Agius Saliba wants commission to investigate ‘de-facto monopolies’ in distribution sector

Labour MEP Alex Agius Saliba has asked the European Commission to investigate de-facto monopolies in the distribution sector, which he says are contributing to higher inflation in food prices.

He said he has been closely following the development of the various factors that cause inflation.

“I have been following with increasing concern how the high and sustained level of inflation is eroding the standard of living for the most vulnerable members of society and is causing upheaval in our communities,” he said.

Agius Saliba said he is particularly focused on the increase in food prices, which is happening at a higher rate than before and has become one of the leading causes of inflation.

High Inflation is generally attributed to a mix of global factors such as COVID, the Russian invasion of Ukraine, supply-chain bottlenecks, and labour shortages. Agius Saliba has however explained how three country-specific factors are leading to an even higher inflation rate in Malta

“First, Malta suffers from the natural disadvantage of being a small island on the periphery of Europe and hence cannot enjoy the benefits of economies of scale. Second, Malta is not entitled to preferential treatment or assistance which could allow it to mitigate its susceptibility to external shocks in the global market,” he said.

“Third, its size and geographical limitations have led to the formation of de-facto monopolies where a handful of importers dominate entire markets. The lack of competition has removed the market-driven downward pressure on prices and led to the formation of informal, artificially high, price benchmarks. These benchmarks, set by long-standing tacit convention, enable the few large operators involved to exploit the high inflation rate to increase their already hefty profits. This in turn enables them to respond aggressively to any parallel importation from smaller traders who attempt to lower prices.”

It is about this third aspect that Agius Saliba has requested the President of the European Commission, Ursula von der Leyen, to take action. “Excessive pricing is an antitrust violation in terms of the EU competition law. EU legislation specifically prohibits the abuse of a dominant market position to impose unfair prices on consumers.”

“If we truly believe that the Single Market should work for the benefit of our consumers, we must ensure that the Market works correctly in every member state. During this particular juncture, we must fight even further so that the Single Market addresses the priorities of our citizens and the worries of our consumers,” he said.

“I have asked the European Commission to urgently investigate the potential abuse of dominant market positions by a few importers, particularly in the food industry. I will do whatever it takes to ensure that socially disadvantaged consumers do not suffer disproportionately from high inflation.”