February 2025 – In a decision that will shape the competitive landscape of the Bulgarian food market, the Bulgarian Commission for Protection of Competition (“CPC”) concluded that there is no evidence of anti-competitive agreements between the major supermarket chains regarding food prices.
Background and investigation
The CPC initiated an investigation in response to the significant increase in retail prices of basic food commodities observed since early 2022 and the first months of 2023. The competition authority aimed to identify any practices restricting competition, such as: covert agreements, collusion, or concerted actions among retailers.
While much of the data in the CPC’s decision remains confidential, a key finding is that profit margins vary among retailers based on the type of goods, market conditions, economic factors and even the location of the supermarket. In some cases, profitability was found to be even negative. Retailers were observed to adjust their margins dynamically to remain competitive, often reducing mark-ups on certain products while applying higher mark-ups on others to maintain overall profitability.
The investigation found no evidence of prior coordination in retail pricing behaviour, common intent, or cooperation among supermarkets to set prices or exchange commercially sensitive information. As a result, the CPC determined that no prohibited agreements or concerted practices were present.
Key findings of the CPC decision
Following its investigation, the CPC concluded:
- There is no conclusive evidence of coordinated price-fixing or anti-competitive agreements among supermarkets.
- Price movements in the sector are primarily driven by market dynamics, including supply chain factors, inflationary pressures, and individual business strategies.
- The competitive structure of the Bulgarian retail sector remains intact, with retailers setting prices independently in response to economic conditions.
- Similarities in final selling prices among retail chains were found to be sporadic rather than systematic in response to the fast moving economic and geopolitical landscape.
Wider economic and policy context
Bulgaria is not the only country where supermarket prices have drawn regulatory scrutiny and sparked public unrest. In Croatia, a boycott of hypermarkets began in late January, initiated by a Facebook campaign, and consumer frustration over rising prices quickly spread to other countries in the region. In Bulgaria, this culminated in a consumer boycott of hypermarkets on 13 February 2025, resulting in a reported 28.8% drop in supermarket turnover—equivalent to BGN 7.9 million, followed by a second boycott event held on 20 February 2025.
While regulatory responses to rising prices have varied, political parties in Bulgaria have proposed legislative measures to regulate pricing, including caps of profit margins on basic food products and introducing state intervention in pricing. However, past competition rulings and EU regulations caution against such measures.
Notably, in September 2024, the Court of Justice of the European Union (“CJEU”) ruled that Hungary’s price restrictions on basic food products and mandatory storage requirements for retailers violated EU competition and internal market rules. After a successful appeal by SPAR, the CJEU found that Hungary’s state-imposed price caps distorted market competition and restricted the free movement of goods within the EU. By setting maximum retail prices and mandating stock levels, the Hungarian government interfered with free pricing mechanisms, giving domestic producers and sellers an unfair advantage over foreign competitors. The ruling emphasized that price controls disrupted market efficiency, leading to shortages, increased costs for retailers, and higher overall food inflation, which peaked at nearly 50% year-over-year in 2023—the highest in the EU. The CJEU made clear that while member states may take emergency economic measures, such actions must comply with EU competition law and uphold free-market principles.
Implications for the retail business and next steps
While the CPC’s decision reaffirms the existing principles of fair competition, retailers should remain cautious and consider the following takeaways:
- Compliance with competition law – While no violations were found, retailers should continue to ensure that their pricing policies and distribution agreements comply with competition regulations to avoid future scrutiny. It is recommended that businesses in the sector train their key personnel for compliance with competition law and regularly review their distribution agreements.
- Avoiding anti-competitive information exchange – Businesses participating in industry associations should be cautious about sharing commercially sensitive information that could lead to parallel pricing or unjustified price increases. Retailers and suppliers should ensure that industry discussions do not involve any exchange of pricing strategies, cost structures, or future market intentions. As a best practice, the internal compliance policies should include detailed guidance and DOs and DON’Ts for the participation in such meetings.
- Price monitoring – While sharing strategic and sensitive information is prohibited, the monitoring of publicly available information from competitors such as end prices of offered goods is considered to be fair and enabling businesses to adapt to the current behaviour of their competitors.
- Market-driven pricing – Businesses are encouraged to maintain transparent and competitive pricing practices, considering the economic factors influencing food costs.
- Regulatory oversight – After this decision, the CPC remains vigilant in monitoring the sector. It announced the initiation of a new full preliminary investigation of the entire sector with respect to the price increases. The competition authority has requested additional data from producers and traders of consumer goods, including eggs, dairy, meat, flour, bread, and oil, to further assess the current market dynamics. The Consumer Protection Commission will also assist in preventing potential unfair practices such as deferred payments, unilateral charges, and penalties imposed by supermarkets on other supply chain players.
In light of this, dawn raids by the CPC may be reasonably expected to follow. Businesses should take internal measures to ensure that their personnel is aware of dawn raid procedures and how to comply with them in order to avoid sanctions for non-cooperation. It is recommended to perform internal mock dawn raids and regular compliance trainings.
Additionally, inspections by the Consumer Protection Commission will focus on unfair commercial practices in retail stores that could contribute to unjustified price increases. The Consumer Protection Commission will monitor whether:
- Products meet the quality standards indicated on their labels,
- Discount announcements comply with consumer law,
- Discounted goods are actually available in stores,
- Products are correctly labelled, and
- Commercial information is not misleading to consumers.
For further information on how this decision may impact your business, please reach out to Kinstellar’s Competition & Antitrust team.