Portugal’s food police have fined supermarket group Pingo Doce €500,000 for selling products at below cost price.
ASAE imposed the €500,000 fine due to in store activity on May 1st 2014, when Pingo Doce had a one day promotion that lopped 50% off the bill for anyone spending over €100.
This meant that many products were sold at half price and thus below the legal minimum price that can be charged.
Apart from near riots in some stores, the initiative has raised questions on the relationship between suppliers and supermarket chains and their right to agree promotions that involve price cuts.
ASAE said last June that Pingo Doce, owned by Jerónimo Martins Retail, should be fined €500,000 for selling at a loss.
The fine was confirmed today by the Ministry of Economy with minister Pires de Lima citing the fine as a fine example of ASAE’s dedication as he addressed parliament.
Pingo Doce’s reaction was less joyful with an official source confirming the fine notification, commenting "The transactions in question were allocated during the campaign on 1st May 2014 in which our partners joined us with a view to generating a day of strong sales with significant savings for our customers."
The decision of ASAE is based on the Individual Restrictive Trade Practices laws of 2013 where ‘selling at a loss’ is covered: “it is forbidden to offer for sale or to sell an asset to a company or to a consumer for a price below its actual purchase price, plus taxes applicable to that sale and, where applicable, the charges relating to transport."
Violation of this law is an offence with fines of between €5,000 and €2,500,000.
Pingo Doce said today that, "the decision surprises us because we are convinced that we observed and complied with the law with the express agreement of our suppliers."
The law seems designed to protect smaller suppliers and retailers from the ravages wrought by supermarket chain promotions but does not cater for one-off promotional activity where legitimately retailers want to cut prices to shift stock, but are prevented from dropping too low or they will have broken the law.