Retail alliances - working to get the best deal for Europe's consumers

25 October 2021
by eub2 -- last modified 25 October 2021

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

"We are asking that the Commission review recognises even more strongly the pro-competitive effects of alliances. Alliances, which exist in all sectors of the economy, combine the sourcing of their members facing stronger, more concentrated suppliers. Retail alliances help, on behalf of Europe's consumers, partially to rebalance the power of multinational brand manufacturers, whose products make up a large proportion of most consumers' shopping baskets and customers expect to see on retailers' shelves. This gives these global manufacturers considerable leverage in negotiating the prices and conditions under which they sell to European retailers, who operate in only a limited number of markets. Alliances also help to mitigate large manufacturers' fragmentation of the single market and other practices aimed at increasing their already significant margins".

Retail alliances ensure consumer benefits in terms of prices, choice and innovation, in a concentrated supplier market of large global suppliers. Numerous studies demonstrate that alliances' activities, which typically involve negotiation of sourcing conditions and services, or the actual purchase of products, lead to a 5-7% reduction in consumer prices. The Commission has over the years explicitly underlined this positive impact of alliances, with Commissioner Breton pointing to this in the context of vaccines, and Executive Vice-President Vestager pointing to their pro-competitive role on numerous occasions.

Retailers face a wide range of abusive supplier practices. These unfair industry practices (UIP) include excessive pricing, abusive rebate schemes, Territorial Supply Constraints (TSCs), illicit denial to supply, requiring retailers to stock products which sell less well to gain access to popular lines, demanding minimum shelf space, and engaging in horizontal cartels. As demonstrated in the ABInBev case and a number of pending investigations, large global manufacturers actively fragment the single market costing Europe's consumers at least €14bn per year. Meanwhile these global suppliers fully exploit the single market to manufacture their products and source their ingredients at European and global level.

This background note gives more detail.

EuroCommerce is the principal European organisation representing the retail and wholesale sector. It embraces national associations in 28 countries and 5 million companies, both leading global players such as Carrefour, Ikea, Metro and Tesco, and many small businesses. Retail and wholesale is the link between producers and consumers. Over a billion times a day, retailers and wholesalers distribute goods and provide an essential service to millions of business and individual customers. The sector generates 1 in 7 jobs, offering a varied career to 26 million Europeans, many of them young people. It also supports millions of further jobs throughout the supply chain, from small local suppliers to international businesses. EuroCommerce is the recognised European social partner for the retail and wholesale sector.

EuroCommerce