“Territorial supply constraints” are a widespread practice in Europe, especially in retail. This costs consumers up to 14 billion euro, concludes the EU.
Jupiler not allowed to go to Belgium
Last year AB InBev was fined 200 million euro for deliberately making Belgian consumers pay more for Jupiler by “restricting cross-border sales between the Netherlands and Belgium”, Competition Commissioner Margrethe Vestager said.
In particular, the brewery prevented beer sold in the Netherlands, where prices are lower, from returning to the (more expensive) Belgian market. It did so by means of modified labels, reduced deliveries to wholesalers and explicit agreements that certain discounts were not allowed on the Belgian market.
Half of retailers get restrictions
Trade organisations immediately responded that it was not an isolated case, and this is now confirmed by a study by the European Commission. In particular, the study showed that as many as half of the retailers and wholesalers surveyed were faced with refusals to supply, changes in packaging and content, and destination obligations when purchasing international FMCG branded products.
According to manufacturers, these so-called “territorial supply constraints” are often due to national structures, with brand manufacturers claiming to adapt to the needs of local retailers and consumers, but according to the European Commission this does not yet explain the price differences.
Food could be 3.5% cheaper
Similarly, specific local costs, such as higher labour or production costs, cannot fully explain the price differences between some countries. In fact, if retailers were able to source products in the country where they are cheapest, rather than at the prevailing purchase prices in their own country, EU consumers could save an estimated 14.1 billion euro (or 3.5%) on their shopping basket.
In response to these findings, the European Commission is organising a workshop today, 11 December, to see how it can act against the practice. European Trade Organisation EuroCommerce is already calling for a stronger (judicial) approach and urgent action.
Retailers want to be able to offer their customers the best price, and the Single Market can do that, says CEO Christian Verschueren: ” Giving retailers and wholesalers the possibility to freely source in the single market would bring down wholesale prices and allow consumers access to a wider range of products.”
