Eight European countries have submitted a plan that aims to end territorial supply restrictions. The topic was brought back into focus by the recent settlement with Mondelez. The European Commission is launching an investigation.
Higher prices
The European Union needs to put a stop to territorial supply restrictions, the practice whereby multinationals prevent retailers from buying products cheaper in other European member states, Dutch Economy Minister Micky Adriaansens believes. He has presented a plan to ban so-called territorial supply restrictions at the European Competitiveness Council on Friday. That plan also has the support of Belgium, Croatia, Czechia, Denmark, Greece, Luxembourg and Slovakia.
Retailers face restrictions on 2 to 4 % of the products they buy, resulting in prices that are up to 10 % higher, Dutch research shows. In fact, an earlier European Commission study from 2020 in sixteen European countries found that consumers pay fourteen billion euros per year to much for their groceries, because products in their countries are up to 50 % more expensive than elsewhere.
Digital labels
Adriaansens stated that he thinks purchasing restrictions on supermarkets have to go, given the negative impact on both supermarkets and consumers. Especially in smaller member states, prices would often be higher due to those restrictions – which is reflected by the eight states supporting the schedule.
A new regulation, which places the burden of proof more on the producer, should avoid lengthy investigation procedures. As the language of the information on the label is one of the barriers when buying products in other countries, the proposal advocates the introduction of digital labels with QR codes so that consumers can access the information online in any language. This is a solution already used by online supermarket Picnic to sell cheaper German products in the Netherlands.
Regulatory differences
The topic has resurfaced after last week’s settlement that the European Commission reached with Mondelez. The multinational was fined 337.5 million euros for hindering cross-border trade in chocolate, biscuits and coffee products, after an investigation that started in 2019. Retail federations have welcomed that decision, but urged the European Commission to take action beyond tackling individual cases.
Following Friday’s Competitiveness Council meeting, the European Commission proposed launching a fact-finding mission into the issue. European brand association AIM has already reacted positively, pointing out that price differences within the European single market are caused by differences in regulations on packaging, labelling, transport and taxes, among other things. This is also the view of the Belgian food federation Fevia, which has previously compared the debate around supply restrictions to “the Loch Ness monster”.
