WRITTEN QUESTION P-2109/01

by Mihail Papayannakis (GUE/NGL) to the Commission

(10 July 2001)

Subject: Price differences in the EU

At the end of May the Commission presented the initial results of its survey into price differences on the European market with regard to two sectors: electronic goods and fresh products. The survey shows that prices for certain electronic goods may diverge by up to 40 % from one Member State to another, while prices for fresh products may vary by a factor of three. Significantly, the Commission notes that European consumers could make savings averaging around 12 % if they purchased each product at its lowest sale price in the EU.

Such a situation cannot be seen as constituting a genuine single market. Can the Commission specify the reasons for these price differences among the EU Member States and indicate what steps it will take to favour greater price convergence in the sectors concerned?

Answer given by Mr Bolkestein on behalf of the Commission

(4 September 2001)

Price convergence should take place in a competitive and efficient economic environment where competition drives prices to converge at the lower levels of the price range. This is essential to realising the full potential of the Internal Market to the benefit of consumers.

The Commission considers that prices are the best indicators of market performance, especially from the point of view of consumers and consequently, the monitoring of price differences within the Internal Market is being improved. Issue n. 8 of the Internal Market Scoreboard released the first results of this improved monitoring. Further results will be published in the Commission's Cardiff report on the functioning of product and capital markets before the end of this year. Results to this date confirm the persistence of significantly high price dispersion in the fresh fruit and consumer electronics sectors.

Detailed information on price differences at the market level is indispensable to identify the origin of those differences. Even in a perfectly integrated market, factors such as differences in consumers tastes or preferences, transport costs and the tradability of some goods can result in price differences. These latter factors explain part of the high price differences that are observed in some fresh food goods.

At this stage of its monitoring process, the Commission cannot draw definitive conclusions, but there is evidence pointing to the existence of other causes of a structural nature which, while being compatible with the EC Treaty, are not compatible with a well-functioning Internal Market. This evidence suggests that factors such as differences in distribution systems and regulatory differences could explain a significant part of remaining price differences. In those cases, structural reforms would be needed in order to improve market performance. Most of those structural reforms have to be implemented at the national level. The recommendations issued in the Broad Economic Policy Guidelines will contribute to that end.

At Community level, the implementation and development of the economic reform programme laid down in the conclusions of the Lisbon European Council (23/24 March 2001) is the best instrument to undertake the necessary reforms to eliminate regulatory and structural barriers which not only are obstacles to price convergence but also and more importantly hinder Community's market performance.