Migros and Coop’s market power sparks resistance

After Revilla was fired: Migros and Cope’s market power stirs resistance

Migros and Cobb dominate the Swiss retail market. Producers must comply with their dictates, and consumers must accept less competition. The experts are now appealing to Komco.

Gabriella Jordan / Switzerland at the weekend

In advertisements, consumers are introduced to an idealized world that seldom exists. In case Hangar And the Migros For example, smiling producers swing across the screen who consider themselves lucky to be able to supply retail giants with their products. As a consumer, you will only notice that there is often a strong boil behind the scenes when the desired product cannot be found in the usual place on the shelf.

This happened about a week ago when a Migros customer couldn’t find the Rivella Refresh product. Since Rivella didn’t want to succumb to Migros’ price pressure, the retailer promptly eliminated Rivella Refresh, Rivella Green Tea, and Focuswater from the range. “Migros is demanding prices that we cannot and will not meet this way.” “We do not feel blackmailed,” Ireland Brugger, managing director of Rivella, told The Sunday, which had exposed the price dispute.

It happens again and again that Migros and Coop ignore individual products or full brands from the range for tactical reasons. Manufacturer Ovaltine Wander and big companies like Nestlé, Mars or L’Oréal have already felt this. The two retailers are resorting to radical means because they can simply afford them: the market concentration in the food trade is higher in this country than in any other. Migros and Cope’s market share is around 70 percent. at Germany It is shared by four companies, Edeka, Rewe, Schwarz Group, Aldi The same amount.

Markenverband sharply criticizes retailers

So Coop and Migros can order almost anything they want, after all for manufacturers, there is no real alternative. If retailers block foreign suppliers and manufacturers of brands like Coca Cola or Nivea from entering Switzerland Charging double the rate at their regular rates and shamelessly disposing of the high purchasing power in this country is a good thing and a win for consumers. However, when they mess around with local manufacturers, the story gets more complicated.

The narrative used by the Swiss Brand Manufacturers Association Promarca is clear: Association President Anastasia Le Trier, who has also appeared as an opponent of the fair price initiative, speaks publicly about the manufacturers’ low profit margins. Bringing branded products to store shelves is tough enough, she now tells CH Media. The Migros group is made up of 80 percent of its brands, and those of 50 percent – soon it’s going to be 60 percent. So space is becoming scarcer. Often times, however, Migros and Coop also have their own brands produced externally, especially Coop, as they only have a few of their own factories.

The manufacturer talks about displacing and stealing ideas

A manufacturer who wants to remain anonymous chooses clearer words: “Sales channels are very strong and must be dismantled.” Produced for years for Migros until he decided to become active in his own class. “Due to its size, Migros and Coop can penetrate into new business areas at will. Nobody can do that. Companies cannot do anything to confront this and are increasingly being pushed out of the market.”

Since the free market plays a role in industry and trade, unlike the protected agricultural sector, the disappearance of market players cannot be prevented. The manufacturer still says about the notion of theft common in the industry, however, shocking:

In Migros, this list is known to be long: Mivella instead of Rivella, Café Zaun instead of Coffee Hag, Eimalzin instead of Ovomaltine or Mirador instead of Aromat. Therefore, the manufacturers and Promarca’s Li-Treyer argue that the Competition Commission (Weko) desperately needs to do something against duopoly. “At least Weko doesn’t seem to have dominated the food trade in Switzerland,” Trier told me.

Patrick Krauskov, former Weko deputy director and current professor of antitrust law at ZHAW, believes Weko should become active in the industry – but for various reasons. Although he does not deny the difficult position of the manufacturers, he sees a much bigger problem as a result of duopoly in the lack of competition. Consumers benefit far less than other countries from innovation and diversified product ranges – or from lower prices. Price competition increased due to the discounts Aldi Suisse and Lidl, but only a small fraction of the product ranges involved. Krauskopf says:

Former Weko Deputy Director: “Investigating market power would be helpful”

Now this economic reality simply cannot be changed. Weko cannot initiate an investigation without concrete evidence that Coop or Migros is misusing their dominant market position – for example charging inappropriate prices or terms and conditions. According to Krauskopf, the requirements for this are rather high not only in Switzerland, but in the competition authorities all the time. Europe. But he says, “A typical study of Coop and Migros’ market power would actually be possible today and possibly useful. After all, there have been no decisions against it in years.” Because many small and medium businesses depend existentially on the two retail giants.

The decision is imminent, though: Weko has been monitoring Migros’ purchases for a year – based on an announcement from the Promarca association. Market monitoring has started on the basis of indications that, as of spring 2019, Migros has asked more of its suppliers to significantly reduce sales prices to Migros without similar consideration, according to Weko. Might be abusive behavior, the clarifications are about to expire.

Rivella and Migros continue to negotiate

Depending on the result, manufacturers or consumers can cheer. While manufacturers hope to lower price pressure, former price watcher Rudolf Straham is on the side of the consumer: “As long as there are no signs of market misuse, the price pressure is justified,” he says. It also points to the difference between standard and specialty products: if a retailer introduces some special varieties of the range that are more expensive, with which the manufacturers try to achieve a higher margin, this differs from listing all brand articles as a means of lobbying.

This also applies to Rivella: Only special varieties like Rivella Refresh have been sorted, and Rivella’s red and blue varieties are still highly selling on the shelves at Migros. So far, it is possible that very few consumers have noticed the disagreement over the price. Meanwhile, things are simmering in the background.