Wal-Mart Sells Milk & Butter Below Cost
Hurts Competition: German Court

AP 12nov02

FRANKFURT, Germany - Germany's highest court ruled Tuesday that Wal-Mart's attempts to sell staples such as milk and butter here below wholesale prices was damaging to competition, the latest development a long-running dispute between the U.S. discount shopping giant and regulators.

In a ruling welcomed by the Federal Cartel Office, the supreme court said that selling products below wholesale prices hurt competition by creating an unfair environment for smaller and mid-sized stores.

The case dates back to September 2000, when the Federal Cartel Office ordered Wal-Mart and two German rivals to call off their price war on groceries — selling items such as milk, butter, flour and cooking oil below cost on a regular basis — because it could drive smaller shops out of business.

While the German-based Aldi and Lidl discount supermarket chains subsequently raised their prices, Wal-Mart appealed the regulator's decision at a state court in Duesseldorf, which ruled in the discounter's favor.

The cartel office then appealed the case to Germany's supreme court. The court said that such exceptionally low prices hurt smaller stores even though no "tangible" limitations to competition were noticeable.

"We respect the decision taken by the federal court today and will orient our pricing in the line with these recommendations," said Amy Wyatt, a spokeswoman at Wal-Mart headquarters in Bentonville, Ark. "However, we still remain committed to raising the standard of living in Germany, by offering our customers the best quality products at the lowest possible prices."

Wal-Mart Stores entered the German market in 1997, but has yet to establish itself as a major player. Last year, it scuttled plans to launch 50 new superstores in Germany by 2003.

In trading on the New York Stock Exchange (news - web sites), Wal-Mart shares rose 1.6 percent, or 85 cents a share, to close Tuesday at $53.85.