Expensive: new measures to combat profiteering in the food trade

While taking delayed measures, some of which are expected to be implemented by… March, the government continues to act in accordance with what was announced by Development Minister Kostas Skrekas, clarifying the measures taken by the government to combat excessive trade markups and food profiteering.

It is worth noting that the new package of measures, announced earlier by the Prime Minister and clarified by Development Minister Kostas Skrekas, includes a ceiling on the profit margin on baby milk and a 30 percent reduction in discounts and credits from suppliers to supermarkets, with the expectation of a corresponding reduction in prices on the shelf. Some of these measures will become permanent and will be enshrined in law in March, and only one will come into force from today.

Offers
According to the announcements, from March supplier discounts will be reduced by 30% with the aim of passing the benefit on to the consumer with a corresponding reduction in price on shelf, which will however be subject to an audit that will have to be carried out DIMEA. The measure will apply to categories in which – according to the competition commission – deviations have been noticed, such as baby milk, detergents, cleaning products, bath shampoo, toothpaste and baby diapers.

Maximum markup on baby milk

One of the main interventions concerns the introduction of a maximum markup limit on baby milk, a product on which there has been active discussion due to the fact that our country is “champion” at the European level, and the price for it 213% higher than in Sweden. In particular, for the category of baby milk, a maximum level of gross profit is established for companies that import, produce and distribute this product in our country. The ceiling is defined as the sum of the company’s operating expenses for this product category and commercial profit in the amount of 7%. This measure will come into effect from March.

Discounts
New measures by the Ministry of Economic Development prohibit suppliers who raise prices for products from conducting discounts and wider promotions for three months on goods for which prices are raised. The measure will come into force from today, when a ministerial decision from Skreka is expected.

On the other hand, those who maintain stable prices are allowed to carry out promotions. If this practice is implemented, the increase in food prices in supermarkets will be transferred to reduced prices.

This measure is introduced from today. “Any price increase announced from today makes it prohibitive to hold promotions in the next 3 months from the introduction of the pricing policy. This restrains companies from unreasonably raising prices,” said Minister Kostas Skrekas. The audit will be conducted by DIMEA both physically and digitally.

“Net” prices from… March

In addition to the above, suppliers will now be required to provide their products to retailers at “net” prices. In this context, credit invoices can only be issued up to 3% in the case of returned or out-growing goods. This measure affects primary sector goods such as fresh fruit, vegetables and meat.. “Prices for key products will be reduced on store shelves from the start of the measures and should be implemented from the beginning of March.”said Development Minister Kostas Skrekas.

The Greek authorities were not prepared for the situation when large producers raised their declared operating costs, and retail chains increased the trade markup on food products.

Attempts to combat this phenomenon through fines turned out to be futile, since even recent fines of one million euros for three companies turned out to be paltry against the backdrop of sharply increased company profits.

Moreover, the annual ICAP study shows that in the “year of inflation”, 500 Greek companies recorded an impressive increase in EBITDA (earnings before interest, taxes, depreciation and amortization) by 75.5%, reaching 25.1 billion euros!

The authorities do not want to spoil relations with the multinational companies that control the Greek economy, and it is not even worth expecting the current government to limit the excess profits of many companies in the sensitive sector of food, beverages and organized retail trade.

After all, these companies not only support the current government (both financially and politically), but also influence the so-called. “ratings”, which puts the Greek authorities in direct dependence on the country’s main creditors.

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