European Commission to examine whether private-label products hamper choice, innovation in European food sector, saying growth of such products has given retailers leverage with suppliers, possibly leading to unfair trading practices

Cindy Allen

BRUSSELS , December 12, 2012 (press release) – The European Commission is launching a study to assess the impact of recent developments in the European retail sector on consumers. Following calls by stakeholders, the Commission will examine, in particular, whether increased concentration and the use of own brand (private label) products have hampered choice and innovation in the European food sector. The Commission invites interested expert researchers to submit proposals to its call for tenders by 14 February 2013. The final report of the study is expected by the end of 2013. The Commission will evaluate the results and may put forward proposals to improve the functioning of European food markets.

Commission Vice President in charge of competition policy Joaquín Almunia said: "Many stakeholders argue that European food markets do not work well, but we need more comprehensive data to assess these claims. Therefore, we have decided to carry out a detailed study to find out whether European consumers enjoy sufficient choice and innovative products adapted to their needs when buying food. This will help us determine how to best solve these problems."

The retail sector has become more concentrated over the last years. In parallel, retailers have introduced their own brands, which are increasingly successful. This has given retailers growing bargaining power vis-à-vis suppliers and may result in unfair trading practices, where individual suppliers are forced to accept unfavourable conditions for fear of losing a big – or sometimes even only – client.

The European Parliament, consumer organisations, national competition authorities and food producers claim that this limits investment and variety in the food supply chain, ultimately to the detriment of the final consumer.

Background

As no comprehensive, contemporaneous data exists on choice and innovation in the food sector, the Commission decided to undertake an in-depth study, covering a wide range of products in several Member States over several years. The study will develop a methodology to quantify what the different actors in the food supply chain have delivered in terms of choice and innovation in recent years.

Regarding choice, the study will measure, for example, the variety of products available to consumer on supermarkets' shelves in their shopping area. To determine the level of innovation, the study will measure, for example, the offer of entirely new products (e.g. coffee capsules or allergen-free products in recent years) or of products with new ingredients or characteristics which allow a different use (e.g. instant-made products). Moreover, the study will verify whether the significant levels of retail concentration reached in some local areas have led to a reduction of choice and innovation for consumers in those areas.

The study will also contribute essential facts and in-depth analyses to the debate on the impact of unfair trading practices in the food supply chain led by the EU High Level Forum on food. Moreover, the study will provide valuable input for the impact assessment that the Commission plans to launch on unfair trading practices (see IP/12/1314).

The call for tenders will be published in the EU Official Journal in the coming days and tender documents will be available on the website of DG Competition (see http://ec.europa.eu/competition/calls/index.html).

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