Italian antitrust authority to probe into McDonald's franchise terms

By Nikita Chaurasia  Date: 2021-08-11

Italian antitrust authority to probe into McDonald's franchise terms

AGCM, Italy's antitrust authority, will investigate the terms and conditions of McDonald's agreements with franchise operators after multiple complaints.

AGCM’s action could pose a danger to the U.S. fast-food chain, making it liable to pay a penalty of around 10% of its overall turnover if found guilty of a violation of Italian antitrust rules. The group had amassed revenues worth USD 19.2 billion in 2020.

The Italian competition watchdog stated that according to the information available, it seemed that the store operators and McDonald's share a relationship of economic dependence.

Some of the clauses of the company in the franchising agreements referred by the complainants form abuse of economic dependence, it mentioned in its decision to start an investigation, as per the document.

The watchdog mentioned that a series of general and binding clauses on prices, stocks, promotions, financial management, supplies, and purchases, including others, could be indicated as elements of abusive conduct.

It is worth noting that antitrust laws prevent companies from misusing the economic dependence of another company with unjustly burdensome or discriminatory contractual conditions, mainly when they cannot find a possible alternative.

Around 85% of McDonald's outlets are operated by franchisees. It has over 615 restaurants in Italy, of which 85% are not owned by the company.

McDonald's Italy mentioned that they do not yet know the details of the probe launched by the Italian Competition Authority, but they are open to collaborate with the Authority and are confident of the decency of their work and the role of McDonald's in encouraging entrepreneurship and promoting the economy of the country.

McDonald's has around 60 days to respond after it receives notification and the investigation is to be concluded by December 31, 2022.

The company found itself on the radar of AGCM after three operators registered complaints in March regarding royalties, rents, sales policies, and the size of their investments.

Source Credits:

https://www.investing.com/news/stock-market-news/exclusive-italian-antitrust-agency-to-investigate-mcdonalds-franchise-terms--document-2584603

About Author

Nikita Chaurasia     aeresearch.net

Nikita Chaurasia

An accomplished professional in the field of content development, playing with words comes naturally to Nikita Chaurasia. After completing her post-graduate MBA degree in Advertising and PR, Nikita worked across numerous content-driven verticals, undertaking diverse r...

Read More

More News By Nikita Chaurasia

Google fined USD 177 Mn by South Korea over anti-competitive practices

Google fined USD 177 Mn by South Korea over anti-competitive practices

By Nikita Chaurasia

The fine is considered to be the ninth-biggest by the regulator to date. It was announced when South Korea’s Telecommunications Business Act, popularly known as “anti-Google law” came into effect.  South Korea’s Kore...

England to become the first country to require EV chargers in new homes

England to become the first country to require EV chargers in new homes

By Nikita Chaurasia

Even the commercial establishments will be required to include EV chargers. The news echoes on U.K.’s efforts to achieve net-zero greenhouse gas emissions by 2050. The British government is expected to introduce a new law in 2021 which wi...

BMW places battery order worth USD 23.8 billion amid rising EV demand

BMW places battery order worth USD 23.8 billion amid rising EV demand

By Nikita Chaurasia

The automaker is planning to use these batteries in its upcoming EVs. BMW had previously signed various battery cell contracts worth USD 14.2 billion. Bayerische Motoren Werke (BMW) AG has increased the orders for battery cells owing to the risi...

TotalEnergies and Iraq ink USD 27 billion oil, gas, solar agreement

TotalEnergies and Iraq ink USD 27 billion oil, gas, solar agreement

By Nikita Chaurasia

French multinational energy company TotalEnergies SE has reportedly signed a USD 27 billion contract for investing in oil, gas, and solar energy production in Iraq. Iraq’s oil minister Ihsan Ismail and Chief Executive Officer of TotalEnergies,...

Fintech startup Skeps secures USD 9.5 million in a Series A funding

Fintech startup Skeps secures USD 9.5 million in a Series A funding

By Nikita Chaurasia

PoS fintech firm Skeps has recently raised USD 9.5 million in a Series A investment round led by Bertelsmann India Investments. The round also saw the participation of existing investor Accel. The new funds will be used to expand the sales, engineer...