Agius Saliba on the warpath: ‘importers coerce stores to refuse cheaper goods’

Labour MEP Alex Agius Saliba has alleged that small storekeepers and grocers in Malta are unable to stock cheaper goods imported by parallel traders, because they are threatened by larger importers into losing access to other major brands. 

The MEP this week managed to force the European Commission into launching an investigation into food prices in Malta, after Brussels refused to wrest the matter from the national competition authority. 

But in a petition to the European Parliament, Agius Saliba won cross-party vote, from the Left, Greens to the European People’s Party, to have the matter investigated by the EC. 

Agius Saliba claimed an oligopoly of powerful distributors on food prices – he specifically named Alf. Mizzi & Sons (AMSM) and Francis Busuttil & Sons as the major players in the market – controlled over 50% of food product imports with some 300 brands. “I’m not alleging a cartel here, but these distributors are so large that they alone control the market, and this alone should trigger an Article 102 case.” 

An Article 102 investigation assesses whether a company is dominant in any market and whether anti-competitive practices are in play. 

Agius Saliba also alleged that major importers were coercing storekeepers into refusing to stock brands imported by parallel traders at a cheaper price. 

“They affix hologram stickers on their products to differentiate them from those imported by smaller parallel traders. The shops that dare stock say, the same detergents but at half the price, are threatened by the large importers, who make them pay for their stock in cash, make them pick up the stocks themselves instead of having it delivered, or even refuse to sell them other brands. There are no other words for this: they want to bankrupt the parallel traders, break them so that they cannot compete in the market.” 

The MEP told the EP’s petitions committee that Malta’s food price inflation had been increasing since December 2023, contrary to the trend in the rest of the EU, with over half of the 3% inflation accounting for food prices alone. 

He said that even Central Bank deputy governor Alexander Demarco had pointed out that the reason for this alone was profiteering, and not scarcity or demand issues. “Can you imagine a situation where you have one particular importer in a major EU state, say in Germany alone, with a market share greater than 50%?” 

Importers’ reaction 

A spokesperson for AMSM told this newspaper the Agius Saliba petition was based “on a false premise”. 

“The European Commission made it clear that the investigation requested isn’t within their competence… Agius Saliba is effectively claiming the Maltese authorities are unable to protect the European single market, and that the Commission should investigate on the grounds that two importers allegedly control the market. 

“He implies AMSM controls over 50% of the fast-moving consumer goods (FMCG) market. The reality is that AMSM has less than 11% share of the FMCG sector in Malta. So, the Petitions Committee accepted the petition based on a wrong premise,” the AMSM spokesperson said. 

AMSM added that of over 100 food distributors in Malta, no one single Maltese company in this sector is in a dominant position. “Competition law prohibits market distortions occasioned by a dominant firm… AMSM categorically rejects any accusation of profiteering. It has been in business for over 100 years and has built the confidence of numerous suppliers to handle their products in Malta, based on efficiency, investment, and integrity.” An FSB spokesperson refuted the allegation of profiteering. “We do not dictate market prices. We have been working round the clock to mitigate this situation by trying to negotiate the best prices with our international suppliers, local service providers as well as trying to optimise its operating costs while prioritising quality.” 

FSB said it had never sought to take advantage of its position as one of Malta’s main foodstuffs importers, saying they invited Agius Saliba to engage with the company directly and verify the facts. “We always seek to offer consumers the best possible prices against an extremely challenging global economic climate characterised by significant price increases.” 

The spokesperson also denied the MEP’s ‘bullying’ claim on retailers who source products from parallel traders. “While we represent a number of brands, we have no control over the market. In fact, many of our brands are available locally through other importers and retailers, contrary to Alex Agius Salib’s misinformed remarks.” 

FSB said it does not place stickers on products to distinguish them from parallel imports, except for an English translation of ingredients when this is legally necessary. 

FSB attributed the rise in food prices to the perfect storm of the war, shipping disruptions in the Red Sea, severe droughts and the post-COVID supply chain recovery, as well as skill shortages and inflated house prices. 

“Costs have gone up across the board and will continue to do so with new EU environmental taxes and ESC requirements… while we all have a role to play for a more sustainable future, this does come at a cost. In order to remain a viable business, we are forced to make the necessary adjustments.” 

Petitions Committee want EC probe 

MEPs representing the other parties in the Petitions Committee backed Agius Saliba’s request to force the European Commission into launching an investigation, after refusing to wrest responsibility for the matter away from the national competition regulator. 

Danish MEP Margrete Auken (Greens) said major players could easily conceal their actions behind the peculiarities of small markets, and that the EC should not rest solely on the investigations of national regulators. 

Bulgarian MEP Andrey Novakov said Agius Saliba’s allegations were worrying and said the EPP supported requests to have the Commission resolve such issues. Another EPP member, German MEP Peter Jahr, said it was clear that Maltese consumers had no recourse to other markets while Germans could easily source cheaper products from nearby border countries. “Importers on the mainland cannot conduct themselves in the same way as they conduct themselves in Malta,” Jahr said. 

Spanish MEP Esther Sanz Selva (The Left) said the Commission could not refuse to act on a market with dominant players, saying this was a situation that led to excessive inflation for citizens. 

Agius Saliba thanked MEPs for backing his call and said it was clear that the single European market was not functioning as expected in Malta. “It is not acceptable that the Commission does not take an interest in this matter… it is vital that the EC is proactive in such particular circumstance in the smallest member state. Malta is an island whose food importation and distribution sector is uniquely Maltese and consumers have no other choice.” 

What is an Article 102 investigation? 

Article 102 of the Treaty on the Functioning of the European Union (TFEU) prohibits abusive conduct by companies that have a dominant position on a particular market. 

The Commission’s first step in an Article 102 investigation is to assess whether the undertaking concerned is dominant on any given market or not. 

Before assessing dominance, the Commission defines the product market and the geographic market. If a company has a market share of less than 40%, it is unlikely to be dominant. 

What is an abuse of dominance? 

Holding a dominant position on any given market is not in itself illegal. However, a dominant company has a special responsibility to ensure that its conduct does not distort competition.  

Examples of behaviour that may amount to an abuse include: requiring buyers to purchase all units of a particular product only from the dominant company – exclusive purchasing; setting prices at a loss-making level – predation or predatory pricing; refusing to supply input indispensable for competition in an ancillary market, and charging excessive prices. 

Investigations 

The Commission’s investigative powers empowers it to enter the premises of companies; examine the records related to the business; take copies of those records; seal the business premises and records; ask members of staff or company representatives questions relating to the subject-matter and purpose of the inspection and record the answers.