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10/12/2016

McDonalds’ most dedicated opponents find allies in Europe

Competition

McDonalds’ most dedicated opponents find allies in Europe

Three Italian consumer organisations filed an antitrust complaint against McDonald's this week with the European Commission

[Flickr/Mike Mozart]

Three Italian consumer organisations filed a complaint on Monday (11 January) alleging American fast food giant McDonald’s is abusing its franchises in Europe through restrictive contracts and property rental arrangements.

Italian organisations Codacons, Movimento Difesa del Cittadino and Cittadinanzattiva received support for their complaint to European Commission antitrust authorities from American labor union SEIU, which has already stirred up protests demanding higher wages for McDonald’s workers in cities across the US and in Brazil.

The American campaigners who have been calling for reform of McDonald’s business practices are now making their mark in Europe.

Around 20 US-based McDonald’s employees who have protested to demand a salary of $15 per hour traveled to Brussels yesterday (12 January) for the announcement of the Italian groups’ antitrust complaint.

Today (13 January) those McDonald’s employees are meeting with members of parliament and union representatives in Brussels, Dublin, Amsterdam, Paris, Copenhagen, London and Berlin. Part of the group headed to London will protest outside of a McDonald’s restaurant there this afternoon.

Scott Courtney is a top strategist at SEIU and has been behind the union’s work with fast food employees in the US. Over the last few months, he’s traveled abroad several times, pushing the movement to spill over to countries beyond the US.

In August Courtney spoke at a hearing he organised in the Brazilian senate with McDonald’s workers.

“This is part of a campaign globally to expose and hold accountable practices of McDonald’s that drive down wages for workers,” Courtney said yesterday at a press conference held with the Italian organisations who launched the EU complaint.

“We believe that McDonald’s has a special role in the world economy. It’s the second largest private employer on the planet,” he added.

SEIU is planning to back more actions against the fast food chain in other countries, Courtney said, though he declined to name where the union is planning to move its campaign to next.

“If I were in McDonald’s shoes right now, I’d be nervous about this,” Courtney said.

>>Read: Commission investigates McDonald’s tax rulings in latest Luxleaks twist

German MEP Jutta Steinruck traveled to Brazilia in August for the hearing on McDonald’s mistreatment of its employees.

Steinruck said McDonald’s has a “unique ability to drive down global standards.”

“One thing that always struck me is the extent to which McDonald’s has managed to shape a different image in Europe as compared to the rest of the world,” Steinruck said.

“Yet in much of Europe, McDonald’s profiles itself, often successfully, as a model employer – one that creates good quality jobs with training and career advancement opportunities,” she added.

On Monday fast food workers in the UK, Belgium and France sent petitions detailing poor working conditions to the European Parliament.

The new actions against McDonald’s in Europe put the company under further pressure: the complaint case filed Monday comes on the heels of the European Commission’s launch of a probe into McDonalds’ alleged tax evasion just one month ago.

>>Read: Vestager: We should thank the Luxleaks whistleblowers

The Italian consumer groups’ main gripe concerns McDonalds’ restrictions on its franchises, which it claims are harmful and might break EU antitrust law.

Companies caught breaking EU antitrust law face fines of up to 10% of global turnover.

According to the complainants, McDonald’s is the only fast food company to force franchisees to rent property owned by the company—which it offers at overblown prices.

The group’s data suggest that McDonald’s leases property to franchisees in France at rental prices of up to 84% more than what its fast food competitor Quick pays.

On top of that, the consumer organisations claim McDonald’s makes franchisees sign contracts that are on average 20 years long and contain lengthy non-compete clauses.

They argue that those conditions boil down to higher retail prices on McDonald’s food, making franchises more expensive for consumers than corporate-owned McDonald’s restaurants.

A McDonalds spokesperson defended the company’s relations with its franchises.

“We are proud of our franchisees and are committed to working closely together so that they have the support they need to operate their restaurants and their businesses. This approach, with the principle of sharing risk and reward, has been successful for many years and has helped create the best business opportunities for our franchisees and the best overall experience for our customers,” the spokesperson said.

McDonald’s employs around 400,000 people in Europe. In 2014, 40% of McDonalds’ global revenue came from its operations in Europe.

>>Read: Parliament tax committee threatens to blacklist uncooperative lobbyists

Background

On 11 January, Italian consumer organisations filed an antitrust complaint with the European Commission against McDonalds' practices relating to franchisees. On the same day, fast food workers in the UK, Belgium and France sent petitions detailing poor working conditions and unfair contracts to the European Parliament. The European Commission began investigating McDonalds' tax deals in Luxembourg in December 2015.