I Heard It On The Grapevine – Price-Fixing In The French Wine Market

Author:Mr Gordon Moir and Christina Gleeson
Profession:Shepherd and Wedderburn LLP
 
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As Brits bemoan higher prices for French wines, it emerges that the higher prices may be due to more than the sterling exchange rate following the Brexit vote. The French Competition Authority decision published on 23 May 2018 reveals that the price increases may also been caused by a price-fixing cartel for Côtes du Rhône wine. The Competition Authority issued a 20k Euro fine to the Côtes du Rhône winegrowers syndicate, a professional body representing wine growers in the region, for establishing and disseminating pricing instructions among members between 2010 and 2017.

The Côtes du Rhône

As described in the decision, the Côtes du Rhône is a massive wine region, the second largest in France after the Bordeaux region, with revenues estimated between 1.47 and 1.54 billion Euro for the period 2014 to 2016. It exports nearly a third of what it produces and its principal export markets are the United Kingdom, Belgium, the USA, Germany and the Scandinavian countries.

The Competition Authority investigation revealed that from 2010 the winegrowers syndicate for the Côtes du Rhône region set annual price lists with the aim of pushing up the bulk wine price. The syndicate published lists of prices in its trade magazine, the Vigneron, it organised information meetings encouraging producers to adhere to the listed prices and it sent newsletters to winegrowers about the price lists.

This led to a steady price increase culminating in a price floor that was reached in 2014, after which the syndicate circulated instructions to stabilise the price. The success of its strategy and its clear intention is detailed in minutes of internal syndicate meetings where it congratulated itself on how the price floor was being respected and in its AGM minutes thanking all winegrowers and members that had followed the instructions and acted in solidarity with the established price list.

Because of the potential effect on trade between EU Member States, the French competition authority found that EU competition law as well as French competition law applied to the practices investigated. The Competition Authority found that between 2010 and 2017 the syndicate had acted in breach of Article 101 of the Treaty on the Functioning of the European Union (TFEU) which prohibits price-fixing agreement and the equivalent French national law ,L. 420-1 of the French commercial code.

It imposed a fine of 20k Euro on the syndicate and, in an ironic twist, required the syndicate to...

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