McDonald’s faces anti-trust scrutiny in Italy

McDonald’s and the pac-man hold of the Anti-trust Authority.



PUBLISHED BY
Christy Gren



TAGS:


1 month ago




McDonald’s is under scrutiny in Italy based on several complaints by its franchise operators and, if found guilty, could be fined almost 10% of its global turnover.

The antitrust authority, AGCM, is investigating McDonald’s agreement terms with franchise operators. Three McDonald operators filed complaints in March regarding rents, royalties, the size of their investments and sales policies.

McDonald’s, which made $19.2 billion in revenues in 2020, said it was “certain of the correctness of our work” and open to collaborating with the agency.

The Italian anti-trust authority says that some of the clauses in the franchise agreement could constitute an abuse of economic dependence, according to the document dated Aug. 4.

The clauses pertain to pricing, promotions, stocks, supplies and purchases, financial management, among others, and are binding upon the franchisees and could be termed as forceful.

McDonald’s Italy finds complaints by its franchise operators

McDonald’s to get better with their correctness of work.

Antitrust laws prohibit companies from abusing the economic dependence of another company via unjustifiably burdensome or discriminatory contractual conditions, especially when the latter cannot find a viable alternative.

McDonald’s has about 615 restaurants in Italy. Franchising is the favored route of operation for McDonald’s and almost 85% of its outlets are franchisees. In Italy too, 85% of its outlets are under this model.

McDonald’s said: “While we do not yet know details of the investigation launched by the Italian Competition Authority, we are open to collaborating with the Authority, and we are certain of the correctness of our work and of the role that McDonald’s has had and continues to have in stimulating entrepreneurship and in supporting the country’s economy.”

McDonald’s has 60 days to respond once it is notified and the investigation must be wrapped up by Dec. 31, 2022, the document said.

Earlier in 2017, the fast-food chain was accused of improperly driving up consumer costs in France, Italy, and Germany by forcing the company’s franchisees to swallow antitrust practices.

In 2017, Italian consumer groups Codacons, Movimento Difesa del Cittadino and Cittadinanzattiva took their grievances to the AGCM.
The fast-food giant was accused of taking advantage of its dominant market positions by requiring its franchise holders in the three European nations to display higher prices than those at company-operated sites, according to the complaints filed with competition authorities in those countries.

The complaints further said that McDonald’s also charged excessively higher rents for franchise locations and imposed terms that restrict franchisees from shifting to other brands.

In 2016, an antitrust complaint was filed by a coalition of Italian consumer groups, backed by the U.S. Service Employees International Union, with the European Commission, the European Union’s executive arm. The commission advised the group to lodge the same with national competition officials in their respective countries.

McDonald’s is “forcing customers of its franchised restaurants to bear unjustifiable price increases,” said the President of Indécosa-CGT, then. “Ultimately, whether one is an employee, a consumer, or a citizen, we are all victims of Ronald McDonald’s limitless greed.”
Indécosa-CGT is the French Association for the Information and Defense of Salaried Consumers.

Christy Gren
Christy Gren is an Industry Specialist Reporter at Industry Leaders Magazine she enjoys writing about Unicorns, Silicon Valley, Startups, Business Leaders and Innovators. Her articles provide an insight about the Power Players in the field of Technology, Auto, Manufacturing, and F&B.

Recent Posts

Supply chain crisis bad news for automotive industry leaders

Supply chain crisis bad news for automotive industry leaders

The world’s biggest car companies are on track to lose production of 7.7 million vehicles in 2021. The forecast advices automakers on supply chain and other issues.
10 hours ago
Scammers dupe Apple fans with free bitcoin lure

Scammers dupe Apple fans with free bitcoin lure

Savvy scammers used a fake event stream, a fake Apple website, and the promise of free bitcoin to lure fans into opening up their wallets.
1 day ago
Japan’s MUFG offloads Union Bank to U.S. Bancorp for $7.3 billion

Japan’s MUFG offloads Union Bank to U.S. Bancorp for $7.3 billion

The total amount of cash to be received as part of MUFG Union Bank’s sale to Bancorp is $7.3 billion (800 billion yen).
2 days ago
Evergrande: A black swan event that could spook markets

Evergrande: A black swan event that could spook markets

EverGrande is now known as the “world’s most indebted property developer” and serves as a symbol of corporate excess.
3 days ago
Moderna vaccine more effective than Pfizer, study says

Moderna vaccine more effective than Pfizer, study says

Moderna’s Covid-19 vaccine does a slightly better job of preventing coronavirus-related hospitalizations and emergency department visits.
5 days ago
iPhone 13 and iPhone 13 Pro: Specifications, Release Date, Features and much more

iPhone 13 and iPhone 13 Pro: Specifications, Release Date, Features and much more

Apple iPhone 13 Pro and iPhone 13 Pro Max can be a hit with its ever new technology A15 Bionic chip and other cool profound features.
6 days ago