The association has reviewed the evolution of almost 700 prices in Alcampo, Aldi, Carrefour, Dia, Eroski, Lidl, Hipercor and Mercadona.

FACUA-Consumers in Action has filed a complaint with the National Commission for Markets and Competition (CNMC) against seven retail chains for not passing on the VAT reduction to all the foodstuffs affected by the measure.

TDB keeps you informed. Follow us on Facebook, Twitter and Instagram.

FACUA denounces seven large chains

The association has reviewed the evolution of 674 prices in Alcampo, Aldi, Carrefour, Dia, Eroski, Lidl, Hipercor and Mercadona. The analyses were carried out on 30 December and 3 January. It found that in 50 cases a price reduction equivalent to that of Value Added Tax had not been applied. Thus, 32 prices are identical to those at the end of the year, 11 have not passed on the totality of the tax reduction and seven are even higher (see a table with the non-compliances).

This is the first phase of the price monitoring campaign launched by FACUA, which will continue over the coming months. In this regard, it reminds us that establishments cannot raise the prices of foodstuffs affected by the VAT reduction at least until the end of April, a period that will be extended for two more months if the underlying CPI for the month of March is not below 5.5%. Only increases justified by cost increases will be legal.

At the moment, the shops with the most irregularities are Dia, with 16%, and Carrefour, with 10%. In Mercadona no anomaly has been detected and in Hipercor only in one product (1% of those analysed). But now it remains to check that there are no further price rises during the months in which the tax reduction will be in force.

Irregularities

In most cases, the irregularities detected by FACUA consist of charging consumers the same amount as before the VAT reduction, which means that the entire amount would be used to increase the shop’s profit margin.

There are also products where the retail price is even higher than in the days before the measure came into force. There are also cases where the reduction is lower than it would have been if the tax reduction had been fully passed on. Among them, FACUA has detected incorrect practices of rounding up to add a cent when in fact they should be rounded down.

The highest number of anomalies was detected in Dia, with 13 irregularities in the 80 prices compared, in nine cases due to rounding up. In second place was Carrefour, where of the 113 prices analysed, in 11 cases the lower VAT was not passed on.

This was followed by Eroski, with eight incorrect prices out of a total of 92 evaluated. In Alcampo, six prices with irregularities out of the 96 analysed, in two cases due to rounding up. At Lidl, six prices were also found to be higher than they should be with the VAT rebate out of a total of 70 products compared.

At Aldi, five cases were reported out of 64 assessed. At Hipercor only one incorrect price out of a total of 76 products monitored. And in Mercadona not a single irregularity detected in the 83 food products where the price at the end of December was compared with the current price.

In its complaints, FACUA asks the CNMC to investigate the practices and to open the appropriate disciplinary proceedings to determine whether the prices applied represent an increase in corporate profit margins or are justified by increases in the costs of products where the VAT reduction has not been passed on.

What the law says

Article 72 of Royal Decree-Law 20/2022, of 27 December, states in paragraph 3 that “the reduction in the tax rate shall benefit the consumer in its entirety, without, therefore, the amount of the reduction being used totally or partially to increase the business profit margin with the consequent increase in prices in the chain of production, distribution or consumption of the products”.

“The effectiveness of this measure will be verified by means of a system for monitoring the evolution of prices, independently of the actions to be carried out by the National Commission for Markets and Competition within the scope of its competences”, continues the aforementioned paragraph.

The foodstuffs affected

According to the regulation, from 1 January, 0% VAT will be applied to the following foods that were previously charged at 4%:

• Plain bread, frozen plain bread dough and frozen plain bread intended exclusively for the production of plain bread.
• Bread-making flour.
• The following types of milk produced by any animal species: natural, certified, pasteurised, concentrated, skimmed, sterilised, UHT, evaporated and powdered.
• Cheese.
• Eggs.
• Fruit, vegetables, legumes, tubers and cereals, which have the status of natural products in accordance with the Food Code and the provisions issued for its development.

VAT on olive and seed oils and pasta will be reduced from 10% to 5%.

Article 72 of the aforementioned Royal Decree-Law states that VAT on these foods will resume at 4 and 10% on 1 May “in the event that the year-on-year rate of underlying inflation for the month of March, published in April, is less than 5.5%”. If this is not the case, the measure will remain in force until the end of June.