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McDonald's Faces More Problems in Europe, Thanks to Antitrust Charge

Italian consumer groups cry foul.

Hannelore Foerster/Getty Images

McDonald's Corp.'s stiffest test in 2016 may not come on U.S. soil from champions of a fairer minimum wage, or from fallout over all-day breakfast service. No, the burger behemoth has bigger Filet-O-Fish to fry across the pond where it now faces a potential antitrust and abuse of power scandal. The latest salvo fired at McDonald's comes from Italy, where three consumer groups have accused the multinational of turning the screws on franchisees by forcing them into ruinous contracts and rental agreements, and charging exorbitant royalties. Bloomberg reported today that the antitrust complaint, registered with the European Commission and backed by European and U.S. trade unions, alleges that McDonald's wields considerable power "to harm franchisees who run its burger restaurants as well as customers, workers and rivals."

None of this should come as a surprise to anyone with a dog-eared copy of Fast Food Nation on the bookshelf. The tactics alleged by the burger chain's European critics are the not-so-secret elements that make Big Macs and McNuggets so darn cheap. Indeed, a labor union spokesperson charged McDonald's with perpetuating "cannibal capitalism" and "a global race to the bottom" after Monday's EU antitrust complaint was filed. This latest European headache for the Golden Arches comes in the wake of a monumental probe opened last year to investigate an alleged 1 billion euro ($1.09 billion) tax dodge, aided and abetted by Luxembourg.

In a statement released to address the antitrust complaint, McDonald's espoused its business model as sound, and one that "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." Sounds an awful lot like code for low-priced burgers, fries, and soda.

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