“Grab one from the back – it’s cheaper”

Following discussions with MEP Alex Agius Saliba (S&D), one of Malta’s major importers has agreed to discontinue a practice that, according to the MEP, has been harming price competition among small retailers and limiting consumer access to more affordable goods.

At 78, Nena values having a grocery shop just a block away. It’s not simply a matter of convenience but also of empowerment: it permits her and her husband Freddie access to their daily needs at their own convenience and helps them to stay well and independent despite they age.

A loyal customer, Nena spends a significant portion of her pension here, ensuring her household’s basic needs are met. This morning, rushing through her shopping list, she absentmindedly forgot to pick up her husband’s favorite shower gel. With the current bottle nearing its end, she has to make a quick return trip.

Reaching for one of the shower gels on the middle shelf, Nena is interrupted by Tessie, the shop owner. “Grab one from the back, Nen,” Tessie advises, “not one with the sticker.”

The holographic stickers on the bottles placed at the front had gone unnoticed by Nena. Now, with Tessie’s explanation, she understood that the item with a sticker came at a significantly higher price than the one without; in this case more than double.

Photo: Sandro Mangion

What purpose do these holographic stickers serve and why are they deemed necessary by a major company that imports and distributes fast-moving consumer goods? It all boils down to the few major importers and distibutors in Malta trying to squeeze out parallel traders, Maltese MEP Alex Agius Saliba told The Journal on the margins of the European parliament’s plenary session in Strasbourg last week. Parallel traders buy products in an unofficial but legal way from countries where they are sold at lower prices and then sell them more cheaply than usual in high-price countries like Malta.

But how does a sticker make a difference, at the end of the day? The cheaper products are still on the shelves, anyway, aren’t they?

Agius Saliba says holographic help differentiate product supplied by one of the major importers from those that reach stores through parallel imports. The holographic stickers then allow the company representatives to easily identify their products on store shelves at a glance, distinguishing them from those sourced through parallel traders. This prompts them to put pressure on the retailer to restock even if they still have some remaining inventory that lacks the sticker.

Photo: Sandro Mangion

While grocers theoretically have the option to decline restocking a product, the reality presents them with a Hobson’s choice, Agius Saliba explains, noting that the small retailers in Malta are effectively under the large importers and ditributors’ thumb. While the import and distribution companies offer attractive incentives like direct delivery, delayed payment options, and free equipment such as fridges and freezers, this creates an obligation to purchase a vast product range, even beyond immediate needs. According to the MEP, the larger importers have been threatening smaller retailers with losing access to other popular brands if they cease ordering less competitively priced products from them, even when they have existing stock from parallel importers. This effectively hinders grocers’ ability to offer consumers more affordable options obtained through parallel trade.

Pointing out that no less than 40% of people in the Maltese islands buy their consumer packaged goods from small retailers, Agius Saliba argues that, by suppressing price competition among these shops, the large importers and distributors are ultimately harming a significant portion of the population.

A member of the European Parliament’s Committee on the Internal Market and Consumer Protection (IMCO) and a champion of consumer protection, Agius Saliba has unsurprisingly been actively working to address this practice in Malta. In a positive development, he announced that, following constructive discussions, the company that has been using the holographic stickers has agreed to discontinue them, effective immediately.

The MEP said he will be informing the European Commission about this latest positive development at a meeting that has been scheduled for this Thursday with European Commission Executive Vice President Margrethe Vestager and members of her cabinet.

“The European Commission has to look into the matter”

Last October Agius Saliba requested the European Commission to investigate food importers and distributors in Malta because, according to him, they were contributing to a situation where Maltese consumers have to shoulder exorbitant price hikes. In his conversation with The Journal, he made clear that at no point did he request an investigation into ‘collusive behaviour’ in Malta to fix prices or limit the availability of certain products on the national markets. Rather, his request was aimed at looking into the unchecked control exerted by a handful of companies, hindering smaller importers from offering more affordable prices to Maltese consumers. He said that the few major players in the Maltese market controlled over 50% of food product imports with some 300 brands, and this alone should trigger a case on the basis of Article 102 of the Treaty on the Functioning of the European Union. Article 102 prohibits abusive conduct by companies that have a dominant position on a particular market.

MEP Agius Saliba also addressed criticism regarding his decision to raise the issue of parallel imports with the EU in Brussels, rather than with the relavant Maltese authorities. He clarified that this is because the European Single Market falls under the exclusive competence of the EU, meaning the Malta Competition and Consumer Affairs Authority (MCCAA) lacks jurisdiction on this specific point under the Malta Competition Act.

He said that, although the European Commission has been resisting to delve into the case, it will now have to look into the matter after the Petitions Committee within the European Parliament – which comprises representatives of all political groups in the assembly – approved a petition presented by the Maltese MEP. The petition calls on the Commission to investigate whether the mechanisms of de facto monopolies are leading to an artificially higher prices in the food retail sector in Malta.

“When I meet with Vice President Vestager and her team on the 7th March, I will present all the information on how the Maltese market is structured, as opposed to the situation in other national markets within the EU, and how this impacts smaller retailers,” Agius Saliba said. “I will ask the Commission for more powers to be granted to national regulatory authorites so that they can conduct certain investigations and ensure compliance. I will also ask for price transarency to be ensured at retail level.”

MEP Alex Agius Saliba (S&D)

“Malta needs MEPs who advocate for change”

From a political perspective, MEP Agius Saliba criticised the Partit Nazzjonalista’s response to the issue. He pointed out that, while both small retailers and consumers have been disadvantaged due to inadequate legislation, the party simply claimed there were no solutions. He emphasised that the recent developments serve as a clear reminder that the Maltese need representatives in the European Parliament who are not afraid to challenge the established order and advocate for positive change.

Main photo: Sandro Mangion

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