid until next Saturday by affixing a notice in a prominent place.

The eight supermarkets would be complying with the orders and would not be circulating their next leaflet, issued with the Sunday newspapers every month and offering special offers for two-week periods.

However, Mr Shaw said the eight supermarkets would independently continue with their special offers.

He added that the promotional leaflets were "no different from the adverts seen on a daily basis, whereby companies and suppliers promote products, prices and offers, stating where they are available".

He expressed his confidence that an investigation would show that the eight supermarkets had acted correctly.

"It was unfortunate that the ministry, through the OFC, was interpreting the law in such a generic manner and applying it arbitrarily to the detriment of consumers," he said.

Moreover, different measures were being used and different degrees of investigation held for different entities, he maintained.

Retail Marketing Ltd coordinates the marketing and promotion of various products and special offers. The supermarkets involved are Tower Supermarket Complex in Sliema, Shoppers Supermarket in Mellieha, Shopwise Discount Store in Qormi, Park Towers Supermarket in St Julian's and Fgura, Lasco Discount Store in Zejtun, Carters Supermarket in Paola and Trolees in Qawra.