(Reuters) – Edenred is now aiming for an annual profit in the upper half of the range previously announced by the restaurant voucher provider, due to strong growth recorded in the third quarter, but the group warns that certain recommendations from the Food Authority Competition might be difficult to implement.

Inflation and labor shortages have driven up Edenred’s results, as have those of other companies in the sector, including its competitor Sodexo, as employers seek to compensate for rising prices by offering more gift certificates or fuel cards to their employees.

Edenred shares, which have lost around 12% since the announcement of a possible cap on fees on meal vouchers, were down 4.7% at 10:15 GMT.

The French competition watchdog on Tuesday advised against limiting the rates of commissions levied by issuers on restaurateurs. However, he also called for removing the exclusive right of issuers to determine where their securities are accepted, in order to restore the balance of power in the market.

According to the Competition Authority, the government could make meal vouchers from different issuers interchangeable and retailers could hand over all meal vouchers received as payment to the intermediary of their choice.

“It is not easy to see how this type of recommendation could be implemented,” said Julien Tanguy, general director of finance, during a conference with analysts.

According to Julien Tanguy, the proposed structure would make payment processing and settlement much more complicated for issuers.

The meal voucher market in France is very concentrated, with four players – Edenred, Sodexo, Bimpli-Swile and Up Coop – controlling more than 99% of the sector in 2022, according to the competition authority.

Edenred is now targeting earnings before interest, taxes, depreciation and amortization (Ebitda) for 2023 in the upper half of a range announced in July and ranging from 1.02 billion to 1.09 billion euros.

(Reporting by Diana Mandiá and Mariana Abreu, by Augustin Turpin, edited by Kate Entringer)

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