It’s not just a bad crop. Nor is it just the climate crisis. Nor is it just “imported inflation”…

The two extensive research studies released by the Competition Commission on the international and Greek markets for extra virgin olive oil reveal something much deeper: a multi-level “machine” that multiplies, delays, and consolidates price increases.

A machine that starts in Haen, Andalusia, passes through the Italian blending and branding hubs and ends up on the Greek shelves, where each chain plays its own commercial game.

The Mediterranean Price Triangle

The first study by the Competition Commission maps the “geography of pricing power” in the Mediterranean olive oil market and reaches a conclusion that challenges the notion of a single, balanced European market. Rather than a homogeneous space, an asymmetric system emerges, in which Spain, Italy, and Greece play three very different roles.

Spain, which produces more than half of the world’s olive oil, acts as the primary price setter. Its prices serve as the reference point for the entire Mediterranean, and changes in Spanish prices are rapidly transmitted to other markets. Italy, by contrast, does not determine long-term price trends but functions as a “multiplier” of short-term volatility. As the largest importer of bulk olive oil from Spain and Greece, Italy blends, bottles, and re-exports it worldwide. As a result, any shock to supply or market sentiment is amplified into sharp price fluctuations. Greece, finally, appears as the adjusting player: Greek prices align with Spanish prices, and when divergences occur, it is the Greek market that adjusts.

The study highlights a critical finding: price increases are not triggered only when production actually falls. Instead, they often begin with expectations of scarcity. During periods of heightened uncertainty about harvests—such as after droughts or heatwaves—the market “prices in” fear. Speculative behavior and bulk purchasing intensify upward pressure, creating waves of volatility that precede actual supply shortages. In this way, prices rise earlier and more sharply than production outcomes alone would justify.

The Shock in Greece

Added to this international picture is a distinctly Greek factor: inelastic supply. Thousands of small producers, high domestic consumption, and limited financial organization of the market mean that even during periods of sharp price increases, supply does not respond quickly. Stocks are held back, the market tightens, and the shock lasts longer and is more intense than international developments alone would suggest.

The Competition Commission’s second study shifts focus to the retail shelf and shows that the international shock is not passed directly to consumers. In supermarkets, there is not a single olive oil market but multiple parallel markets operating under different rules. Large retail chains do not simply pass on costs; instead, they apply active pricing strategies, changing reference points and degrees of alignment depending on whether prices are low, medium, or high. Olive oil thus shifts from a passive product to a tool of commercial strategy.

Particular importance is attached to widely sold, comparable brands. In these cases, prices tend to be transmitted almost mechanically from one chain to another, creating a form of price anchoring at high levels. No chain readily lowers prices on its own, resulting in price declines lagging significantly behind price increases.

A “Price Increase Machine”

The conclusion of the two studies is clear: olive oil became more expensive due to the simultaneous operation of international speculative expectations, inelastic Greek supply, Italy’s role as a blending and re-export hub, and the active pricing strategies of retail chains. Together, these form a complete “price increase mechanism,” explaining why a return to “normal” prices is much slower and more difficult than might be expected.

It is noted that the two studies published by the Competition Commission were prepared by staff of the Authority’s Market Mapping and Research Unit, in cooperation with the University of Ioannina. They are based on modern econometric methodologies used internationally to analyze highly volatile markets.

The study on international price dynamics in Greece, Spain, and Italy is authored by Ioanna Christodoulaki, Athanasios Dimas, Dimitrios Panagiotou, and Athanasios Stavrakoudis. It relies on multi-year weekly producer price data and uses a combination of dynamic conditional correlation models (DCC-GARCH) and long-run relationship analysis (cointegration – VECM) to capture both long-term equilibrium and short-term shock transmission across markets.

The second study, focusing on the formation of final prices in Greek retail, is authored by the same researchers and examines daily price data for extra virgin olive oil across four major supermarket chains over a period exceeding two years (March 2023 – November 2025). The researchers analyzed both the full range of available brands and two common brands sold by all chains, applying quantile regression to capture how competitive dynamics and pricing strategies change depending on price levels.