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Consumer groups: McDonald's charging rents 10 times above market rates

Staff writer |
Italian consumer groups filed an antitrust complaint with the European Commission against McDonald's. They say the company used its dominant position in the market to gouge consumers and its franchisees.

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Codacons, Movimento Difesa del Cittadino and Cittadinanzattiva allege that McDonald's is violating European Union rules by abusing its position as a landlord by charging rents to franchisees with prices up to 10 times above market rates.

The group says McDonald's has set 20-year franchise contracts followed by one- to two-year non-competitive clauses that limit the ability of franchisees to switch to other brands.

The high rents and the contract terms leads to the franchisees charging inflated prices to consumers, the consumer groups say.

The groups argue that the practices are in violation of EU antitrust rules that establish "dominant companies have a responsibility not to abuse their powerful market position by restricting competition."

The coalition that filed the complaint says that the effects of McDonald's practices in Europe are perhaps most obviously demonstrated by higher priced items at franchise restaurants compared to company-operated restaurants.

About 97% of menu items had higher prices at franchise outlets than in corporate-owned restaurants in Bologna, 68% of items had higher prices in franchise stores in Rome; and 71% of menu items had higher prices in Paris, the coalition says in its complaint.

In France for example, an order of small fries was 72% more expensive at franchised stores than corporate stores in Marseille, 64% more expensive in Paris and 25% more expensive in Lyon, the coalition says.