Bulgaria's consumer protection commission (KZP) has opened 11 cases against retail chains over unjustified price rises on basics such as cheese, milk, tomatoes and cucumbers, its head Maya Manolova said at a briefing today. Unless the chains can show the higher prices are justified, they face fines of €10,000 to €100,000 for each product.
KZP has already published first results from its checks. It says mark-ups on some food groups are above 120–140%. It is now comparing October prices with August prices.
See also: Consumer watchdog finds 125% markup on butter at a retail chain
The checks at the chains began on 2 October. They aim to find real shelf prices and see how the chains trade. KZP is checking food group by group. It started with dairy, fruit and vegetables, because people file the most complaints about them.
KZP fines firms under the Consumer Protection Act, product by product. While a case is open, the chains can submit data to show a price rise is justified.
Manolova gave examples. At one chain, butter is delivered for €1.43 and sells on the shelf for €3.79 with VAT. "Without VAT, the mark-up on this butter, which is golden not only in its packaging but in its price, is 135%," she said. Another butter at the same chain, from a different supplier, is delivered for €1.73 and sells for €3.85, a mark-up of 85%.
At another chain, 0.5-litre fresh milk is delivered for €0.44 and sells for €1.07 without VAT, a mark-up of 99%. A litre of fresh milk at the same chain is delivered for €0.94 and sells for €1.89, a mark-up of 68%.
Kashkaval is delivered for €2.67 and sells for €6.39 without VAT, a mark-up of 99%. Among three kinds of cheese at one chain, the highest mark-up is 95% without VAT. White brined cheese there is delivered for €1.92 and sells for €4.49. Yoghurt has a mark-up of 80%. The lowest mark-up KZP found is 31%, on one of the milks, and the usual ones are around 80%.
Manolova says no European country has mark-ups like these. In Germany they are usually 15–25%, in Austria 25–30% and in France about 25%. She says it is morally wrong and "a real disgrace" that Bulgarian producers, who generate a billion in sales for the chains, are burdened with such prices.
KZP is also sending a complaint today to the Commission for Protection of Competition (KZK) about discriminatory mark-ups on suppliers. The Competition Protection Act bans a gap of more than 10% in mark-ups on similar goods in one product category. Manolova says this is discrimination against suppliers and trading partners, and is among the absolute bans on unfair trading practices.
She says KZK does not need to gather evidence again, because KZP already has the delivery and shelf prices, and the gaps of more than 10% in mark-ups between suppliers. The penalty under Article 100 of the act is up to 10% of turnover. For the biggest chains the maximum is between €50m and €135m, depending on turnover.
Tomorrow, 21 October, KZP, the Bulgarian Food Safety Agency (BABH) and the tax agency NAP will start a joint check in the warehouses of the big chains.
The Association for Modern Trade (SMT) criticised the first results. It says KZP is confusing consumers with inaccurate information and interpretations, and that the most common error is mixing up price indices with trade mark-ups or profits. SMT wants the commission to say how many products it checked and how many of them have a 150% mark-up. It also asks what the lowest mark-ups are on the main goods, and why the commission reports only the highest figure, without the mark-ups on the other items it checked. The association also asks whether people are being told that a mark-up is not profit.