Next step: the concentration of suppliers?

According to Dr Judit Firniksz, a competition law expert with law firm Réti, Antall and Madl Landwell, a concentration process took place in Hungarian food retail in the past 15 years and unique. Smaller stores established franchise systems and managed to compete with multinational chains successfully and Hungarian retail chains were formed. In parallel with this, an imbalance developed between the bargaining positions of retailers and suppliers. Multinational chains use their bargaining power to set contracting conditions. Therefore, suppliers have to accept conditions like the obligatory use of certain services or long payment deadlines. In Dr Judit Firniksz’s opinion, the concentration process is a completely normal phenomenon on the single market of the European Union, but suppliers could try to join forces to create better bargaining positions against retailers. Suppliers could establish a strategy for survival to offset their competitive disadvantage. Nevertheless, it is not easy to define the form, depth and scope of this cooperation. Competition law must also be taken into consideration, since it forbids agreements that prevent, limit or distort economic competition. On 4 June 2009, the Hungarian Competition Authority (GVH) imposed a HUF 71 million fine on the Association of Hungarian Bakers and several baking companies because of the reasons mentioned above. In cases like this a sales association could be of help in representing the members’ interests when negotiating with retailers and in pre-selling activities like storing or cooling, without violating consumer rights.