McDonalds's hit by European consumers' anti-trust complaint

GMT 11:07 2016 Wednesday ,13 January

Arab Today, arab today McDonalds's hit by European consumers' anti-trust complaint

McDonald's logo
Brussels - AFP

Three Italian consumer groups lodged a far-ranging anti-trust complaint with EU regulators against US fast food giant McDonald's, urging Brussels to investigate the company's franchise system which they say harms consumers.

Codacons, Movimento Difesa del Cittadino and Cittadinanzattiva said McDonald's exploits its franchises in several European countries by locking them into overly long contracts and charging exorbitant rents that far exceed market prices.

If taken up by the European Commission, the executive arm of the 28-nation European Union, the probe would join a separate investigation by Brussels over the fast food giant's tax deals in Luxembourg.

"The coalition calls upon the Commission to take action against the unlawful and restrictive contracts McDonald?s imposes on its franchisees, which negatively affect consumer choice, pricing, and quality of service and food across Europe," the groups said in a statement.

In its compliant, the groups say most of McDonald?s revenue in Europe comes not from selling hamburgers, but from collecting rent.

"These rents are often significantly higher than market rents and those paid by direct competitors," the consumer groups said a statement.

In France, where McDonald's dominates the fast food market, these margins on real estate reach between 63 and 77 percent, the statement said.

The commission, which is under no time constraint to decide on the issue, confirmed in an email to AFP that it had received the complaint, "which it will now look into."

If found guilty, McDonald's faces penalties that could reach up to 10 percent of global sales and an obligation to profoundly restructure its business.

But it is far from certain the complaint will bring about a second investigation into the company by the EU, which would first examine the sector more largely to form its own opinion on the issues raised.

The powerful US labour union, SEIU, offered backing to the compliant as it tries to drum up support to pressure McDonald's to boost wages worldwide instead of prioritising low costs and higher profits.

"It (Other OTC: ITGL - news) 's because of McDonald's super-size impact on the global economy that the actions being taken here today are so important for efforts around the world to hold the company accountable," SEIU director Scott Courtney said at a news briefing in Brussels.

The global leader in fast-food, McDonald's has more than 36,000 restaurants in more than a hundred countries around the world.


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