Business

McDonald's faces competition complaint in Europe

McDonald's chips Image copyright PA

McDonald's has been accused of abusing its market power by imposing unfair and restrictive contracts on people operating its franchise restaurants in Europe.

A formal complaint has been made to the European Commission by a group of Italian consumers' organisations.

They accuse McDonald's of forcing franchisees to pay excessive rents and high fees.

McDonald's said it shared risks and rewards with its licencees.

In a statement, McDonald's said: "We are proud of our franchisees and are committed to working closely together so that they have the support they need to operate their restaurants and their businesses.

"This approach, with the principle of sharing risk and reward, has been successful for many years and has helped create the best business opportunities for our franchisees and the best overall experience for our customers."

'Dominant position'

The Service Employees International Union (SEIU) and European unions, including the Bakers Food and Allied Workers Union in the UK, are supporting the formal antitrust complaint.

"McDonald's abuse of its dominant market position hurts everyone: franchisees, consumers, and workers. We strongly urge the European Commission to investigate the charges and to use all of its powers to hold McDonald's accountable," said SEIU organising director, Scott Courtney.

The European Commission said it would now study the submission. It has the powers to launch an investigation if it believes the allegations are founded.

The consumer organisations claim franchisees are prevented from switching to competitors because McDonald's makes them sign longer-than-average contracts.

They also said licensees lease premises from the company at above market rates.

It is claimed this leads to poorer consumer choice and higher prices in franchise stores as opposed to those owned directly by the company.

Franchisees own and operate 73% of McDonald's restaurants in Europe.

McDonald's received $9.27bn (£6.40bn) in revenues from its franchised restaurants worldwide in 2014.

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