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German High Court Convicts Wal-Mart of Predatory Pricing

| Written by Stacy Mitchell | No Comments | Updated on Feb 1, 2003 The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/german-high-court-convicts-walmart-predatory-pricing/

Germany’s highest court has ruled that Wal-Mart’s below-cost pricing strategy undermines competition and violates the country’s antitrust laws.

Two years ago, the federal Cartel Office accused Wal-Mart and two other large supermarket chains of selling goods below cost and ordered the companies to raise their prices. The items in question included about a dozen staple products like milk, butter, and vegetable oil.

German law prohibits below cost pricing, because of its impact on small businesses. In this case, authorities feared a price war among the country’s three largest food retailers would decimate independent shops, ultimately leaving consumers with fewer options and higher prices.

Wal-Mart appealed the regulator’s decision through a state court, which ruled in the company’s favor. The Cartel Office then appealed to the Supreme Court, which ruled that below cost pricing harms independent competitors and reduces competition over the long-term.

Wal-Mart opened its first German store in 1997, but has struggled ever since. Last year the company dropped plans to open 50 new superstores.

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About Stacy Mitchell

Stacy Mitchell is a senior researcher with the Institute for Local Self-Reliance, where she directs initiatives on independent business and community banking. She is the author of Big-Box Swindle and also produces a popular monthly newsletter, the Hometown Advantage Bulletin.  Connect with her on twitter and catch her recent TEDx Talk: Why We Can’t Shop Our Way to a Better Economy. More

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