By Foo Yun Chee
BRUSSELS (Reuters) – Italy’s antitrust authority AGCM will investigate McDonald’s (NYSE 🙂 terms and conditions in its deals with franchise operators following several complaints, according to an AGCM document seen by Reuters.
AGCM’s move could put the US fast food chain at risk of a fine of up to 10% of its global turnover if convicted of violating Italian antitrust rules.
The AGCM declined to comment. McDonald’s, which made $ 19.2 billion in revenue in 2020, said it was “confident in the accuracy of our work” and open to collaborating with the agency.
The Italian competition watchdog said that, based on available information, there appeared to be an economic dependency relationship between the store operators and McDonald’s.
Some of McDonald’s clauses in the franchise agreements cited by the whistleblowers could constitute an abuse of economic dependency, it said in its decision to open an investigation, according to the document dated August 4.
The watchdog said that a series of generalized and binding clauses on prices, promotions, stocks, supplies and purchases, financial management, among others, could be seen as elements of abusive conduct.
Antitrust laws prohibit companies from abusing the economic dependence of another company through unjustifiably burdensome or discriminatory contractual conditions, especially when the latter cannot find a viable alternative.
With 85% of its outlets operated by franchisees, the franchise is an important business model for McDonald’s. It has around 615 restaurants in Italy, 85% of which are not owned by the company.
McDonald’s said: “While we do not yet know the details of the investigation initiated by the Italian Competition Authority, we are open to collaborating with the Authority, and we are confident of the veracity of our work and of the role that McDonald’s has had and continues to play. stimulate entrepreneurship and support the country’s economy. “
McDonald’s has 60 days to respond once notified and the investigation must be completed by December. December 31, 2022, the document read.
McDonald’s found itself on the AGCM’s radar after three operators filed complaints in March about rents, royalties, the size of their investments and sales policies, according to the document.
The Italian consumer groups Codacons, Movimento Difesa del Cittadino and Cittadinanzattiva in 2017 brought their complaints to the AGCM.
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