Every day low pricing at Wal-Mart's German operation took on a whole new complexion this week as the retail giant was ordered to put its prices up. Hard discounters Aldi and Lidl were also told by the cartel office to raise prices on staple goods or face fines of up to DM1 m (£315,000) for each product sold below cost price. Wal-Mart's defiance of German law has enraged the retail lobby, which accused the US retailer of fuelling a price war driving smaller competitors out of business. An organisation of Wal-Mart's size may be able to sustain huge losses in order to gain market share, but competitors cannot afford to slash margins and rely on economies of scale elsewhere to reduce losses, said cartel office chief Ulf Boege. It's not a question of setting up "protective fences" around small stores, he insisted. "To me it's about seeing that independent companies are not pushed out through the unjust pricing strategy of big companies with superior market strength." Spar's German operation hoped the ruling would have a "positive impact on the sector as a whole". But other pundits were more sceptical. One said it would do little to prevent the Wal-Mart effect from running small firms out of business. But the future looks bleak for Wal-Mart's German operation, which continues to chalk up heavy losses. Now that Real has been struck off Wal-Mart's shopping list for at least a couple of years, the US retailer, which has less than 3% of the German market, simply doesn't have sufficient scale to progress, explained Clive Vaughan at Retail Intelligence. "They may have massive buying power but they need scale in Germany to make the supply chain work more efficiently. There's no room for manoeuvre in Germany Wal-Mart's tried it on and got a slap on the wrist." {{NEWS }}

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