Revised EU competition rules on cooperation agreements, which entered into force on 1 July, provide the legal framework for retail and wholesale purchasing alliances in Europe.
This is according to EuroCommerce, an association representing European retailers and Wholesalers. Its Director General, Christel Delberghe, commented: “The revised horizontal guidelines affirm the many benefits that joint buying brings to consumers and industry, including better prices, choice, efficiencies and innovation. They also usefully confirm that retail and wholesale alliances may be set up in various ways and engage in different activities – from joint sourcing to joint negotiations of terms and conditions – to help retailers and wholesalers negotiate and bring better prices to households.”
The new rules recognise the value of pooling demand to countervail the market power of large suppliers and as a means to strengthen competitiveness and resilience.
The rules offer guidance on what can and cannot be done when negotiating with suppliers – reiterating the value of hard bargaining for consumers. They also confirm the many positive effects such negotiations can have on consumers, who benefit from better prices and more choice, and for suppliers, who can expand their distribution networks and innovate more.
The guidelines also recognise that a key element when assessing the effects of alliances is the countervailing selling power of suppliers – including whether they offer “must-have” products that retailers and wholesalers need to place on their shelves if they want to attract consumers. EuroCommerce stated that is important to note that European retail and wholesale alliances deal with a small number of powerful global manufacturers who dominate certain product categories with their must-have products and enjoy net margins of 15-30% – ten times those of retailers.
They do not deal with farmers or SME suppliers. A Commission’s Joint Research Center report confirms that European Retail and Wholesale Alliances have no or very limited effect on farmers.
Delberghe concluded: “These new guidelines provide important clarity and recognition to retail and wholesale alliances, which support a diverse retail and wholesale sector as a key contributor to EU citizen’s life every day. Alliances help to rebalance the distribution of economic power for the benefit of consumers and mitigate the negative effects of territorial supply constraints, often imposed by global suppliers, which both fragment the Single Market and cost EU citizens at least €14 billion each year.”
