The future of European retail alliance AgeCore is highly uncertain now that German supermarket chain Edeka is cancelling its membership. One of the reasons is a lawsuit in France about possible abuse of power.
Abuse of trade practices
A bolt from the blue: Edeka, German market leader and by far the largest member of AgeCore, is pulling out of the retail alliance which it founded five years ago together with Colruyt (Belgium), Coop (Switzerland), Intermarché (France), Conad (Italy) and Eroski (Spain). This is reported in the German trade journal Lebensmittel Zeitung. With its termination, Edeka is reportedly anticipating problems that could arise as a result of a lawsuit in France: there, Intermarché risks a fine of 150 million euros for alleged abuse of power via the Agecore and ITM Belgium purchasing offices.
The French competition authority DGCCRF considers that there has been an "abuse of trade practices". The services offered by AgeCore would be disproportionate to the costs they charge. Retailers have to pay for "the right to enter into negotiations without any real economic consideration: the cost of doing so far exceeds the increase in turnover it is expected to generate," is the charge. This may put a damper on the operation of the alliance, which was regularly in the news between 2018 and 2020 with boycotts against major multinationals such as Nestlé, Mars, PepsiCo and Coca-Cola.
Not yet final?
Edeka is now said to be more interested in Everest, the new purchasing alliance it recently set up with the Dutch web supermarket Picnic. This new organisation has recruited none other than Gianluigi Ferrari, former CEO of AgeCore, to open a head office in Amsterdam. Former Colruyt purchasing director and Spar top executive Dirk Depoorter must have imagined the start of his new job as CEO of AgeCore differently. Without its largest member - responsible for about 40 percent of its turnover - the alliance will lose much of its impact. We asked him for a reaction, but he hasn't replied yet.
LZ believes that Edeka's departure is not yet final. Talks on the sale of shares are ongoing - all members must give their consent - and CEO Markus Mosa may want to step up the pressure to renegotiate contracts and claim a bigger share of the benefits. To be continued...