Retailer alliances – working to get the best deal for Europe’s consumers

With the Commission today holding a workshop on joint purchasing and further refining its review of horizontal competition rules,  EuroCommerce Director-General Christian Verschueren said today:

“Multinational brand manufacturers’ products make up a large proportion of most consumers’ shopping baskets and customers expect to see them on retailers’ shelves.  This gives these large manufacturers, for whom Europe is only one of many markets they serve, considerable power in negotiating the prices and conditions under which they sell to European retailers, who operate in only a limited number of markets.  Retailer alliances help partially to rebalance that power relationship and, on behalf of Europe’s consumers, mitigate large manufacturers’ constant demands to further increase their already considerable margins.  We are asking for the Commission review fully recognises the pro-competitive effects of such cooperation”.

Retailer alliances play a pro-competitive role in retailers’ dealings with a concentrated supplier market of larger, global suppliers in ensuring consumer benefits in terms of prices, choice and innovation. Numerous studies demonstrate that their activities, which typically involve negotiation of sourcing conditions and services, but in most cases not the actual purchase of products, lead to a 5-7% reduction in consumer prices.  This Commission has over the years explicitly underlined this positive impact of alliances, with Commissioner Breton underlining this in the context of vaccines and Executive Vice-President Vestager pointing to their pro-competitive role on numerous occasions.

We have been seeking to ensure that the review of the horizontal regulation and guidelines continues to recognise the advantages of alliances for consumers and the supply chain in reinforcing the single market and offering partial mitigation of a wide range of abusive supplier practices. These include arbitrary price increases, refusal to sell, requiring retailers to stock products which sell less well to gain access to popular lines, demanding minimum shelf space, exclusionary rebates and horizontal cartels.

As demonstrated in the AB-InBev case and a number of pending investigations, large global manufacturers actively fragment the single market costing Europe’s consumers at least €14bn per year. They demand that retailers buy only from the designated distributor in a given market, and actively change labelling or product composition to make it difficult to source centrally. In the meantime, these global suppliers fully exploit the single market to manufacture their products and source their ingredients at European and global level.

The attached background note gives more detail.