Consumer goods and retail companies are facing intensified scrutiny from competition authorities across several key areas, and often that scrutiny starts with unannounced inspections. There has been a marked increase in the number of dawn raids launched, particularly in recent months, as agencies are under pressure to tackle price increases, cost-of-living issues, labor market restrictions, and the continued artificial segmentation of the Single Market. As regulatory attention continues to grow, companies must prioritize compliance, training, and internal safeguards to mitigate risk.
In our latest episode of the Off the Shelf podcast series, Kurt Haegeman (Partner, Baker McKenzie Brussels) and Mara Ghiorghies (Partner, Baker McKenzie London) explore these key antitrust risks affecting the CG&R sector and provide practical guidance for navigating these challenges.
Key takeaways
- Dawn Raids: Ensure you have an up-to-date and tested process for handling unannounced inspections (including at individuals' homes), through short practical internal policies, procedures, and workshops addressed to your data/IT teams, legal, communications, HR, and reception staff. Learn more about our global Dawn Raid App, which provides step-by-step guidance on handling inspections across multiple jurisdictions and instant access to Baker McKenzie antitrust and tax lawyers.
- Labor Markets: Provide tailored, practical competition compliance training to HR and business employees with HR responsibilities, and expand your regular audits/health checks to cover no-poach/non-solicitation agreements, wage-fixing, and information exchange/benchmarking and roundtables.
- Restrictions in Supply Relationships: Provide tailored training to sales and marketing teams on vertical restrictions – include case studies, specific examples of interactions with resellers and focus on high-risk scenarios (promotions, cross-border arbitrage, complaints from resellers).
- AI-enabled Pricing Tools and Algorithms: Work with the business to map out instances where they are using third-party providers of algorithm services/AI to help optimize prices and maximize profits, and ensure they are vetted from a competition law perspective.
- Signaling: Train your executives, senior management, and media/PR teams on antitrust risks associated with public statements regarding pricing strategies, business plans, investments, or other competitive areas, as these can attract antitrust scrutiny.
Areas impacting consumer goods clients
Dawn raids
Consumer goods companies are increasingly subject to dawn raids as antitrust authorities intensify enforcement efforts, particularly in consumer-facing markets. This surge is driven by public pressure to address price increases and cost-of-living concerns. Agencies are now more proactive, often acting on tips from internal whistleblowers who escalate issues externally after being let down by internal responses.
Some jurisdictions, such as the UK, incentivize whistleblowing with financial rewards. Modern enforcement tactics include accessing data across company servers, cloud platforms, mobile phones, and personal devices, with some raids even extending to employees' homes. Informal communication channels and social media, which are now increasingly being used for business as well as personal use, are also under scrutiny. Importantly, deletion of messages can be detected and can result in severe penalties due to zero-tolerance policies.
Anti-trust enforcement in relation to HR or labor market restrictions
Antitrust authorities have expanded their focus to include labor market restrictions, marking a significant shift in enforcement priorities. Key areas under scrutiny include no-poach agreements, wage-fixing arrangements, and the exchange of salary and benefits information. These practices are increasingly considered anticompetitive, and recent enforcement actions have resulted in high-profile fines across the EU and UK, including cases involving consumer goods companies. This trend is expected to accelerate, making it essential for organizations to review and update their HR policies to ensure compliance with competition laws.
It is important to recognize that competition for talent often spans across industry sectors. For example, a luxury brand may compete with a tech firm when recruiting data analysts. The risk of infringement is particularly high during periods of talent scarcity, such as when businesses face skill shortages or intense competition to retain employees.
To mitigate these risks, organizations should:
- Ensure HR teams receive tailored and practical competition compliance training.
- Review agreements with suppliers, customers, consultants, and partners to confirm that any non-solicitation clauses are justified and narrowly scoped.
- Conduct targeted health checks with HR and business teams to help identify exposure to key enforcement risks.
- Monitor the forums, conferences, and roundtables attended by HR personnel to ensure appropriate compliance safeguards are in place.
- Roll out clear guidance and protocols on legitimate HR benchmarking practices is essential to maintaining compliance with competition law.
Restrictions in supply agreements
Consumer goods companies remain prime targets for enforcement actions related to supply agreements, particularly resale price maintenance and cross-border trade restrictions. Authorities, especially in Europe, continue to crack down on practices where "recommended prices" are used to disguise minimum resale prices. A notable example includes a EUR 600 million fine imposed on ten companies in the French household appliances sector. In addition, restrictions on EU parallel trade are under strict scrutiny, with suppliers facing significant penalties for limiting cross-border resale. Such practices are considered serious violations in the EU, and enforcement in this area is expected to remain rigorous and uncompromising.
Emerging areas of risk
Several antitrust risks are expected to gain prominence in the coming months, particularly in relation to pricing technologies and public disclosures. Businesses should exercise caution when approached by consultants offering AI-enabled pricing tools that claim to optimize prices based on industry-wide usage. Antitrust authorities have publicly acknowledged this trend and are actively investigating such developments. It is critical to ensure that any benchmarking or pricing software is properly configured to avoid competition law violations. These tools often require the submission of sensitive data, such as pricing, costs, or inventory, which raises concerns about how third-party providers use and share this information. Authorities have made it clear that a lack of understanding about how an algorithm or software operates is not a valid defense.
Another area of concern involves public statements made by companies, which may be interpreted as indirect information exchange with competitors. Although not a new risk, there is renewed regulatory interest in this issue, including within the consumer goods and retail sector. Executives and senior management should be aware that public disclosures about pricing strategies, business plans, investments, or other competitive areas can attract antitrust scrutiny.
To mitigate these risks, training for employees should focus on:
- What to say (avoiding statements about pricing intentions)
- Why say it (ensuring there is a legitimate reason, such as informing customers or investors)
- When to say it (disclosing only prices that the company is already committed to)
These safeguards are essential to maintaining compliance in a rapidly evolving enforcement landscape.