BWB investigates market-dominant buyer in the poultry sector

Role of the Fairness Office

At the center of the current proceedings is the suspicion that a "market-dominant" buyer dictated delivery terms to fattening operations. Up to 200 farmers could be affected. On Friday, the ministry said only that it concerned a "full-range supplier." The BWB confirmed to the APA that in the current case investigations are being conducted under the Fair Competition Conditions Act (FWBG), which is intended to protect agricultural operations against unfair trading practices.

The BWB did not name the company involved. It is also keeping quiet about which specific practices are being challenged. The investigations arose in the course of a complaint filed by the so-called "Fairness Office," which advises farmers in conflicts with the retail trade. This makes the case the second known instance in which the Fairness Office has taken the route to the competition authority.

In parallel, the BWB recently launched investigations into the dairy market. Here, in the course of the introduction of animal welfare standards, supply agreements with dairy farmers are said to have been unilaterally altered, according to the BWB. The authority points to comparable structures in both proceedings: powerful buyers face a large number of small producers.

Pending proceedings before the Cartel Court

According to the competition watchdogs, three proceedings are currently pending before the Cartel Court for alleged violations of the FWBG. These concern the drugstore chain dm, the Tyrolean food retailer MPreis, as well as the aforementioned wholesale fruit merchant. The new poultry case will add a fourth proceeding, but is still at an earlier stage of investigation.

The Fair Competition Conditions Act (FWBG) is intended to balance the power imbalance between the food retail trade and agricultural producers. It prohibits a range of unfair business practices – such as unilateral changes to contracts, short-notice cancellations of ordered quantities, or the enforcement of prices below production costs. Violations can be punished by the Cartel Court with financial penalties.

What the FWBG regulates

The BWB emphasizes that these are investigations and that no company is being pre-judged. Should the suspicion be confirmed, the conduct against the FWBG would be another case in which a large buyer exploited its position toward its farming suppliers. The authority announced that it would examine the matter expeditiously.

For the farmers affected, their economic livelihoods are at stake. Fattening operations are often dependent on a few large buyers; dictated delivery terms can squeeze margins and devalue investments. The Fairness Office sees itself as the first point of contact and attempts to settle conflicts before they – as now – end up at the competition authority.

The Chamber of Agriculture and the Farmers' Association are following the developments with great interest. Both organizations had repeatedly called for stricter rules vis-à-vis the food retail trade in the past. Should the BWB bring charges before the Cartel Court, it would be one of the few proceedings in which the position of producers against market-dominant buyers becomes legally entrenched.

The investigations are ongoing. The BWB left open when a conclusion can be expected. What is certain is that with the current step, the authority is tightening its course toward the food retail trade – and the Fairness Office has, for the second time since its existence, chosen the route to the competition authority.