AIM, the European Brands Association, has said it is becoming increasingly concerned about reports of the behaviours of the new ‘Epic Partners’ retail alliance which spans markets from Portugal to Russia.
Incorporated in Geneva in March this year, Epic Partners brings together some of the biggest grocery retailers in Europe: Edeka, Germany’s number 1 retailer (26% market share); Magnit, Russia’s number 2 retailer (20% market share); ICA, Sweden’s number 1 retailer (48% market share); Jerónimo Martins, Poland’s number 1 and Portugal’s number 2 retailer; and Migros, Switzerland’s number 1 retailer.
Together, the new purchasing alliance represents a combined market power of no less than €142bn.
“We are hearing reports of the same gatekeeper manipulation being deployed against consumer brands manufacturers by Epic as has been the case for years by AgeCore, exploiting their significant market power across multiple markets and distorting competition,” said Michelle Gibbons, Director General of AIM.
“The tactics that are deployed by these gatekeepers were outlined in the recently aired ARTE documentary ‘Hypermarchés, la chute de l’empire.’ Coordinated instructions to delist, or threaten to delist, products across multiple markets and extortionate fees charged to access markets – which is a form of market entry toll – are once again being deployed. With a retailer wielding Epic members’ market power, which can represent 20 to 30% of your sales in some markets, you have no choice but to yield to demands that are beyond unfair: they are anticompetitive and your business is held to ransom.”
Epic Partners is the latest in a series of international retail alliances created over the past few years, in which retailers move from one to another. In a series of musical chairs, Edeka dropped AgeCore in March, announcing a new alliance, Everest, with Picnic, just after the French authorities in February raised concerns on the behaviours of such alliances, fining AgeCore €177m. Both Edeka and Intermarché dropped AgeCore, moving on respectively to new territories and new formations.
Whilst welcoming the action taken by France, AIM stated that the EU needs to take similar action and investigate the activities of these alliances. It said that gatekeeper alliances differ from genuine purchasing groups that bring together independent retailers, who work together with consumer brands manufacturers to ensure an efficient, effective, and fair supply chain that brings the best to the shelf for the consumer.
Gibbons concluded: “There are many challenges right now in the supply chain with inflation, logistics difficulties and raw materials costs soaring. At the same time, we as consumer brands manufacturers continue to innovate, invest and transform our production processes and products for a more sustainable future. A fair supply chain that works together for a more sustainable Europe cannot operate with this kind of toxic behaviour that distorts competition and ultimately harms EU consumers and businesses.”
NAM Implications:
- If gatekeeper alliances result in lower on-shelf prices for voter-shoppers…
- …it is unrealistic to expect government support.
- Leaving the only option whereby suppliers tailor and intensify their offerings for non-alliance members to try to beat them on the shelf.
- See: Tailoring to Consumer Need: Getting Closer to the Super-Savvy Post-Lockdown Consumer
