The Commission for Protection of Competition initiated ex officio antitrust proceedings against Atlantic Group, Atlantic Brands and Strauss Adriatic and conducted dawn raids, in order to investigate potential existence of restrictive agreements.
In May and June 2021, the Commission conducted an analysis of competition conditions in retail sales with selected food items in the Republic of Serbia – carbonated soft drinks, ground coffee, edible sunflower oil, milk, and dairy products. The analysis also included the retail price movements of certain ground coffee brands during the period between 2015 and 2020.
The results of the analysis have shown that the wholesale market for grounded coffee is a concentrated and stable market with a small number of market participants and the two largest participants and competitors – Atlantic Group which owns brands Grand coffee, Bonito and Barcaffe, and Strauss Adriatic which owns Doncafe and C kafa – whose joint market share was not below 80% during the period from 2013 to 2020, creating the conditions for much easier reaching the agreements between the competitors. The analysis of price movements also showed a simultaneous increase in prices of the selected products of Strauss Adriatic and Atlantic Group (“Doncafe Moment 200 gr” and “Grand gold kafa 200 gr“) at the beginning of 2017, whereby after this increase the prices were not significantly reduced until the end of the observing period. The results of the correlation analysis of retail prices of two selected products indicated that there is very high collusion of price trends of these two products. On the other side, raw coffee prices were continuously falling between 2017 and 2019. Having in mind that the raw coffee price participates with over 90% in formation of the final product price, the correlation between the movements of these prices during the observing period was expected. However, the analysis showed that these prices were changing in different directions. Furthermore, the analysis showed that there was no correlation between the movement of the raw coffee prices on the world market and retail ground coffee prices on the Serbian market either – while the prices on the world market were falling, retail prices on the Serbian market were increasing. The Commission reasonably concluded that the movement of retail prices of ground coffee brands of Atlantic Group and Strauss Adriatic does not indicate that they were formed as the consequence of the existing market conditions but as the consequence of the price policy coordination. The Commission also noticed that after the statements of directors of Strauss Adriatic and Atlantic Group indicating that the prices have not changed since 2017 and that they will not be changed, no price changes actually occurred.
Having all this in mind, the Commission assumed that Atlantic Group and Strauss Adriatic concerted their business strategies regarding the prices of ground coffee on the Serbian market, thus replacing the mutual competition with cooperation, leading to significant restriction, distortion, or prevention of competition.
A few years ago, the Commission investigated certain tobacco companies for the reason of their concerted practices. However, this investigation was suspended due to the lack of proof, so we should see how these proceedings will end.
By Nikola Poznanovic, Partner, and Katarina Randjelovic, Senior Associate, JPM Jankovic Popovic Mitic