The Competition Council fined the sunflower oil producer, “Floarea Soarelui” JSC, and its distributor, “Lux Proba Grup” LLC, for an anti-competitive agreement.

The investigation was initiated in 2022 based on suspicions of infringement of Art. 5 of the Competition Law (anti-competitive agreement between “Floarea Soarelui” JSC and “Lux Proba Grup” LLC) and Art. 11 (abuse of dominant position) during the period October 2019 to June 2022. Following the completion of the investigation, the Competition Council concluded the existence of an anti-competitive agreement between the two undertakings. However, suspicions regarding the practice of excessive pricing were not confirmed.

The fines applied to both undertakings are as follows:

  • „Floarea Soarelui” JSC: fine of 123.1 million MDL
  • „Lux Proba Grup” LLC: fine of 69.5 million MDL

Relationship between undertakings

„Lux Proba Grup” LLC is the main distributor of bottled oil produced by „Floarea Soarelui” JSC. In parallel, the manufacturer delivers its products directly to certain retail commercial networks. Thus, both undertakigs operate on the same level of the distribution chain for sunflower oil.

Identified anti-competitive practices

During the investigation, it was found that during the investigated period (October 2019 – June 2022), the two undertakings coordinated their prices before communicating them to their own customers. Following dawn raids carried out at their headquarters, evidence was identified which demonstrated that:

  • Before increasing prices to its clients, “Lux Proba Grup” LLC requested the producer “Floarea Soarelui” JSC to also raise prices for the commercial networks with which the producer directly worked;
  • On the other hand, before deciding the direct sales prices to its own clients, “Floarea Soarelui” JSC requested information from “Lux Proba Grup” LLC about the prices at which the distributor would deliver the products. In this way, the producer aligned its prices to avoid offering advantages to merchants who preferred to buy directly.

From the analysis of internal documents, it emerged that in the case of direct deliveries made by “Floarea Soarelui” JSC, prices were calculated taking into account the commercial markups practiced by the distributor.”

The coordination of sensitive commercial information regarding each undertaking’s relationships with its customers has led to a restriction of intra-brand competition. This practice limited the ability of merchants to purchase sunflower oil directly from the producer at more advantageous prices and to offer better prices to consumers.

The coordination of commercial information also targeted setting the price for oil brands “private label / own brand” of other undrtakings that produced their oil at the “Floarea Soarelui” JSC factory, oil brands which compete on the shelf with the oil produced by “Floarea Soarelui” JSC, thus also restricting inter-brand / between brands competition.

The analysis of the prices applied by the producer

Additionally, the investigation did not confirm the initial signs of excessive pricing in May 2022. The analysis carried out by the Competition Council revealed a correlation between costs and prices, and it could not be demonstrated that excessive prices existed.

Alexei Gherțescu, President of the Competition Council: “It is essential that all market participants adhere to the rules of fair competition. Close cooperative relationships between producers and distributors cannot justify practices that aim to or result in restricting competition in the market, thereby reducing the benefits of competition for consumers”.

Next steps:

After the decision is communicated, the fined undertakings have 30 working days to challenge the decision in court. If the decision is upheld, the imposed fines will be collected into the state budget.

The non-confidential version of the decision, from which the sensitive information of the two undertakings will be removed, will be published on the official website of the Competition Council.

For more information, you can contact us at: office@competition.md