“Urgent action needed against territorial supply constraints”

“Urgent action needed against territorial supply constraints”

(content provided by EuroCommerce) Speaking to mark the launch of the Benelux study on territorial supply constraints, EuroCommerce Director-General Christian Verschueren argued for the EU to act on big brands’ fragmentation of the European market.

Worrying trend

“The Benelux study just published provides further evidence of a worrying trend for all those who care about the single market and the interests of consumers. Big brands are breaking up the single market, using their dominant position to force retailers and wholesalers to buy products only in the country in which they operate; and they are doing so to maximize their already considerable profits at the expense of consumers. This is a little-known issue which needs to be addressed as a matter of urgency,” said Verschueren.

The Benelux study looks at the restrictions enforced by suppliers of products on retailers, preventing them from sourcing centrally or buying in the country of their choice. It shows that 77% of retailers asked saw territorial supply constraints as raising prices for consumers, and 67% as restricting their ability to offer their customers the full range of products the brands sell elsewhere. The study demonstrates with concrete evidence the prevalence of territorial supply constraints and their impact on retailers and consumers. It also notes that such restrictions are particularly imposed by dominant, often multinational suppliers, for whom the EU market only represents a small percentage of their global turnover.

This Benelux report could act as an important pilot for further EU action, following a Commission communication on the European retail sector, produced last month. This highlighted the problem of territorial supply constraints as one to be further investigated.  This is in parallel with the current Commission investigation of the practices of ABInBev in partitioning the Belgian and Dutch markets and their compatibility with EU competition law.

Verschueren added: “Large multinationals operate on a global scale and sell freely across Europe, yet partition national markets to prevent retailers using the single market to get the best prices and best products for their customers. This contrast between manufacturers exploiting the full benefits of the single market for themselves, and restricting it for retailers, is costing consumers millions of euros every day. We will be working with the Commission and our national members to see this change, and change soon.”