Supermarkets do transfer the VAT reduction applied by the Government to food or, at least, there are no indications that this is not the case, according to the conclusions of the report prepared by the National Commission for Markets and Competition (CNMC) precisely to ensure that the measure is complied with.
The report was commissioned by the Secretary of State for the Economy and Business Support after the Government's decision to reduce VAT on basic food items from 10% to 5% as of January 1, and on products from 10% to 5%. such as pasta or cooking oils.
This drop in VAT, which the Government decided to extend at the end of June, was not without suspicion among consumers, among other things because, with the turn of the year, some distributors raised their prices. Its launch also coincided with the attacks by Podemos on Mercadona for its business benefits.
The CNMC study indicates that "there have been no systematic problems in the transfer of the VAT reduction" and that, from the point of view of competition, there has been no relationship between the different levels of concentration between provinces or municipalities in Spain. and the degree of application of the measure.
The organization chaired by Cani Fernández has analyzed more than 60,000 prices between December 2022 and May 2023 in a market in which supermarkets cover 70% of the vein surface. It has also used data from the INE, the Ministry of Agriculture, Eurostat and various private consultancies. He has also resorted to meetings, interviews and requests for information, according to what he indicates.
The recently approved report is interesting, among other things, because it shows the market shares, measured in this case by square meters of area, of the large distributors in Spain. Mercadona is, with 17.3%, the leader by far, ahead of Carrefour's 9.1%, Dia's 8.5%, Eroski's 6.4% and Lidl's 5.2%.
The market is dynamic, he indicates, with an annual growth of 1.7% since 2012, but it is also undergoing increasing concentration in which large-scale distribution is becoming strong and the first three operators now account for close to a third part of the entire sales area.
To reach its conclusion, the competition authority has compared the evolution of prices with what could be expected from their behavior before taxes. It has also compared the evolution of the price of the products affected by the drop in VAT with other foods not affected by this reduction.
The third method applied has consisted of comparing how prices evolve in the regions where VAT is applied in comparison with the Canary Islands, Ceuta and Melilla, where this tax is not levied.
Its conclusions are similar to those of the Bank of Spain, which has not found irregularities in the VAT reduction either. The tax reduction will be in force until December 31, provided that the interannual rate of underlying inflation is above 5.5%.
