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Italy watchdog ends investigation into McDonald's franchising terms

Published 06/30/2022, 05:11 AM
Updated 06/30/2022, 07:00 AM
© Reuters. FILE PHOTO: The logo for McDonald's restaurant is seen as McDonald's Corp. reports fourth quarter earnings, in Arlington, Virginia, U.S., January 27, 2022.    REUTERS/Joshua Roberts/File Photo
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MILAN (Reuters) -Italy's antitrust authority said on Thursday it had closed an investigation launched last year over U.S. fast-food chain McDonald's (NYSE:MCD) franchise terms in the country.

The AGCM regulator said that the company had committed to removing clauses in contracts with its Italian affiliates which could raise economic dependence issues and "which could unduly condition their work and reduce, in an unjustified way, their profit margins".

"The Authority considered that the commitments proposed were adequate to remove the competition concerns related to abuse of economic dependence alleged in the opening proceedings," it said in a statement.

Following complaints by three franchise operators, the watchdog said in August 2021 that, a series of pervasive and binding clauses on prices, promotions, stocks, supplies and purchases, financial management, among others, could be seen as elements of abusive conduct.

With most of its outlets operated by franchisees, franchising is an important business model for McDonald's, which reported revenue of $23.2 billion last year.

© Reuters. FILE PHOTO: The logo for McDonald's restaurant is seen as McDonald's Corp. reports fourth quarter earnings, in Arlington, Virginia, U.S., January 27, 2022.    REUTERS/Joshua Roberts/File Photo

AGCM earlier noted that the U.S. company could have been fined as much as 10% of its global turnover had it been found guilty of breaching Italian antitrust rules.

McDonald's has 640 restaurants in Italy, which are mainly managed under a franchising regime by 140 licensees. It employs 27,000 people in the country, the company's website showed.

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