This comes from Stratfor.com a private company that "provides strategic intelligence" (for a price), and is described by some as a "quasi private-CIA." Most of the time they express tough unilateralist views of American Power. They tend to be well informed and smart.
Summary
An Italian court has ruled in favor of a coffee-drinker who sued because he said an Italian bistro "price-gouged" in the switchover from the lira to the euro in January 2002. The precedent will snarl European courts with thousands of similar cases until there is some sort of broad price amnesty or some government-enforced price adjustment. That is, of course, unless the Italian government spills the issue into someone else's lap.
Stratfor.com - Euro Backlash: Would You Like Cream With Your Lawsuit?
Analysis
A regional Italian court on Jan. 16 ruled that a bistro in the Italian town of Ladispoli overcharged a customer 0.23 euro (28
cents) for a cappuccino on Jan. 1, 2002.
The ruling, relating to widely reviled price rises that followed the introduction of the euro in 2002, is the first of its kind.
Barring an overturning of the Jan. 16 ruling, Europe is about to be hit with a wave of legal cases that will end with either a broad unpopular price amnesty or a broad (and equally unpopular) mandatory price adjustment.
The case in question was facilitated by Codacons, a leading Italian consumer advocacy group. Codacons President Carlo Rienzi, knowing a public relations coup when he saw one, ordered a cappuccino from the offending bistro -- at pre-euro prices, of course -- the day after the ruling. He proudly waved the receipt in front of reporters, celebrating "the cappuccino's vendetta."
What should be little more than an amusing historical footnote, however, could explode into a much larger issue.
On Dec. 31, 2001, the day before the euro became Europe's common currency, the offending cup of coffee cost 1,500 lire, or 0.77 euros. One day later the price was rounded up to 1 euro, approximately a 30 percent increase.
Similar price "round-ups" occurred throughout the 12 states that adopted the euro as a common currency, leading to a broad price increase throughout inflation-sensitive Europe. Particularly galling to most Europeans was the fact that most of the adjustments hit small-price items that impacted aspects of everyday life: parking meters, small food items and coffee.
More than a few cents are at stake. In addition to the 23 euro cents refund, the court ordered the convicted gouger to cover the plaintiff's legal costs of 1,200 euros ($1,480).
Now that the legal precedent has been set, Italian courts are bracing for a deluge of petty lawsuits that could drown the system if left unchecked. Other European justice systems, concerned about spillover, are casting a wary eye toward Rome.
The Italian government has three choices. First, it could enact a broad price amnesty, forgiving businesses for their "round-up"
strategies. Prime Minister Silvio Berlusconi is particularly fond of such heavy-handed, retroactive solutions. After all, he rammed a similar amnesty through Parliament in 2003 in order to cover his own political hindquarters. The problem is that this "solution" would throw stale grounds into the brew of Italian politics just as new elections appear to be on the horizon.
The second option would be to couple the amnesty with an equally broad price rollback, forcing businesses to reduce their prices to pre-euro levels, albeit still denominated in euros, while forgiving them for past indiscretions. Such a price cut would please an electorate that is increasingly disenchanted with Italy's pro-U.S. government, but at the cost of brewing rage in Italy's small business community.
The final possibility is quintessentially Italian. A staple joke in European circles is that Italy always has supported European integration because Brussels eurocrats have longer attention spans than Italian bureaucrats and therefore do a better job of ruling Italy than the natives. Berlusconi's best bet probably is to drop this problem into someone else's lap. Appealing the case to a European court -- in effect, booting the issue upstairs -- would deflect criticism away from the government and onto "Europe" while creating a Europe-wide precedent that would bury the issue.
Such a development would appeal to European sensibilities, which often involve taking exception to the foibles of Italian governance, making the likelihood of a European solution quite likely.
Codacons is probably dreading just such a solution. After all, a cup of joe still costs 1 euro in Ladispoli. The price of Rienzi's cappuccino was only adjusted downward to pre-euro prices for the photo-op.
Posted by Francis Pisani at January 30, 2004 06:26 PM