GRTU ‘very concerned’ discount giant EuroSpin will hit local stores hard

The General Retailers and Traders’ Union has expressed its deep concern at the news that discount supermarket EuroSpin will be opening several stores in Malta, with plans to eventually increase their number to 12.

GRTU CEO Abigail Mamo told Business Today that the Italian low-cost giant would be another foreign business competing directly on unfair terms with Maltese businesses of all sizes.

Earlier this week MaltaToday reported that EuroSpin is planning to open five supermarkets in Malta, and intends on eventually having 12 outlets in total.

With over 1,000 supermarkets in Italy and 62 in Slovenia, Malta will be EuroSpin’s second overseas market. It currently has over 7,000 employees.

Mamo, however, said that while the GRTU was always in favour of investment, in this case it was “very concerned” in view of the fact that EuroSpin, as a foreign business, would be entitled to a refund of 30% on the 35% tax rate.

“This is something that will hit hard both the small, self-employed run, corner stores and the larger Maltese supermarkets,” Mamo said.

“It is not an issue of race but an issue of unfair discrimination, where this business, being foreign-owned, will have the automatic opportunity of benefitting from getting a 30% refund of the taxes they pay, effectively only paying 5%.”

Arguments that they need to pay the remainder of their tax once this is declared in their own country are of little comfort, Mamo emphasised.
She said that, in such a situation, local businesses were being classed as less important.

“Maltese businesses are being treated as second class and given the clear message that nobody cares about their business.

“We are not against foreign investment but when it is at the direct expense of Maltese business it’s another story entirely.”

Mamo underlined that charity had to being at home, and said the union was calling out politicians for not safeguarding the interest of Maltese businesses.

“Greater responsibility is requested from our politicians who are there to safeguard Maltese interests first and foremost,” she said.  

By way of analogy, Mamo said: “Imagine being employed and doing the same job as someone foreign and just because you are Maltese you hand over 35% of your wage to the government while the foreigner only pays 5%, in your own country.”

“Is this justice?” she asked

She added that cheaper prices were inevitable with such tax discrepancies, but that apart from cheaper prices, consumers also demand good quality and that the standards Malta has enjoyed not be tampered with.

“We expect the authorities to make sure that Malta does not become the dumping ground of other EU counties as this has happened in the past and is a proven business model of certain discount stores,” Mamo added.

Drastic challenge in market beneficial for consumers

Consumers’ Association chairperson Benny Borg Bonello offered a contrasting view about the opening of more supermarkets selling lower cost products, however.

Asked whether he felt the announced EuroSpin outlets would be beneficial for consumers, Borg Bonello said that they definitely would, since there would be more competition.

He said that the situation in the supermarkets sector had been stable for a while, and that a strong challenge in the market would be something positive.

“One problem with a small country is that the markets are small and the tendency is that each market would be dominated by a small number of providers,” Borg Bonello said, “The consequence of this is higher prices and limited choice.”

“A drastic challenge in this market will be good as the situation has been quite stable for some time now.”

Borg Bonello noted that, when German discount supermarket Lidl had first opened in Malta, this had brought a shake-up in the market.

“Prices fell and the consumers found a wider choice of products as other smaller retailers had to adjust to the situation in order to compete,” he said.

Once the market had stabilised, however, prices started increasing again, he pointed out, so much so that several consumers had noticed in recent months that the prices charged by those dominating the market had begun to rise.

“Thus, a new competitor will surely be beneficial.”

Borg Bonello went on to highlight that new, large competitors tended to open large retail outlets, which, by law, were obliged to show unit pricing (€ per kg/litre), apart from the price of the product.

The unit price, he underscored, was very important when it came to comparing prices.

“It should be noted that when some eight years ago, the Ghaqda tal-Konsumaturi put pressure on the authorities to enforce the unit pricing legislation, the Malta Competition and Consumer Affairs Authority, issued a change in the legislation with the result that 85% of the retailers at that time were exempted from showing unit prices,” Borg Bonello said

“Another consequence of this was that 40% of the localities in Malta did not have a single outlet which was obliged to show unit prices,” he added.

Level playing field needed

Asked for its views on the matter, the Malta Chamber of Commerce, without making specific reference to taxation, said that while it was in favour of competition, this should take place on a level playing field.

“Within the context of a globalized economy, the Malta Chamber is in favour of healthy competition as this typically results in more sustainability and a better customer experience all round,” a spokesperson for the Chamber of Commerce said.

“This however needs to take place within a framework of a level playing field, otherwise it would result in a situation of discrimination between businesses.”