December 1999 / January 2000

Germany: Sales below cost price under the amended ARC

01 December 2000

Prices below cost are a major issue, especially in the food retail sector. With the introduction of the new explicit prohibition on sales below cost price, the position of smaller retailers should in theory be strengthened. Despite this explicit prohibition, it has proved difficult for the competition authorities to calculate cost prices. Moreover, it is often argued that a pricing-belowcost strategy may be necessary to match competitors’ prices, in which case it might be even more difficult to prove the anti-competitive objectives of such a strategy. Accordingly, there are doubts about whether the new prohibition will in practice improve the position of retailers claiming that they are being obstructed by competitors selling below cost price.