Commission Staff Working Document - Competition in the food supply chain Accompanying document to the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions - A better functioning food supply chain in Europe {COM(2009) 591 final}
Date: 2009-10-28
Institutions: European Commission
Subjects: agri-foodstuffs, competition, consumer price, food price, foodstuff, impact study, price fluctuation, price of agricultural produce, restriction on competition, supply

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 28.10.2009 
SEC(2009) 1449 

COMMISSION STAFF WORKING DOCUMENT 

Competition in the food supply chain 

Accompanying document to the 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

A better functioning food supply chain in Europe 

{COM(2009) 591 final} 

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   EN 

 
 
 
 
 
 
 
 
TABLE OF CONTENTS 

1. 

2. 

2.1. 

2.2. 

2.3. 

3. 

3.1. 

3.2. 

3.3. 

3.4. 

4. 

4.1. 

4.2. 

4.3. 

4.4. 

5. 

Introduction .................................................................................................................. 3 

Preliminary Observations on the Structure of the European Food Supply Chains ...... 4 

The supply chains of non- processed food (agricultural produce)............................... 4 

The supply chains for processed food.......................................................................... 6 

The retail sector............................................................................................................ 8 

Gap between producer prices and consumer prices ..................................................... 9 

Addressing the perception of high food prices in absolute terms .............................. 10 

Price formation........................................................................................................... 11 

Price stickiness as assessed by stakeholders .............................................................. 13 

Milk: a case for urgent action..................................................................................... 14 

Practices specific to food supply chains..................................................................... 16 

Preliminary considerations on the concept of "buyer power".................................... 17 

Retail-driven practices ............................................................................................... 18 

Supplier-driven practices ........................................................................................... 25 

Other practices linked to unfair trading ..................................................................... 27 

Conclusions ................................................................................................................ 28 

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COMMISSION STAFF WORKING DOCUMENT 

Competition in the Food Supply Chain 

1. 

INTRODUCTION 

Following the unprecedented price hikes of 2007-2008, the European Commission has 
set  up  a  Task  Force  to  analyse  the  functioning  of  the  European  food  supply  chain. 
Although in 2008 the prices of certain commodities started to decline, the absence of a 
swift  downward  price  trend  has  raised  concerns  regarding  possible  malfunctions  of 
the  European  food  supply  chain.  From  a  competition  policy  perspective,  questions 
arose regarding the competitive structure of food markets and the regulatory hurdles 
that market entrants may face. Against this backdrop, key questions relate to the need 
to understand whether: (i) concentration in the food supply chain is more problematic 
than  in  other  sectors,  (ii)  the  food  supply  chain  is  prone  to  price  stickiness  and  (iii) 
such alleged stickiness can be linked to competition shortcomings. 

In  this  context,  the  Commission  was  given  a  mandate  to  improve  its  knowledge  of 
food  markets  -  both  of  processed  food  and  non-processed  agricultural  products.  To 
this  end,  DG  Competition  has  carried  out  a  Stakeholder  Survey  construed  around  a 
series of informal discussions with a selection of representative associations of food 
producers, processors, traders, wholesalers and retailers between April and July 2009 
in  Brussels.  These  associations  were  chosen  across  several  product  markets  and 
sectors, in an attempt to grasp the specificities of different supply chains (e.g. cereals, 
breakfast cereals, milk and dairy, livestock and meat processing, pasta, confectionery, 
branded  foodstuffs  and  beverages,  fruit  and  vegetables,  oils  and  oilseeds,  sugar, 
poultry and eggs, etc.). The objective of these meetings was to obtain insights into the 
main  stages  and  sectors  that  compose  the  overall  European  food  supply  chain, 
touching  upon  a  number  of  economic  developments  that  have  characterised  specific 
sectors of activity in recent years. This exercise further aimed at identifying potential 
competition-related concerns that may affect the functioning of food markets, to the 
ultimate detriment of European consumers.  

In  parallel,  the  Commission  strengthened  its  dialogue  with  National  Competition 
Authorities (NCAs) on food related issues. Three meetings with NCAs were held in 
Brussels  in  July  and  November  2008,  as  well  as  in  July  2009.  These  meetings 
punctuated  a  continuous  flow  of  information  between  Competition  Authorities 
throughout  the  EU  on  recent  enforcement,  monitoring  and  advocacy  initiatives 
undertaken at national and EU level on food markets1. In particular, this information 
exchange focused on a number of specific practices that occur with relative frequency 
in the food sector. Apart from hardcore restrictions of competition such as cartels and 
resale price maintenance, some practices have been singled out as potentially harmful 
for competition. Such practices, which may thus merit a closer assessment, always on 
a  case-by-case  basis,  relate  mainly  to  joint  purchasing  agreements  ("buying 
alliances"); joint selling agreements; brand exclusivities including tying and bundling; 
and increased use of private labels.  

1 

To  facilitate  information  exchange,  DG  Competition  circulated  several  Questionnaires  to 
Member States to which the NCAs promptly replied to over the course of 2008/2009. 

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The present paper is based on the main findings and key messages flowing from 
the  Stakeholder  Survey  and  from  a  number  of  specific  written  contributions 
submitted by NCAs over the last year. 

2. 

PRELIMINARY  OBSERVATIONS  ON  THE  STRUCTURE  OF  THE  EUROPEAN 
FOOD SUPPLY CHAINS 

All the stakeholders and NCAs interviewed agree that a single "European food supply 
chain"  cannot  be  defined  or  identified  given  the  wide  variety  of  agro-food  products 
and the diversity of actors operating on food markets. Supply chains differ according 
to  product,  geographic  and  even  seasonal  markets  in  some  cases.  To  reflect  such 
diversities,  an  important  distinction  needs  to  be  made  between  non-processed  food 
(agricultural produce, perishable) and processed food (stockable). 

2.1. 

The supply chains of non- processed food (agricultural produce) 

the 

low  productivity.  Producers  are 

The non-processed food sector is mainly characterized by a very fragmented structure, 
with a great  number  of  suppliers and intermediaries that intervene at various stages. 
The  length  and  complexity  of  this  type  of  chain  implies  a  number  of  structural 
least 
inefficiencies  often  coupled  with 
concentrated  sector  in  the  food  supply  chain,  which  leaves  them  at  a  comparative 
disadvantage  in  terms of bargaining power (for example, in France there are around 
87000 enterprises that produce fruits and vegetables2). Such suppliers are often unable 
to build a critical mass in terms of volumes and lack an efficient and speedy delivery 
infrastructure  that  would  allow  them  to  supply  ranges  of  products  within  a  given 
category, enabling them to sell directly to retailers or at least to rationalise the supply 
chain. This type of supply structure is perceived as archaic in comparison to modern 
retail  trade  and  is  often  unprepared  to  meet  consumer  demand  directly.  Due  to  this 
fragmented  structure  and  low  efficiency  in  their  marketing  operations,  farmers  are 
often unable to enter into more direct negotiations with their retail counterparts. The 
agricultural  produce  is  thus,  in  many  cases,  purchased  and  re-sold  by  a  number  of 
intermediaries  before  it  can  reach  shop  shelves.  Even  when  producers  join  forces  in 
producer organizations (POs), wide differences exist across Europe as to the strength 
of  such  organizations.  For  example,  in  2003,  while  in  the  Netherlands  and  Belgium 
more than 70% of all fruit and vegetable production was marketed through POs, the 
percentage  was  significantly  lower  in  the  three  most  important  producing  Member 
States: less than 30% for Italy, 50% for Spain and 55% for France3. This explains why 
an  important  number  of  intermediary  operators  intervene  in  such  supply  chains.  In 
Italy, for example, according to the findings of the Italian Competition Authority4, up 
to  4  different  intermediary  operators  intervene  in  the  fruit  and  vegetables  supply 
chain5. Moreover, for each region and each product chain, fresh products go through 

2 

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on 

Agriculture 

"Les modalités de formation des prix alimentaires: du producteur au consommateur", Rapport 
Lambert, France, 2009 
DG 
Factsheet 
http://ec.europa.eu/agriculture/publi/fact/horti/2003_en.pdf. 
Italian Competition Authority Inquiry into the fruit and vegetables markets, June 2007 
Moreover,  there  are  important  differences  between  fresh  product  chains  in  terms  of  the  part 
that  the  agricultural  product  itself  represents  in  the  final  price.  For  example,  in  Spain  for 
apples  and  pears,  the  origin  producer  price  (expressed  in  percentage  of  the  activity  of  the 
producer  of  origin  into  the  end  price)  represents  around  29-41%  of  the  end  price.  For 
clementines and lemons, it is around 28%, for beans it is 57% whilst for onions it is 17%. 

Horticulture, 

available 

2003, 

at: 

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different  handling,  transport  and  packing  phases  which  all  incur  costs6.  At  each 
intermediary  level,  margins  are  added  which  impact  on  the  end-price  of  products. 
Such intermediaries act as a filter in price transmission to end-consumers.  

Broadly speaking, and leaving aside the purchases made by governmental marketing 
boards, an agricultural product may pass through a number of different marketing and 
distribution channels before reaching the ultimate consumer: 

– 

– 

– 

– 

– 

in  the  shortest  supply  chain,  which  is  an  exception  since  larger 
operations are still difficult to develop, the product may be sold directly 
to  the  consumer  if  the  producer  himself  sells  at  the  farm  gate  or  in  a 
local village market or to local retailers (e.g. organic vegetables); 

it may be sold to a wholesaler who will then resell to any of the buyers 
mentioned  above  either  directly  or  through  other  wholesalers  or 
middlemen such as traders (e.g. cereals); 

in  some  sectors,  producers  have  shown  capacity  to  concentrate  and 
have  extended  their  geographic  footprint  accordingly,  through  the 
strengthening  of  producers  organisations  and  cooperatives  (e.g.  milk 
sector in Northern Europe; for example in The Netherlands, Friesland 
Campina controls 80% of the milk collection and processing7); 

in  some  long  supply  chains,  which  involve  some  primary  forms  of 
processing, the product can go through a large number of phases over a 
relatively long period of time (e.g. for the meat supply chain, cattle is 
first bred, then sold to fatteners, then to slaughterhouses, after which it 
can  go  through  a  de-boning  plant,  and  to  successive  cutting  and 
packaging stages, before reaching shop shelves);  

moreover, important regional specificities intervene in price formation, 
per product chain. For example, in France, for pork, producer prices are 
determined  by  the  exchanges  on  the  Marché  du  Porc  Breton;  this 
market represents only 10% of the French pork transactions; however it 
gives  the  price  orientation  for  the  entire  territory8.  For  French  beef, 
prices  are  formed  on  a  weekly  basis  mostly  by  the  confrontation  of 
offer (75 POs, 2500 private negotiators) and demand (370 slaughtering 
/deboning/processing houses)9. 

It must be recalled that for unprocessed food chains, intermediaries tend to exercise an 
aggregation  function,  by  bringing  together  several  varieties  of  the  same  product  or 
complementary products to meet the needs of retail trade. This function is not fulfilled 
by producers directly and partly explains the length of the chains. 

It appears evident that the farmers who need to sell their fresh produce over a limited 
number of days (e.g. the life span of a salad is about 3 days), are under more pressure 
to accept lower prices from their buyers in order to avoid the loss of their crop. On the 

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"Análisis de la cadena de valor y de la formación de precios en los productos frescos", Cap 
gemini/  Ernst  &  Young,  Asociación  Española  de  Distribuidores,  Autoservicios  y 
Supermercados, 2004. 
"Formation des prix alimentaires", rapport Besson, France, December 2008. 
UECVB (European livestock and meat trading union) data. 
See footnote 8. 

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other hand, stockable produce, such as cereals, can be stored longer by producers and 
thus sold at more advantageous prices. 

Overall,  the  non-processed  food  supply  chains  are  characterised  by  atomised 
weaker suppliers and stronger buyers, who are often intermediary operators and 
rarely  retailers.  Such  buyers  are  the  often  “unavoidable”  trading  partners  for 
producers. Agricultural producers feel compelled to satisfy terms and conditions 
stipulated  by  their  buyers  –  and  that  farmers  often  perceive  as  going  beyond 
what is "fair" – so as not to lose these indispensable buyers. 

The  non-processed  food  chains  are  thus  characterised  by  a  form  of  structural 
archaism.  Many  historical  factors,  as  well  as  intrinsic  characteristics  of  the 
agricultural  production  process,  may  have  influenced  the  structure  of  non-
processed  food  chains  and  may  have  contributed  to  sheltering  farmers  from 
market  pressures.  In  particular,  in some specific sectors there has been no real 
integration of farming assets, and no dynamic search for enhanced cooperation 
between  farmers  at  downstream  stages  of  the  supply  chain,  except  for 
cooperatives  that  have  developed  at  different  speeds  across  Europe.  Given  the 
farmers' difficulties in aggregating their offer, there is still an intrinsic need for 
autonomous  market  players  to  perform  an  aggregation  function.  These 
numerous  layers  of  intermediaries  thus  act  as  a  bottleneck  and  may  influence 
negatively  price  transmission  to  end  consumers.  Since  1992,  the  Common 
Agricultural  Policy  (CAP)  has  been  going  through  a  reform  process  with  the 
objective of helping farmers to better respond to market signals and to face new 
challenges,  whilst  improving  their  incentives  to  develop  more  innovative  and 
more market-oriented business models. 

Given  the  wide  differences  between  Member  States  and  sectors  and  the 
impossibility to draw common conclusions across regions and product markets, 
future  analysis  should  focus  on  those  markets  which  present  both  a  highly 
fragmented structure in terms of the number of intermediaries and stages along 
the chain, and a high level of concentration at certain of these stages. This would 
seem  to  be  the  case  in  particular  for  certain  unprocessed  sectors,  key  to 
consumers, such as milk (e.g. as announced by the Communication on the Dairy 
Situation of 22 July 2009), fruit and vegetables, meat and fish.  

Issues related to a potential malfunctioning of this type of supply chain appear to 
be  mainly  linked  to  structural  inefficiencies  resulting  in  contractual  tensions 
between weaker suppliers and stronger buyers. This has been confirmed by the 
recent experience of a number of NCAs (e.g. Hungarian NCA study of 2007 on 
the relationship between large retailers and their suppliers; Slovak NCA inquiry 
into retail chains; Greek investigation on the tomato sector). Such considerations 
are further detailed in Section 4 of this paper. 

2.2. 

The supply chains for processed food 

The  supply  chain  for  processed  food  is  characterised  by  more  direct  negotiations 
occurring between  producers and retailers, sometimes through the vehicle of buying 
groups. The food industry is more concentrated than agricultural suppliers, especially 
if large industrial multinationals are considered. For example, on the French breakfast 
cereals market, in 2007, Kellogg's held a 44.1% market share, Nestlé a 26.7% share 

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and  Jordan's  a  4.9%  share10,  which  implies  a  75.7%  share  for  the  top  3  suppliers. 
Similar  high  market  shares  were  reported  for  the  Spanish  soft  drinks  market  (top  3 
suppliers having a market share nearing 90%), beer (the top 3 suppliers amounting to 
75% of the market) and pizza market (the top 3 producers nearing 75% of the market) 
in 200511. As recalled by the High Level Group on the Competitiveness of the Agro 
Food  Industry,  a  nuance  needs  to  be  brought  to  such  figures  to  recall  that  a  great 
number  of  SMEs  are  also  active  in  the  European  agro-food  industry12.  These 
companies  are  for  example  active  in  the  production  of  secondary  brands  or  niche 
products, and introduce competition on the market in terms of variety and price. When 
negotiations occur between retailers and large multinational suppliers, who are often 
producers  of  a  portfolio  of  goods  which  are  in  some  cases  must-carry  brands, 
suppliers may have significant market power. In such cases, the buyer power of even 
the largest retailers may be offset by the market power of the suppliers13. The profit 
margins of such “unavoidable” suppliers are generally higher than those of retailers. 
As  an  illustration,  on  average  in  2006,  the  average  net  profit  margins  of  European 
retailers were around 4%, whereas these same margins in the case of The Coca-Cola 
Company  and  the  Group  Danone  were  around  20%  and  11%,  respectively14.  These 
differences in profitability can be explained by the fact that retailers compete mostly 
on price-related criteria whereas branded good producers compete on other factors in 
addition to price including brand image, product characteristics, consumer preferences 
for  special  flavours,  etc.  Furthermore,  in  the  processed  food  and  drinks  industry, 
concentration has  occurred  earlier and some of  the  leading brands are supplied by a 
very small number of producers15.  

This  inversed  balance  in  bargaining  power  has  contributed  to  an  increased 
concentration  of  retailers  and  the  development  of  buying  platforms  destined  to  pool 
purchase  volumes  together  so  as  to  negotiate  better  terms  from  such  suppliers  (See 
Section  4.2).  It  appears  that  only  when  suppliers  are  producers  of  complementary 
products,  private  labels  or  niche  products,  retailers  can  exert  stronger  buyer  power 
within the processed food sector. 

The  processed  food  supply  chains  are  characterised  by  the  interplay  between  a 
relatively  concentrated  food  industry  having  significant  market  power  and  the 
retail sector. Negotiations occur, for most operations, directly between suppliers 
and  retailers.  When  suppliers  are  producers  of  "must-carry"  brands,  suppliers 
tend  to  hold  a  stronger  bargaining  position  than  their  retail  counterparts. 
According  to  retailers,  they  consequently  make  lower  margins  for  such 

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Data  from  AC  Nielsen  as  supplied  by  Eurocommerce  (Retail,  Wholesale  and  International 
Trade Representation to the EU). 
Eurocommerce research. 
Available at: 
http://ec.europa.eu/enterprise/newsroom/cf/itemshortdetail.cfm?item_id=2954&lang=en&tpa_
id=156. 
UK  Competition  Commission  Grocery  Inquiry,  2008,  available  at:  http://www.competition-
commission.org.uk/inquiries/ref2006/grocery/index.htm 
Data provided by Eurocommerce, Source: Deloitte, Global powers of the consumer products 
industry, fiscal year 2006. 
According to data presented by Eurocommerce, in Spain the top 3 retailers cover 56% of the 
market, whereas the top 3 soft drinks producers cover 87% of the market. 

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products16. A significant number of SMEs are also active in agro-food industries 
and contribute to the complex structure of the processed food chain. In this last 
case,  the  bargaining  position  could  be  the  opposite,  with  the  suppliers  in  a 
weaker position than the retailers. 

Issues  relating  to  possible  malfunctions  of  this  type  of  supply  chains  may  raise 
competition-related  concerns.  Such  potential  concerns  are  tackled  in  detail  in 
Section 4 of this paper. 

2.3. 

The retail sector  

The  retail  sector  has  followed  an  intense  concentration  trend  over  the  last  20  years, 
hence  the  recurring  image  of  retailers  as  gatekeepers  to  mass  consumers.  Data 
provided  by  stakeholders  as  well  as  by  most  NCAs  converge  to  show  that 
concentration ratios in the retail sector are high in many Member States (e.g. the UK 
top 4 retailers account for 65% of the market, the Finish top 2 retailers for 75%, the 
Latvian  top  2  for  60%,  the  Dutch  top  3  for  83%,  the  Slovenian  top  3  for  63%,  the 
Portuguese top 5 for 63%, the German top 5 for 90% etc; and in general the majority 
of  NCAs  define  these  markets  as  "oligopolistic").  However,  there  are  also  Member 
States which present a more atomised and not so concentrated food retail sector. Such 
would be the case, for instance, of Greece (where the 10 largest retailers account for 
78.5%  of  the  total  sales)  and  Romania  (where  the  top  10  retailers  would  have  a 
combined market share of only 19% of the market).  

Despite  the  high  concentration  ratios,  it  is  essential  to  emphasise  that  stakeholders 
agreed  that  the  retail  sector  is  fiercely  competitive.  Supplier  associations  have 
unequivocally  confirmed  this  statement  in  the  course  of  the  fact-finding  exercise 
carried  out  by  DG  Competition,  and  further  empirical  data  provided  in  this  context 
strengthens this assertion17. It is interesting to note that NCAs have not quoted in their 
latest enforcement actions any case sanctioning retailers for taking part in horizontal 
anti-competitive agreements or abuses of dominance. This may corroborate the view 
that  the  retail  sector  is  generally  competitive.  Retailers  engage  in  frequent  “price 
wars”, and this intense competition maintains a high pressure on them to deliver better 
prices for consumers. Such pressure may also have contributed to keeping retail price 
increases  below  general  inflation  (e.g.  according  to  data  presented  by  the  retail 
sector18, in Belgium, over the last 25 years the average yearly retail price increase has 
been  of  1.47%  whilst  average  yearly  inflation  was  of  1.99%).  This  pressure  is 
furthermore reflected on the net operating margins of retailers (broadly speaking such 
operating margins should be seen in conjunction with the business models of modern 
retailers). For example, the net operational margins of certain large retailers in 2006 

16 
17 

18 

Eurocommerce and ERRT (European Retail Round Table ) data. 
CPB Netherlands Bureau for Economic Policy analysis, April 2008. The study on the Dutch 
retail  sector  reaches  the  conclusion  that  “(…)  competition  on  these  markets  seems  to  have 
become  tougher  and  mark-ups  lower  over  time  (1995-2005).  Furthermore,  no  significant 
empirical  indications  (were  found)  that  supermarkets  were  able  to  use their  buyer power  to 
shift profits from manufacturers to supermarkets after 1993. Finally, (…), in terms of welfare, 
consumers  have  benefited  from  fiercer  competition  in  terms  of  lower  prices.”  For  example, 
branded  goods  producers  as  represented  in  the  CIAA  (Confederation  of  Food  and  Drink 
Industries  of  the  EU)  and  Livestock  Meat  traders  such  as  UECBV  reported  that  retailers 
fiercely compete on prices downstream. 
Eurocommerce. 

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were  as  follows:  Auchan  France  (4.3%),  Carrefour  France  (4.6%),  Casino  France 
(4.7%)  and  Tesco  UK  (6.4%).  Further  data  provided  by  retailers  shows  that  for  the 
same year, the real net margin of Italian retailers was of around 2.2%. It appears that 
concentration  ratios  do  not  prima  facie  affect  price  competition  and  that  European 
consumers generally reap the benefits of this retail competition. 

Moreover,  European  consumers  are  increasingly  shifting  from  the  traditional  “one-
stop-shop”  approach  for  their  weekly  grocery  shopping  and  now  visit  more  than  3 
shops on average for their food purchases19 (modern trade supermarkets, discounters 
or alternative  distribution  channels). This seems  to  suggest that there is increasingly 
intense  competition  between  different  retail  formats.  The  rise  in  single  person 
households, the growing number of working women and changes in traditional family 
structures,  coupled  with  a  “back-to-town”  phenomenon  amounting  to  the  re-
population  of  urban  centres  has  led  consumer  preference  towards  convenience 
proximity  stores20  (e.g.  in  Belgium,  Proxy  Delhaize).  Rather  than  rolling  out  more 
supermarkets in an already saturated market, retailers have recently started developing 
new formats aimed at the general public and also at various consumer niches. These 
niche markets include bio/organic shops, stores aimed at providing proximity services 
or  responding  to  the  demand  from  low  income  households  focused  on  cheap  ready 
made meals, etc. Analysts believe that such trends will be confirmed in coming years 
and  lead  to  more  fragmentation  of  consumer  experiences  in  retailing21.  NCA 
experience confirms this emerging trend, though with regional differences. However, 
this is not always synonymous of increased competition since a large number of such 
stores are owned or franchised by the same large groups. 

One of the key findings of the current exercise is that competition at retail level is 
fierce,  both  between  retailers  themselves  and  increasingly  between  different 
retail  formats.  This  has  also  translated  into  lower  net  operating  margins  for 
retailers (e.g. according to data presented by the retail sector, retail margins are 
on average around 4%, even lower on fresh produce where they near 2%)22 and 
has contributed to cheaper prices for consumers on the long term. 

Such findings seem to contradict wide-spread perception that retailers currently 
have the highest margins in the food supply chain. 

3. 

GAP BETWEEN PRODUCER PRICES AND CONSUMER PRICES 

In the context of the soaring agricultural commodity prices of 2006-2008 and of their 
more recent downward trend since, much of the political debate has been focused on 

19 
20 

21 

22 

Statement confirmed by branded goods producers represented in CIAA. 
Institute  for  Grocery  Distribution,  European  Private  label  growth:  strategic  responses  for 
suppliers and retailers, 2006. 
2008  Global  Powers  of  retailing,  Deloitte.  The  study  mentions  the  new  trend  of  “long  tail” 
retailing: “As a result of IT improvements, it is now possible to operate a portfolio of small, 
targeted  businesses  just  as  efficiently  as  one  large  business.  Hence  retailers  seeking  growth 
can  invest  in  new  businesses  along  the  long  tail  (smaller  income)  rather  than  expanding 
existing mass market formats”. 
"Marges  distribution-industrie  sur  10  ans",  Natixis.A,  September  2007,  provided  by 
Eurocommerce. 

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two key issues: (a) the overall high prices of food and; (b) potential price stickiness in 
the food supply chain. 

Public  perception  has  been,  and  to  a  certain  extent  continues  to  be,  that  food  prices 
have  increased  more  than  other  consumer  goods  and  that  they  are  generally  too 
expensive.  Price  stickiness  would  be  defined  as  the  phenomenon  of  end  consumer 
prices  remaining  high,  despite  the  declining  price  of  agricultural  inputs.  This  would 
mean  that  farmers  receive  lower  prices  for  their  products,  but  in  the  same  time 
consumer  prices  do  not  decrease.  Such  a  phenomenon  would  thus  indicate  that  the 
benefits deriving from cheaper agricultural produce are not passed onto consumers by 
means of cheaper food, and that profits are caught at certain stages of the food supply 
chain.  In  order  to  tackle  such  concerns  a  number  of  preliminary  remarks  must  be 
made.  

3.1. 

Addressing the perception of high food prices in absolute terms 

Household expenditure on food remains very important at EU scale and ranges from 
9.06% in the UK to 41.87% in Romania23. It is however important to recall that over 
the  last  three  decades,  food  inflation  has  remained  below  general  inflation. 
Furthermore, even in the current context and in the aftermath of rising food prices in 
2007/2008, a certain nuance needs to be added to the general perception that food is 
too expensive. For example, 500g of pasta cost around €1 in Italy (average 4 servings 
amounting to 0.25 € per portion 24), which is less than the price of certain packets of 
chewing gum. Further data show that a French consumer spends on average €0.90 a 
day to buy 600g of fruit and vegetables. To support the above assumptions, Interfel25, 
the French fresh fruit and vegetables inter-branch organization, recently launched an 
information  campaign  aiming  to  correct  the  public’s  perception  that  fruit  and 
vegetables are too expensive. The campaign’s objective was to stimulate consumption 
in a context of an exacerbated debate on the excessive pricing of fresh produce.  

It is also important to note that European consumers increasingly favour the purchase 
of  processed  foods  in  light  of  the  requirements  of  modern  life.  Such  food  is  often 
more  labour-intensive  and  other  factors  such  processing,  refrigeration,  transport  and 
advertising etc., all influence its end-price. Expensive inputs such as energy should be 
taken into account in this analysis: it seems that in the 2007 food crisis soaring energy 
costs have contributed significantly to the rise in food prices. To the contrary, it may 
be useful to recall that, especially for processed food, the cost of agricultural input in 
the total end-cost is rather minimal. A simple example that is often quoted is that of a 
bread baguette: for an end consumer price of €1 .00, wheat amounts for €0.05 of grain 

23 

24 

25 

Commission Communication on "Tackling the challenge of rising food prices; Directions for 
EU action" of May 2008, COM(2008)321. 
According to data provided by UNAFPA (Union of Organisations of Manufacturers of Pasta 
Products  of  the  EU)  and  CONAD  Italia.  According  to  data  provided  by  the  Italian  pasta 
industry, the "unavoidable" price raise of 2007-2008 increased the overall pasta expense per 
capita in Italy by less then €8 per year. 
See  http://www.interfel.com/fr/le-prix/.  The  campaign  used  slogans  such  as  “1  espresso  = 
1litre of home-made soup”. It further reminded consumers that fresh produce is priced higher 
only when demand is for produce that is not seasonal. 

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ex-farm26.  Furthermore,  for  branded  goods,  the  cost  of  marketing  sometimes 
represents as much as 50% of the end-price of the product. 

Such examples indicate that the public may need further information about the 
pricing  of  food,  so  as  to  correct  the  perception  that  food  is  too  expensive  in 
absolute terms, across products, regions and seasons. 

3.2. 

Price formation 

A better understanding of price formation (and relevant costs incurred at every step of 
the food supply chains) is crucial before assessing whether price stickiness has indeed 
occurred  in  Europe  in  the  aftermath  of  the  food  crisis  of  2006-2008.  In  particular, 
price  formation  should  be  assessed  against  the  backdrop  of  the  structure  of  the 
different supply chains (as detailed in Section 2 of this paper). 

A number of external factors (e.g. international commodity markets, futures markets, 
weather  conditions  etc.),  as  well  as  internal  factors  (e.g.  number  of  intermediaries, 
market structure.) contribute to price formation at each level of the supply chains. For 
instance,  the  producers  and  traders  of  agricultural  commodities27  mentioned 
commodity  prices  are  by  nature  volatile,  given  their  different  production  and 
consumption  patterns.  Indeed,  grains  are  harvested  once  a  year,  whilst  they  are 
consumed/used  throughout  the  whole  year.  Between  the  signature  of  a  commodity 
purchasing  contract  and  the  consumption  of  the  final  manufactured  product,  a  two 
year  cycle  can  be  considered  as  normal.  Prices  for  the  same  harvest  may  vary 
depending on demand/supply at the time of purchase. Prices of grains depend (apart 
from international demand and supply for the commodity as such) on a multitude of 
other  factors  such  as  freight  and  exchange  rates  and  final  prices  of  other  products 
(inputs)  such  as  seeds,  fertilizers,  energy  and  plant  protection  products.  As  some  of 
the latter are purchased by farmers months in advance of sowing (for fertilizers about 
6 months from purchase to arrival on farm can be counted), supply prices impacting 
on grain prices do not coincide with the commodities’ market prices (spot prices) at 
the time of planting or harvest. It seems that fluctuations of international commodity 
markets  may  have  a  significant  influence  as  regards  price  formation  for  certain 
products.  

These international markets should be differentiated from other, more local, reference 
markets  which  appear  crucial  in  setting  the  prices  of  certain  fresh  products.  For 
certain  products,  it  seems  that  the  first  stage  in  price  formation  occurs  at  wholesale 
level, and not at production level. In terms of price formation in the fresh/ perishable 
supply  chains,  the  DG  Competition  survey  found  that  "after-sales  price  setting28" 
occurs quite frequently. This term refers to a marketing technique whereby producers 
sell  their  produce  to  clients  (wholesalers/  other  intermediaries/  retailers)  without 
knowing the price which they will receive from such buyers. The price is thus set after 
the buyer has, in turn, concluded the resale of the produce to his downstream buyers. 
This  practice  is  highly  controversial  and  leads  to  tensions  between  market  players 

26 

27 
28 

Example  quoted  by  COCERAL  (Committee  of  cereals,  oilseeds,  animal  feed,  oil  and  fats, 
olive oil and agrosupply trade of the EU). 
COCERAL. 
"Prix après vente". 

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since  it  allegedly  drives  the  prices  paid  to  producers  downwards.  Consequently, 
situations occur where at the end of the cycle, the producer receives a price which is 
lower than his production costs. It appears that this practice seems unavoidable in a 
number of Member States (e.g. Spain, Belgium, Italy to name a few), especially since 
it is applied for highly perishable products where the merchandise must be passed on 
rapidly (examples of products that were quoted in the context of the practice at stake 
were fruit and vegetables, but also meat, though the practice may be frequent in more 
product chains). 

As  mentioned  in  Section  2,  in  long  supply  chains,  each  operator  adds  a  mark-up  at 
every  step  which  is  reflected  in  the  final  price  of  products.  The  existence  of  a  high 
number  of  intermediaries  impacts  on  the  prices  paid  to  producers:  it  seems  that  the 
longer the chain, the lower the price paid to producers. According to data presented by 
the Italian Competition Authority29, the share of the end price collected by a producer 
would pass from 60% in a scenario where the producer sells directly to the retailer, to 
30% in a situation in which 3 intermediaries operate between the same producer and 
retailer, in that product chain.  

The  above  considerations  might  partly  explain  the  differences  between  producer 
prices and end-consumer prices. This assertion seems to be supported by research in a 
number  of  Member  States  and  product  markets,  which  suggests  the  existence  of 
common monitoring and investigation patterns among Member States as regards food 
price  formation  issues.  Indeed,  a  number  of  Member  States  have  set  up  a  series  of 
pricing  monitoring  tools  and  observatories  (Bulgaria,  Czech  Republic,  Denmark, 
Finland, France, Greece, Latvia, Poland, Portugal, Slovakia, Slovenia, Spain) or have 
assessed the gap between producer/ consumer prices for certain products  (Denmark, 
Estonia,  Hungary,  France,  Greece,  Latvia,  Lithuania,  Spain,  Slovakia,  Slovenia).  To 
date  no  NCA  has  found  that  this  gap  is  directly  linked  to  any  competition 
infringements. Indeed, factors mentioned by NCAs as contributing to such gap are of 
structural  or  external  nature,  such  as  the  number  of  intermediaries  operating  in  the 
supply chains, the specific characteristics of the products, global price increase trends, 
higher  raw  materials  purchase  prices,  or  increasing  labour,  energy,  production  and 
marketing costs. 

Price  formation  follows  complex  patterns  in  all  supply  chains.  Transparent 
information  on  the  structure  of  price  formation  should  be  further  gathered  by 
the  Commission  and  Member  States'  Authorities  in  order  to  have  a  better 
understanding of the mechanisms and criteria currently used to determine food 
prices. This exercise would also allow all the stakeholders involved in the supply 
chain,  as  well  as  consumers,  to  have  a  more  transparent  overview  of  price 
formations mechanisms30. 

29 
30 

Italian Competition Authority inquiry into the fruit and vegetables supply chain, June 2007. 
Representatives  of  the  supply  sector  such  as  COPA-COGECA,  CIAA,  CEFS  (European 
Committee  of  Sugar  Manufacturers)  etc  and  of  the  retail  sector  such  as  ERRT  and 
EUROCOMMERCE would see this as useful. 

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3.3. 

Price stickiness as assessed by stakeholders 

A  number  of  explanations  were  provided  to  explain  why  consumer  prices  have  not 
adjusted downwards, to follow the recent decline in commodity prices.  

An  explanation  shared  by  a  majority  of  stakeholders  was  that  there  is  an 
understandable time lag between the demand for production inputs (such as fertilizers, 
plant  production  products  and  seeds),  actual  production  and  demand.  Commodities 
are purchased by food and feed processors often months in advance in large quantities 
("panic  purchases"  of  2007/08).  Since  inputs  costs  were  higher  in  2007/08, 
insufficient time may have passed for an effective pass-through to end prices. Other 
possible explanations related to the low share of the actual agricultural inputs in final 
food products' price formation, and the high energy and labour costs, in particular for 
the processed food that European consumers increasingly purchase. 

The  retail  sector  emphasised  that  overall  price  levels  are  heavily  affected  by 
regulatory  and  quasi-regulatory  measures  implemented  at  national  level  and  which 
constitute a burden to free trade and an unnecessary fragmentation of the EU internal 
market  (e.g.  planning  permissions,  opening  hours  restrictions,  codes  of  conduct, 
etc.)31. Food producers have also concurred in saying that increased EU requirements 
regarding  food  and  feed  safety,  import  controls,  the  use  of  fertilizers  and  other 
environmental  concerns  have  a  heavy  weight  in  the  end  price  formation  of  their 
products. NCAs have also highlighted in a number of studies and advocacy initiatives 
the  negative  impact  that  certain  regulatory  restraints  may  have  on  competition  (e.g. 
see repeal of the Royer – Raffarin laws in France, retail Planning System in Ireland, 
regional laws in Italy, urban planning and zoning laws in Belgium, Portugal and the 
UK, administrative authorisations in Spain). 

Notwithstanding  the  above  structural  plausible  explanations  of  price  stickiness,  it  is 
important to analyse the distribution of value added and profitability along the supply 
chains  as  a  factor  which  may  also  intrinsically  contribute  to  such  shortcomings  in 
pass-through to end consumers.  

In light of an often exacerbated political debate, the retail sector has frequently been 
under  the  spotlight  as  the  sector  where  the  profit  margins  are  allegedly  highest,  and 
where  the  most  substantial  amount  is  added  to  the  formation  of  the  final  consumer 
price32.  To  counteract  such  allegations,  the  retail  sector  representatives  recalled  that 
their  net  operating  margins  are  relatively  low.  For  example,  in  2008,  in  France,  the 
price of a salad was structured as follows33: the end-consumer retail price per unit was 

31 

32 

33 

See  also  a  study  on  "Market  structure  in  the  distribution  sector  and  merchandise  trade", 
Working Party of the Trade Committee, OECD, 2007. The study confirms that regulation may 
lead to market fragmentation that may not be optimal from an efficiency point of view. 
According  to  representatives  of  retail  sector,  it  should  be  recalled  however  that  modern 
retailers  are  more  than  simple  outlets  in  the  sense  that  they  add  value  as  service  providers 
though  promotional  and  marketing  activities,  information  to  consumers,  investment  in 
customer proximity services, and innovation on new products. Such services incur costs and it 
is understandable, from a business perspective, that these costs are reflected to a certain extent 
in  consumer  prices.  For  example  waste  and  shrinkage  costs  are  often  high  in  modern  retail 
outlets. 
Data of the Fédération des Entreprises du Commerce et de la Distribution (FCD) available at: 
http://www.fcd.asso.fr/maj/upload/docs_fcd/communiques/91.pdf. 

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€ 0.83. Out of this, 47% of end price  (€ 0.39) went to the producer/ seller 34; around 
25% amounted to various logistical costs and around 29% represented the commercial 
margin  of  the  retailer.  Out  of  this  gross  retailer  margin  of  29%,  the  net  operating 
margin  amounted  only  to  2%.  The  rest  was  absorbed  by  the  cost  of  destruction  of 
merchandise (8%), labour costs (8%) and other variable costs (11%).  

The wholesalers, traders and food industry representatives also claim that their profit 
margins have not increased in the last years. This may mean that no single operator 
captures  a  high  percentage  of  the  value  added.  It  may  be  the  multiplication  of  the 
number  of  players  on  food  markets,  each  adding  a  mark-up,  which  leads  to  a  more 
rigid structure, acting as filter in price transmission to end consumers. In addition to 
this,  the  way  the  margins  are  determined  might  also  have  an  influence  on  the 
difference between consumer prices and producer prices. For instance, it would seem 
that  in  certain  cases  intermediary  margins  are  kept  within  a  certain  pre-established 
range regardless of the fluctuations of producer prices and other market conditions. If 
this mark-up phenomenon would multiply at each intermediary level, it is possible to 
presume that the end price would also be increased as a result thereof. 

Stakeholders  and  NCAs  explain  the  recent  widening  of  the  gap  between 
producer prices and consumer prices by a number of factors mainly linked to the 
structure  of  the  food  sectors  and  to  the  different  regulatory  frameworks 
surrounding food markets.  

This notwithstanding, a more accurate overview of the functioning of the supply 
chain,  in  particular,  at  its  middle  stage,  in  terms  of  competition  conditions, 
regulatory constraints and other structural factors, may be therefore necessary. 
Analysis should focus on specific sectors (as identified in Section 2) such as fruit, 
vegetables, fish, meat and milk. In such sectors, given the relatively low degree of 
processing/  transformation  involved,  it  may  be  easier  to  detect  where  price 
stickiness may arise and the type of malfunction that may occur. 

Indeed,  a  better  understanding  by  the  Commission  and  Member  States  of  the 
interplay  of  such  factors,  over  an  adequate  period  of  time,  may  contribute  to 
finding  the  adequate  policy  tools  to  tackle  any  possible  concern  as  regards  the 
functioning of the food supply chain. 

3.4.  Milk: a case for urgent action  

After  an  unprecedented  period  of  high  prices  for  milk  and  dairy  products  in  2007-
2008,  European  producers  now  face  uncertain  markets,  currently  characterized  by  a 
sharp  drop  in  producer  prices.  The  initial  2007  price  hikes  within  the  dairy  supply 
chain first appeared on commodity markets, particularly on the markets for skimmed 
milk  powder  (SMP)  and  butter.  From  these  internationally  connected  markets,  the 
price  increase  was  promptly  transmitted  to  agricultural  milk  producers  and  to  EU 
consumers.  Regarding  the  following  fall  in  commodity  prices  in  2008,  the  full 
transmission to the agricultural sector became evident in substantially lower farm gate 

34 

Salad conditioned to be sold includes price paid to producer, conditioning fee and first seller 
margin. 

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prices  for  raw  milk,  while  aggregated  consumer  prices  still  remain  at  comparatively 
high levels. 

A number of farmer and milk producer protests were recently carried out throughout 
Europe.  Farmers  claim  that  their  livelihood  is  threatened  despite  intervention 
mechanisms that the Commission and national governments have deployed. The price 
of 21 €/100kg is the so called intervention milk  price equivalent, the 'value' of milk in 
case  all  milk  were  to  be  processed  into  butter  and  SMP  and  sold  at  their  respective 
intervention prices. As an example, the cost of milk production in Northern Ireland, 
was 20.9 €/100kg in 2006 (before the increase in f eed, fuel and fertilizer prices). It is 
estimated  that  increased  input  prices  have  elevated  production  costs  to  around  22.9 
€/100kg. The current milk price appears lowe r than production costs, which from the 
producers'  perspective  is  not  a  sustainable  situation.  Furthermore,  since  consumer 
prices  of  milk  have  remained  high,  European  consumers  may  not  fully  benefit  from 
lower end prices deriving from low production prices. This would mean that the value 
added is captured at certain stages of the milk chain.  

Several  national  studies  have  recently  analysed  price  formation  in  the  milk  supply 
chain, in broad terms. For example, in a study35 regarding the milk chain prepared by 
the Spanish Ministry for Agriculture, it is observed that a number of factors influence 
the end price of milk. The study concluded that the structure of the value added chain 
for  packaged  liquid  milk  is  quite  rigid.  In  order  to  improve  the  functioning  of  the 
supply  chain,  the  study  observed  that  emphasis  should  be  placed  on  improving  the 
structures of the sectors involved. For instance, the efficiency of dairy farms should 
improve so as to make them less dependent on the variations of inputs, seasonal price 
tensions,  over-production  in  exporting  countries,  etc.  There  should  also  be  a  further 
concentration  of  the  milk  industry  to  go  in  pair  with  a  further  rationalisation  of  the 
costs for collection and distribution, as well as perhaps allow for a shortening of the 
supply  chain.  A  study  of  the  Belgian  Ministry  for  the  Economy  on  the  milk  supply 
chain36  also  observed  that  "the  relationship  that  connects  the  end  consumer  to  the 
producer is far from being mechanical, determinist, easily identifiable, foreseeable or 
immediate in time." It further stated that "it would not be meaningful to compare the 
price of milk paid to the cattle breeder to the price paid by the end-consumer". The 
study further noted that the revenues of cattle breeders depend increasingly more on 
the worldwide evolution of supply and demand. As for the costs these breeders incur, 
animal  feed  and  energy  constitute  significant  expenses  that  also  closely  follow 
international trends. Consequently the financial situation of breeders over the period 
of 2006-2008 has been mostly affected by the increase of such variable costs. On the 
basis  of  all  the  information  gathered,  the  Belgian  authorities  concluded  that 
"divergences in pricing on short term are not to be necessarily linked to any anomaly" 
in  the  milk  supply  chain  and  that  "no  information  was  identified  that  would  signify 
any  irregularities  at  the  level  of  price  formation  at  any  stage  of  the  milk  supply 
chain". 

The above-mentioned research highlights the wide differences that exist between the 
milk supply chains of the different EU Member States. Such differences are illustrated 

35 

36 

Food price observatory of the Spanish Ministry for the Environment, Study on price formation 
of bottled milk, April 2009. 
"Evolutions  récentes  des  prix  et  des  coûts  dans  la  filière  du  lait",  SPF  Economie,  October 
2008. 

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in the diverse actions that Member States have undertaken to date. Indeed, a number 
of NCAs have investigated or are currently monitoring this sector in more detail (e.g. 
(i)  enforcement  actions  taken  against  cartels  and  restrictive  practices  in  Greece, 
Lithuania, UK and Ireland, (ii) sectoral studies in Belgium, France, Latvia, Lithuania, 
Romania,  Slovakia,  and  Spain,  or  (iii)  ongoing  investigations  in  Germany  and 
Denmark).  It  may  be  worth  noting  that  the  competitive  process  may  contribute  to 
realigning supply and demand, leading to a rationalisation of supply and stimulating 
innovation on the long term. In light of the urgency to address the difficult situation 
that the milk sector is undergoing currently, the Commission adopted in July 2009 a 
Report on the Dairy Market Situation. More information is currently being gathered 
by  the  Commission  from  Member  States'  Authorities  on  price  formation  and 
transmission in the milk supply chains. Such information may help the Commission 
detect possible endemic problems and better coordinate future actions. 

As  indicated  in  the  Commission  Communication  on  the  Dairy  Situation  of  22 
July  200937,  the  Commission  and  NCAs  are  considering  the  possibility  of 
stimulating  a  focused  monitoring  of  dairy  markets,  and  where  appropriate, 
envisage  enforcement  actions  at  EU  or  national  level  through  the  operation  of 
joint working team with the European Competition Network. 

4. 

PRACTICES SPECIFIC TO FOOD SUPPLY CHAINS  

One  of  the  key  objectives  of  the  current  exercise  was  for  the  Commission  to 
understand directly from business operators and NCAs whether they encounter certain 
practices  that,  on  a  case-by-case  basis,  may  possibly  raise  concerns  from  an  EC 
competition law perspective (entailing harmful effects on competition and consumer 
welfare). 

It must be noted from the outset that NCAs have been very active over the last years 
in terms of their enforcement actions on food markets. This common trend has led to 
the finding of a large number of infringements of competition rules in these markets 
and the imposition of significant fines. In this regard, NCAs have mostly focused their 
enforcement  actions  on  cartel  activities.  Indeed,  NCAs  have  actively  pursued 
collusive  horizontal  agreements  affecting  a  number  of  food  markets  (among  others, 
milk  and dairy in Bulgaria, Greece,  Lithuania  and  the  UK;  bread  and  pasta  in  Italy; 
poultry  in  the  Czech  Republic,  etc.).  NCAs  have  also  focused  on  pursuing  certain 
specific resale price maintenance cases also affecting food markets at local level (e.g. 
chocolates  in  France,  flour  in  Denmark,  ice-creams  in  Poland,  etc.).  A  number  of 
abuses of dominance cases have also been assessed in different Member States (e.g. 
Denmark,  France,  Hungary,  Portugal,  Sweden,  etc),  but  they  remained  limited  in 
scope  and  for  the  most  part  targeted  the  food  processing  industry.  As  already 
mentioned,  to  date  no  abuse  of  dominance  against  retailers  has  been  found,  even 
though certain ongoing investigations are been carried out at national level. 

The above actions relate to "classic" enforcement actions deriving from Art.81-82 EC. 
This notwithstanding, the Commission Communication on Food Prices of December 

37 

See  also  subsequent  creation  of  High  Level  Expert  Group  on  Milk  in  October  2009,  at 
http://europa.eu/rapid/pressReleasesAction.do?reference=IP/09/1420&format=HTML&aged=
0&language=EN&guiLanguage=en 

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2008  identified  certain  practices,  specific  to  food  markets,  which  may  give  rise  to 
competition  concerns,  in  particular  circumstances:  joint  purchasing  agreements 
("buying  alliances");  single  branding  obligations  and  tying;  exclusive  supply 
agreements; certification schemes and the increased use of private label products. For 
the sake of clarity and completeness, Section 4 groups these practices into two broad 
categories:  retail-driven  practices  and  supply-driven  practices.  Also,  it  must  be 
emphasised  that  such  practices  are  not  per  se  anticompetitive  and  may  entail 
efficiency  gains  that  can  justify  their  application.  It  is  only  in  certain  special 
circumstances that they may raise competition concerns.  

Among  the  above  listed  practices,  in  the  context  of  the  DG  Competition  survey, 
stakeholders and NCAs have in particular singled out some practices as raising most 
frequent  concerns  on  food  markets,  in  particular  circumstances:  joint  purchasing 
agreements,  the  increased  use  of  private  labels,  tying  and  bundling  and  joint  selling 
agreements.  Given  the  relatively  novel  issues  they  raise,  in  parallel  with  the 
development  of  certain  business  models  which  are  in  constant  evolution,  Section  4 
focuses mainly on them. 

4.1. 

Preliminary considerations on the concept of "buyer power" 

Over  the  last  two  years,  intense  public  debate  has  focused  on  the  alleged  abuses  of 
buyer power by large food retailers. An important caveat would need to be made from 
the outset in terms of application of competition rules to buyer power related issues. 
The primary objective of EC competition policy is to ensure well-functioning markets 
to  the  benefit  of  citizens  and  businesses  in  the  EU.  Competition  Authorities 
consequently tackle buyer power to the extent that it harms, or could potentially harm, 
the competitive process and thereby consumer welfare.  

In  this  regard,  it  should  be  noted  that  unequal  bargaining  power  does  not  always 
present  a  "buyer  power"  problem,  in  terms  of  competition  law;  therefore,  the  two 
concepts should be carefully distinguished.  

"Unequal  bargaining  power"  is  present  whenever  one  party  to  a  proposed  contract, 
be it either the seller or the buyer, can "drive a hard bargain"; that is, can impose upon 
the other contracting party terms and conditions that are deemed unfavourable by that 
other party. There can be numerous reasons for the first party's ability to do so without 
risking that its counterpart decides not to enter into the proposed contract: significant 
difference  between  the  relative  sizes  and  turnover  of  the  contracting  parties  (e.g., 
atomised  small  sellers),  economic  dependency  arising  out  of  long  term  business 
relationships (e.g., sole supplier/off-taker relationship), significant sunk costs already 
incurred  by  one  of  the  parties  (e.g.,  upfront  investments),  and  last  but  not  least 
changing supply/demand conditions in the relevant market. Unequal bargaining power 
often leads to commercial dealings that appear to be unjust, unfair or undesirable from 
a social or political point of view. This has in turn triggered legislative responses in 
many  Member  States  such  as,  for  example,  the  adoption  of  unfair  trading  practices 
laws aiming to subdue the behaviour of the powerful contracting party (e.g., Austria, 
Belgium,  France,  Germany,  Portugal,  Slovakia)  or  the  introduction  or  envisaged 
adoption  of  codes  of  good  practice  establishing  a  set  of  rules  in  the  transactions 
between large retailers and their suppliers (e.g. Czech Republic, Hungary, Lithuania, 
Portugal,  Romania,  Slovakia,  Spain,  UK).  Section  4.4  below  further  tackles  these 
practices  (e.g.  late  payments,  unilateral  changes  in  contracts,  ad-hoc  changes  to 
contractual terms, upfront payments as entry to fees to negotiations etc.).  

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"Buyer  power"  may  have  either  beneficial  or  adverse  effects  on  consumers.  Buyer 
power is often exercised by buyers as a countervailing power to achieve better prices 
and terms from suppliers. When such savings are passed on to consumers downstream 
in the supply chain, buyer power has beneficial effects for consumers. Buyer power 
may  also  increase  output  in  the  upstream  markets  and  thus  increase  the  welfare  of 
consumers on the long run. The exercise of buyer power which leads to lower prices 
upstream  is  therefore  not  to  be  considered  per  se  anti-competitive.  Generally,  with 
sufficiently  intense  competition  on  downstream  markets,  lower  prices  obtained  on 
upstream  markets  will  be  passed  on  to  consumers.  On  the  other  hand,  if  a  buyer 
possesses  monopsony  power  (i.e.,  he  is  the  only  buyer  in  the  relevant  market)  or 
considerable buying power/ market power on the upstream purchasing markets, which 
is  coupled  with  significant  market  power  on  the  downstream  resale  markets,  a 
competition  problem  may  arise  if  the  buyer  does  not  pass  onto  consumers  any 
significant  part  of  the  benefits  obtained  on  the  upstream  market  from  his  suppliers. 
Moreover, if the exercise of buyer power is found to lead to a lower profitability for 
suppliers  (e.g.  suppliers’  sale  price  being  below  their  costs),  this  may,  in  specific 
circumstances, induce suppliers to invest less in new products and may lead to a loss 
in  product  diversity  and  quality  for  end  consumers.  This  aspect  is  also  taken  into 
account by EC competition policy when assessing the impact of the exercise of buyer 
power on consumers. Consumer welfare encompasses prices, diversity and quality. 

Abuses  of  buyer  power  are  contrary  to  EC  competition  law  where  there  is  a 
proven  detriment  to  downstream  consumers.  Much  of  the  current  political 
interest is in fact focused on issues of "unequal bargaining power" which should 
be distinguished from issues of "buyer power", and actually highlights problems 
faced by small suppliers in the context of contractual negotiations with stronger 
buyers.  

Contractual  imbalances  associated  with  unequal  bargaining  power  are  tackled 
through  policy  tools  other  than  competition  law  instruments,  such  as,  for 
example,  contract  law,  common  agricultural  policy,  SME  policy,  or  unfair 
commercial  practices  laws.  Most  Member  States  have  already  enacted  specific 
laws  dealing  with  such  issues  and  have established legal protective mechanisms 
for all contractual parties in the context of their commercial laws. EC antitrust 
law  is  not  concerned  with  particular  outcomes  of  contractual  negotiations 
between parties unless such terms would have negative effects on the competitive 
process  and  ultimately  reduce  consumer  welfare.  It  is  not  the  aim  of  EC 
competition  rules,  as  currently  devised,  to  interfere  in  the  bargain  struck 
between contractual parties, in the absence of proven competitive harm. 

4.2. 

Retail-driven practices  

The series of practices detailed below are therefore retail-driven in the sense that they 
are implemented by the buyers and they entail either the expression of buyer power or 
lead to its creation: 

4.2.1. 

Joint purchasing agreements: "buying alliances"  

In  order  to  strengthen  their  buyer  power,  especially  when  facing  strong  suppliers, 
retailers  have  increasingly  started  to  use  the  vehicle  of  buying  alliances  in  some  of 
their  negotiations  with  suppliers.  Such  buying  alliances  now  also  regroup  large  EU 

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trans-national  retail  chains  (examples  of  such  alliances  are  COOPERNIC,  AMS, 
Agenor/Alidis,  EMD,  etc.).  At  their  origin,  such  alliances  aimed  at  pooling  the 
required  purchase  volumes  of  their  SME  retail  members  together,  so  as  to  build  a 
critical  mass  that  would  allow  them  to  compete  with  large  retailers  (chains/groups). 
These alliances developed over time aiming to further obtain better negotiation terms 
from  their  strongest  suppliers  (e.g.  often  producers  of  must-carry  branded  goods). 
However, it seems that actual joint buying now also occurs with the aim of obtaining 
scale economies in the specification and procurement of private label goods. It seems 
therefore that some international retail alliances thus go beyond the mere concept of 
"buying  alliances38".  On  the  basis  of  the  information  gathered  to  date,  the  overall 
objectives identified for these modern retail alliances are to negotiate from suppliers 
international  discounts  based  on  the  alliance’s  performance  (in  addition  to  national 
rebates), to provide international marketing services to their suppliers and to achieve 
economies of scale in the procurement of private label goods.  

Purchasing  agreements,  when  concluded  among  market  players  with  the  aim  of 
achieving volumes and discounts similar to their bigger competitors are normally pro-
competitive.  Even  if  a  moderate  degree  of  market  power  is  created,  this  may  be 
outweighed  by  economies  of  scale  provided  the  parties  actually  bundle  volume. 
Competition  Authorities  have  traditionally  taken  the  view  that  such  purchasing 
alliances would not be problematic from a competition standpoint as long as: (i) the 
low  prices  obtained  by  retailers  are  passed  onto  end-consumers,  and  (ii)  there  is 
sufficient  effective  competition  between  retailers  downstream.  Given  the  relatively 
scarce  information  on  the  operations  of  large  buying  alliances,  DG  Competition  has 
asked  stakeholders  and  NCAs  for  their  opinion  on  this  relatively  new  phenomenon. 
From the responses gathered, it would seem that, in certain specific cases, such large 
transnational buying alliances may raise concerns as to their effect on competition and 
ultimately,  on  consumers.  In  particular,  certain  stakeholders  suggested  that  such 
alliances  may,  in  some  circumstances,  facilitate  market  partitioning.  Moreover, 
alliance  members  may  have  low  incentives  to  pass  onto  consumers  the  revenues 
obtained from the payments made by suppliers in exchange of international marketing 
services provided to them by such retail alliances. 

The market partitioning concern would imply that retailers would agree not to expand 
or  agree  to  reduce  their  presence  in  the  geographic  territory  covered  by  another 
member  of  the  same  alliance.  Competition  would  therefore  be  reduced39.  Such  a 
possibility cannot be discarded since these alliances frequently have only one member 
per country. It must be recalled however that no antitrust cases of retail cartels have 
been sanctioned by any Competition Authority to date. 

Another potential competition concern relates to the fact that the profits reaped from 
these  alliances,  resulting  from  considerable  financial  advantages  provided  by  their 
suppliers, may be kept by alliance members and not passed onto consumers. It seems 
that retail alliances receive payments from suppliers in exchange for the provision of 

38 
39 

Retail representatives confirm such overall activities of retail alliances. 
Commission  Notice,  Guidelines  on  the  application  of  Art.  81  EC  to  horizontal  cooperation 
agreements, (2001/C 3/02). Parag. 124 states "purchasing agreements only come under Art. 81 
(1) by their nature if the cooperation does not truly concern joint buying, but serves as a tool 
to  engage  in  a  disguised  cartel,  i.e.  otherwise  prohibited  price  fixing,  output  limitation  or 
market allocation." 

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international  marketing  services  (e.g.  simultaneous  product  launches  in  all  stores  of 
the alliance, coordinated promotional campaigns, "access to people" information and 
provision of consumer data, etc.). These payments, based on end of year performance 
indicators  of  the  alliance  as  a  whole,  are  allegedly  made  at  the  end  of  the  year,  ex-
post,  after  the  services  were  provided  and  in  the  form  of  lump-sums  paid  to  the 
alliance.  These  amounts  are  then  split  between  the  alliance  members  who  have 
provided  such  services.  Suppliers  often  perceive  these  payments  as  a  necessary 
burden they need to incur in order to ensure that their products are distributed by the 
members  of  these  alliances.  Indeed,  the  fear  of  being  delisted  is  a  major  recurrent 
concern  of  suppliers  throughout  the  whole  supply  chain.  It  seems  that  there  is  no 
direct  relationship  between  these  lump  sums  and  the  retail  products  for  which  the 
services were provided by the alliance. A retailer may therefore be reluctant to reduce 
consumer prices in advance of a future payment he will receive at the end of the year 
from  his  suppliers.  Such  lump  sum  revenues  may  be  independent  of  sales  volumes 
and  thus  may  not  affect  pricing  decisions.  They  may  hence  be  used  by  alliance 
members to finance other activities, and may thus not be passed onto consumers in the 
form of cheaper products. Furthermore, a direct link between (i) the initial provision 
of  the  marketing  services  by  alliance  members,  (ii)  the  end-of-year  lump  sum 
payments  made  by  suppliers  and  (iii)  the  end  prices  of  the  products  for  which  the 
marketing  services  were  provided  in  the  first  place  is  rather  difficult  to  construe. 
Finally, suppliers may have incentives to recoup the losses they incur by the payments 
made  to  the  alliance  and  therefore  increase  the  price  of  their  products.  This  would 
have a possible upward effect on consumer prices.  
According  to  the  Guidelines  on  Horizontal  Agreements  ("Horizontal  Guidelines")40, 
the primary concern in the context of such alliances is that lower prices may not be 
passed  on  to  customers  further  downstream.  This  may  cause  cost  increases  for  the 
purchasers' competitors on the selling markets because (i) either suppliers will try to 
recover  price  reductions  for  one  group  of  customers  by  increasing  prices  for  other 
customers  or  (ii)  purchasers'  competitors  have  a  more  limited  access  to  efficient 
suppliers41. NCAs have confirmed that to date they have very limited experience with 
respect  to  joint  purchasing  agreements  performed  by  large,  transnational  retail 
operators.  In  line  with  the  Horizontal  Guidelines,  a  key  element  considered  by  the 
NCAs  to  determine  potential  anti-competitive  effects  stemming  from  this  kind  of 

40 
41 

Supra footnote 38. 
There is no absolute threshold which indicates that a buying cooperation creates some degree 
of market power and thus falls under Article 81(1) EC. However, as the Horizontal Guidelines 
indicate, in most cases it is unlikely that market power exists if the parties to the agreement 
have  a  combined  market  share  of  below  15  %  on  the  purchasing  market(s)  as  well  as  a 
combined market share of below 15 % on the selling market(s). It should also be recalled that 
joint  purchasing  may  involve  both  horizontal  and  vertical  agreements.  In  these  cases  a  two-
step analysis by Competition Authorities is necessary. First, the horizontal agreements have to 
be  assessed  according  to  the  principles  described  in  the  Horizontal  Guidelines.  If  this 
assessment  leads  to  the  conclusion  that  cooperation  between  competitors  in  the  area  of 
purchasing  is  acceptable,  a  further  assessment  will  be  necessary  to  examine  the  vertical 
agreements  concluded  with  suppliers  or  individual  sellers.  The  latter  assessment  will  follow 
the rules of the Block Exemption Regulation 2790/1999 on the application of the Article 81(3) 
to categories of vertical agreements and concerted practices ("Regulation 2790/1999) and the 
Guidelines  on  Vertical  Restraints  (see  Commission  Notice,  Guidelines  on  Vertical  restraints 
(2000/C 291/01), parag. 29). 

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cooperation  are  the  market  shares  that  buying  groups  can  reach  both  in  upstream 
purchasing and downstream selling markets. 

Given  the  reticence  of  operators  to  disclose  information  relating  to  the 
functioning  of  these  buying  alliances,  it  is  premature  to  draw  at  this  stage  any 
definite  conclusions  as  to  their  impact  on  competition.  In  certain  theoretical 
circumstances,  such  forms  of  cooperation  may  harm  the  competitive  process 
downstream and entail fewer incentives for their participants to transfer benefits 
gained from rationalisation processes upon their consumers, and their impact on 
innovation and product variety may also therefore be questioned. On the basis of 
the  limited  information  available,  the  Commission  and  NCAs  should  continue 
gathering more extensive and accurate data in order to deepen their analysis on 
this specific area. 

At this moment in time, and based on the available market share data, it appears 
however  that  such  buying  groups  perform  a  countervailing  force  in  order  to 
build  a  critical  mass  in  negotiations  with  multinational  suppliers  of  branded 
goods, and that no direct link can be established at this stage with potential price 
stickiness effects. 

4.2.2. 

Increased use of private label products 

Broadly  speaking,  private  label  products  encompass  all  merchandise  sold  under  a 
retailer's  brand.  That  brand  can  be  the  retailer's  own  name  or  a  name  created 
exclusively by that retailer. The initial rationale behind the creation of the concept of 
private labels is to provide retailers with a way to satisfy consumer demand for cost-
efficient alternatives to branded products, while retaining product range and ensuring 
quality (since retailers could not afford to endanger their reputation as distributors if 
they  provided  poor  quality  own-products).  Such  private  labels  are  also  used  by 
modern retailers to compete with discounters, in an attempt to offer relatively cheap 
goods.  Private  labels  originate  from  a  competitive  dynamic,  which,  prima  facie,  can 
be beneficial to consumers. Furthermore, private labels are often produced by SMEs, 
and  may  have  the  effect  of  stimulating  the  growth  of  the  latter,  allowing  them  to 
expand  together  with  the  retailers  that  sell  the  end  products,  home  and  in  other 
Member States42. In non-processed food markets, private labels act as a sort of quality 
certification  by  retailers,  leading  to  the  aggregation  of  supply  more  efficiently  and 
entailing a faster ability for consumers to recognise and ascertain the quality of fresh 
produce. Furthermore, private labels may help rationalise the food supply chain since 
they allow retailers to enter into direct procurement and purchasing negotiations with 
their  suppliers.  As  a  consequence  thereof,  private  labels  may  allow  retailers  to 
participate  in  the  aggregation  of  supply,  a  function  that  is  traditionally  left  to 
intermediaries  in  the  sector.  This  can  lead  to  efficiency  gains  and  help  reduce 
potential  price  stickiness  by  the  shortening  of  the  supply  chains.  Also,  to  a  certain 
extent,  retailers  that  offer  private  labels  discharge  their  producers  from  the 
responsibility of these products vis-à-vis consumers. In processed food chains, where 
they  are  mostly  used,  private  labels  are  competitors  of  established  brands.  The 

42 

An  example  was  provided  of  a  -  range  of  Italian  origin  products  that  are  now  also  sold  in 
France after the joint venture of Conad Italia and Centrales Leclerc. 

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increased use of these products may also help shorten the processed food chain since 
they allow retailers to directly participate in production. 

A number of market operators and NCAs have however raised concerns with respect 
to the increased use of private label products by retailers. These concerns have mainly 
referred  to  the  potential  foreclosure  effects  and  the  impact  on  prices  that  may  stem 
from such an increased use.  

Indeed, from a competition policy perspective, the extensive use of private labels may 
possibly lead to foreclosure of existing and potential competing suppliers. This could 
restrict in-store inter-brand competition thereby reducing the number of product items 
available  on  shop  shelves.  Consequently  consumer  choice  may  be  limited  (both  in 
terms of product availability and product quality). Such concerns can be raised when 
one considers that shelf space is limited. By stocking private labels on their shelves, 
retailers thus become direct competitors of their suppliers43. It can be argued that, the 
greater  the  share  of  private  labels  within  the  total  turnover  of  a  retailer,  the  less  the 
retailer depends on branded goods' turnover. It seems that retailers increasingly stock 
one or two A brands of a particular product (premium reference brand for a category) 
and their own private labels, which may also be divided in subsequent categories. This 
may therefore result in a saturation of shelf space and therefore amount to foreclosure/ 
elimination of other secondary B, C, etc, brands (such brands may be regional brands 
for example, and it is argued by some that the diversity of the European food heritage 
can be gradually lost as a result). 
In terms of pricing, retailers usually price their private label 20-30% below brand A44. 
Retailers may thus have an incentive to raise the price of the A branded product so as 
to maximise his margins on the sale of private labels. In addition, private labels may 
also entail other secondary effects on the pricing of competing branded goods. Indeed, 
when  a  private  label  appears  on  the  market,  it  could  be  envisaged  that,  to  a  certain 
extent,  brand  manufacturers  may  be  willing  to  give  up  serving  the  potentially 
"switching"  consumers  and  would  concentrate  instead  on  customers  loyal  to  the 
branded product. As a consequence it is possible that they could exploit brand loyalty 
and  increase  prices.  This  could  entail  that  consumers  would  pay  more  for  branded 
goods in the aftermath of a competing private label for that product segment.  

Another potentially negative aspect entailed by private labels is that they may have a 
stalling  effect  on  the  innovation  of  branded  goods  suppliers.  Indeed,  such  suppliers 
may stop innovating altogether from a fear of "free-riding" by private label producers. 
Whilst  recalling  the  pro-competitive  effects  of  private  labels,  the  vast  majority  of 
NCAs agree that there is a need to better understand the impact of this growing trend 
on competition. 

Moreover, within the processed food supply chains, it is important to note that certain 
practices  may  especially  raise  competition-related  concerns  if  taken  in  a  context  of 
cumulative effects. Indeed competition concerns can arise in a context where there are 
strong suppliers as price setters that have as counterparts strong buyers. In such cases 

43 

44 

"Retailer and private labels: asymmetry of information, in-store competition and the control 
of  shelf  space",  Pieter  Kuipers,  in  "Private  labels,  brands  and  competition  policy",  Oxford 
University Press, 2009. 
Retail  representatives  mentioned  such  pricing  strategies  of  private  labels  compared  to  A 
brands. 

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there  may  exist  a  common  interest  between  such  powerful  operators  to  maintain  a 
market status quo, which de facto forecloses weaker competitors (actual or potential 
weaker  suppliers/  buyers).  This  can  be  particularly  pertinent  in  a  situation  where 
modern retailers have developed business models that include the marketing of private 
labels  and  where  strong  suppliers  have  developed  "must-carry"  brands  tie  or  bundle 
several  products  within  a  category.  Since  shelf-space  is  limited,  there  may  be  an 
interest  from  both  sides  in  allocating  and  maintaining  that  space  for  private  label 
products, on the one hand, and a limited number of brands (mostly 2 or 3) marketed 
by  leading  food  industry  products,  on  the  other  hand.  This  may  entail  foreclosure 
effects as regards actual or potential suppliers of weaker secondary brands. This may 
also possibly foreclose weaker buyers who cannot build the critical purchasing mass 
so  as  to  secure  supply  of  such  brands  at  as  advantageous  prices  as  their  larger 
competitors. 

Market  operators  and  NCAs  have  expressed  concerns  related  to  the  potential 
long-term  anti-competitive  effects  of  private  labels  on  consumer  choice,  quality 
of products and pricing of food in general.  

More solid information would be needed in this context in order to analyse the 
long-term  effects  of  the  increased  use  of  private  labels  in  a  context  in  which 
retailers  are  increasingly  viewed  as  competitors  of  their  suppliers.  When  the 
extensive  use  of  private  labels  leads  a  retailer  and  its  competing  leading  brand 
supplier to coordinate their respective pricing and assortment strategies, in-store 
competition  between  brands  may  be  restricted  and,  absent  a  sufficient 
competitive  pressure  from  other  retailers,  consumers  may  suffer  from  higher 
prices or reduced choice for the relevant products.  

However,  since  private  labels  are  primarily  the  expression  of  a  competitive 
dynamic  which  may  contribute  to  rationalizing  the  food  supply  chain,  more 
robust  data  would  need  to  be  gathered  before  reaching  any  conclusion  on 
possible negative effects they may entail 

4.2.3.  Other  retail  driven  practices:  Exclusive  supply  agreements,  Certification 

schemes, Slotting allowances, Category management 

Exclusive supply is an extreme form of limited distribution in as far as the limit on the 
number of buyers is concerned: the agreement specifies that there is only one buyer 
inside  the  Community  to  which  the  supplier  may  sell  a  particular  final  product. 
Notwithstanding  possible  economies  of  scale  in  distribution  as  potential  efficiency 
enhancing effect, the main competition risk of exclusive supply is foreclosure of other 
buyers45.  The importance of  the  buyer  on  the  downstream  market is the main  factor 
which  determines  whether  a  competition  problem  may  arise46.  If  the  buyer  has  no 
market  power  downstream,  no  appreciable  negative  effects  for  consumers  can  be 

45 

46 

Exclusive supply is exempted from the applicability of Art. 81(1) EC up to 30 % market share 
of  the  buyer,  even  if  combined  with  other  non-hardcore  vertical  restraints  such  as  non-
compete, see Regulation 2790/1999. 
The market share of the buyer on the upstream purchase market is also important for assessing 
the  ability  of  the  buyer  to  "impose"  exclusive  supply  which  forecloses  other  buyers  from 
access to supplies. 

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expected.  During  discussions,  no  market  operator  reported  particular  concerns  with 
exclusive  supply  agreements.  The  supply  sector  has  not  provided  any  information 
with  respect  to  potential  situations  where  suppliers  would  be  tied  to  one  distributor. 
Retailers  concur  to  this  opinion  and  have  stated  that  they  are  not  confronted  to 
shortages  of  supply  deriving  from  possible  foreclosure  problems  resulting  from 
exclusive  supply  agreements.  Some  NCAs  have  dealt  with  exclusive  supply-related 
cases (e.g. Austria, Hungary), but such issues have not been at the forefront of NCA 
activities and have not resulted in the sanctioning of competition law infringements. 

Certification schemes are required by retailers so as to certify the quality, safety and 
origin of food products that will be then marketed through retail outlets. Whilst their 
usefulness responds to a number of policy goals (e.g. health and safety), such schemes 
are often quoted by farmers/ food producers as representing a significant financial and 
administrative  burden  for  them  (given  the  multitude  of  such  schemes  and  their 
sometimes  overlapping  requirements).  Retail-driven  certification  schemes  could 
indirectly compel suppliers to sell to only one buyer. The potential competition risks 
that  this  would  entail  as  a  consequence  would  be  possible  foreclosure  of  competing 
buyers.  However,  buyers  interviewed  stated  that  they  do  not  have  any  shortage  of 
supply concerns. This means that no foreclosure of competing buyers would seem to 
exist in practice stemming from the existence of certification schemes. Furthermore, 
NCAs have not mentioned having encountered concerns deriving from such schemes. 
It  must  also  be  recalled  that  such  certification  requirements  are  most  frequently 
imposed  upon  the  entire  food  supply  chain  by  national  and  EU  regulations  for  a 
number of policy reasons, such as the protection of health and safety.  

Initially,  the  term  "slotting  allowances"  was  used  to  describe  payments  made  by 
suppliers  to  retailers  to  support  the  introduction  of  new  products.  The  term  has 
gradually evolved to represent the payments made by suppliers for premium product 
placements  on  shelves  and  in-store.  In  any  retail  outlet,  shelf  space  is  limited  and 
different positioning on shelve can influence the success/ failure of a product. The use 
of upfront slotting allowances may in many cases contribute to an efficient allocation 
of  shelf  space  for  new  products.  As  seen  previously,  suppliers  compete  with  each 
other and  with the  retailer's  private  label products for shelf space. The store shelves 
are  therefore  among  retailers'  most  important  assets  in  their  relationships  with 
suppliers.  Retailers  usually  demand  special  compensation  from  suppliers  for  shelf 
allocation/ positioning on shelf. Suppliers also use slotting allowances to their benefit 
so  as  to  ensure  an  optimal  positioning  for  their  products.  Slotting  allowances  are 
therefore fixed fees that manufacturers pay to retailers in order to get access to their 
shelf  space.  The  use  of  such  practices  may  raise  competition  concerns  in  several 
circumstances. Slotting allowances may result in anticompetitive foreclosure of other 
retailers, in particular when these payments induce the supplier to channel its products 
through only one or a limited number of retailers. Possible foreclosure of competing 
suppliers can also occur if some suppliers are not able to pay these allowances with 
the risk of remaining out of the shelves. In terms of pricing, suppliers may recoup the 
losses  incurred  by  these  payments  by  raising  the  prices  of  their  products,  driving 
consumer  prices  upwards.  Furthermore,  retailers  may  not  pass  onto  consumer  the 
financial  advantages  obtained  by  suppliers,  in  the  form  of  cheaper  products.  Such 
practices  may  also  lead  to  less  consumer  choice.  However,  all  such  competition 
concerns need to be assessed on a case-by-case basis, taking into account factors such 
as  the  market  power  of  suppliers  and  buyers.  To  date  NCAs  have  only  to  a  limited 
extent dealt with such issues. 

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Category  management  agreements  are  agreements  by  which,  within  a  distribution 
agreement,  the  distributor  entrusts  a  supplier  (the  "category  captain")  with  the 
marketing  of  a  category  of  products  including  in  general  not  only  the  supplier's 
products,  but  also  the  products  of  its  competitors.  The  use  of  category  management 
ensures  that the  optimal quantity  of products is presented timely and directly on the 
shelves.  It  contributes  to  achieve  economies  of  scale  by  allowing  suppliers  to  better 
anticipate  demand  and  tailor  their  promotions  accordingly.  The  extent  to  which 
category  captains  are  used  by  retailers  can  vary  widely  across  firms  and  product 
categories.  At  one  extreme,  some  retailers  do  not  use  category  captains  at  all,  even 
though they undertake category management processes internally. Other retailers rely 
on a single supplier for advice about the management of the category and check this 
advice  against  the  recommendations  of  other  suppliers  and  their  own  data.  At  the 
other extreme, some retailers might delegate all category management responsibilities 
to the captain for one or more categories. Whilst category management provides the 
opportunity for major cost savings in the distribution of consumer goods, it also raises 
potential competition related concerns. A category captain can use its role to exclude 
rivals  or  otherwise  to  increase  significantly  rivals’  costs  of  competing.  A  category 
captain  can  also  use  his  role  to  facilitate  collusion  among  rivals  in  the  category  or 
between competing retailers that the category captain serves. To date NCAs have only 
to a limited extent dealt with such issues. 

The current exercise led to the conclusion that exclusive supply agreements are 
not a major concern for operators and NCAs.  

To the extent that no foreclosure concerns are detected, considerations related to 
the  proliferation  of  certification  schemes  and  to  the  objectives  they  seek  to 
achieve are best tackled by policy instruments other than competition tools. 

Slotting  allowances  are  currently  perceived  by  the  majority  of  operators  as  a 
requirement  of  modern  trade  and  as  an  intrinsic  characteristic  of  the  business 
model of modern retailers. Overall, it would seem on the basis of the information 
gathered  to  date  that  slotting  allowances  are  not  among  the  major  causes  of 
concern to operators in the food supply chain, nor among the main concerns of 
NCAs. 

Similarly,  category  management  related  issues  do  not  appear  to  be  of  major 
concern to the operators that intervened in discussions, or to NCAs. 

4.3. 

Supplier-driven practices  

In  order  to  have  an  as  complete  view  as  possible  on  practices  which  may 
circumstantially  affect  competition  on  food  markets,  a  number  of  supplier-driven 
practices  are  detailed  below.  Most  of  such  practices  may  occur  in  a  context  where 
suppliers have significant market power.  

4.3.1. 

Supplier cartels, resale price maintenance 

In  terms  of  competition  law  enforcement  related  to  the  food  supply  chain,  it  seems 
that the last years have been characterised by recent supplier-side cartel activities that 
have arisen on food markets. Based on information presented by operators and on data 
continuously  gathered  by  NCAs  it  appears  that  the  supply  sector  has  been  prone  to 
collusive agreements (e.g. pasta and bakery in Italy, canned fruit and milk in Greece, 

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poultry in Czech Rep., beef processors in Ireland, milk processing in Lithuania, etc.). 
A  relatively  high  number  of  other  such  cases  are  currently  being  investigated,  at 
national  and  EU  level.  NCAs  have  also  dealt  with  a  number  of  resale  price 
management  agreements  (e.g.  olive  oil  in  Spain,  frozen  vegetables  in  Greece,  soft 
drinks in Czech Republic, chocolates in France etc…). 

Cartel  agreements  have  been  rapidly  identified,  investigated  and  addressed  by 
Competition  Authorities,  both  at  national  and  EU  level.  This  cartelisation 
phenomenon  may,  to  a  certain  extent,  have  contributed  to  the  artificial 
maintenance of high food prices. NCAs have also promptly addressed restrictive 
resale price maintenance practices. This highlights that NCAs are well-equipped 
to tackle such "classic" competition concerns on national markets. 

4.3.2. 

Single branding obligations and tying 

From  the  discussions  held  with  stakeholders,  it  seems  that  practices  amounting  to 
single  branding  (in  the  form  of  an  obligation/  incentive  scheme  which  makes  the 
buyer purchase practically all his requirements on a particular market from only one 
supplier)  do  not  occur  frequently  on  food  supply  markets.  Under  certain  limited 
circumstances,  tying  obligations  may  help  to  produce  efficiencies  arising  from  joint 
production  or  joint  distribution.  Competition  concerns  relative  to  such  agreements 
would relate to reduced in-store inter-brand competition47, amounting to lesser choice 
for consumers and possibly higher consumer prices. On the other hand, stakeholders 
have  expressed  concerns  relative  to  practices  amounting  to  tying,  full  range-forcing 
and  bundling  which  seem  to  occur  frequently  in  the  food  sector,  especially  in  cases 
involving  very  popular  or  must-carry  brands.  This  would  allegedly  occur  when 
suppliers  of  very  popular  brands  make  the  sale  of  these  products  to  retailers 
conditional  on  retailer  purchasing  a  bundle  of  products,  which  also  comprise  less 
popular  products.  Under  certain  circumstances,  and  taking  into  account  the  market 
position  of  the  supplier,  such  practices  may  entail  competition  concerns  since  they 
may  have  foreclosure  effects,  rising  rivals'  costs  and  potentially  leading  to  higher 
prices.  Hardly  any  NCA  has  identified  complaints  received  or  actions  taken  with 
respect  to  single  branding  or  tying  obligations  (e.g.  ice-cream  market  in  Portugal, 
herbs  and  spices  market  in  Germany,  or  ongoing  investigations  in  Bulgaria).  An 
explanation  of  this  could  be  that  enforcement  actions  of  NCAs  in  food  and  retail 
markets  have  focused  to  a  larger  extent,  as  above  mentioned,  on  other  hardcore 
practices either of horizontal  (e.g. cartels) or vertical (e.g. resale price maintenance) 
nature. 

Tying and bundling concerns are frequent in the food sector. Since Competition 
Authorities are well equipped to tackle such concerns, it should be recommended 
that they strengthen their vigilant monitoring and enforcement activities in this 
respect throughout the EU. 

47 

See Guidelines on Vertical Restraints. 

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4.3.3. 

Joint selling 

Commercialisation  agreements  occur  with  relative  frequency  in  the  context  of  joint 
selling  agreements  framed  within  POs/  farmers  cooperatives  in  the  non-processed 
food sector. Such agreements may entail significant efficiencies linked to economies 
of scale in distribution. They are also expressly acknowledged in the framework of the 
Common Agricultural Policy as a vehicle for strengthening producer cooperation. The 
principal  competition  concern  about  such  joint  selling  agreements  is  price  fixing 
between competing producers. This may eliminate price competition between parties 
and  also  restrict  the  volume  of  products  to  be  delivered  by  participants.  Such 
agreements are caught by the provisions of Art. 81(1) EC, even if parties are free to 
sell  outside  the  agreement.  However,  it  should  be  noted  that,  if  the  cooperation 
between  parties  is  not  limited  to  joint  selling,  but  also  involves  upwards  joint 
production  (production  joint  ventures)  or  joint  integration  of  assets  to  meet  the 
demand  of  customers  in  an  aggregated  manner  (e.g.  fresh  product  assortments),  the 
fixing of prices to immediate customers might be regarded as an ancillary restriction. 
Such agreements may thus raise questions in terms of the limits of joint selling, taking 
into account the specificities of the agricultural sector on one hand, and competition 
policy  rules  on  horizontal  agreements  on  the  other.  It  appears  that  in  some  Member 
States  such  questions  currently  arise  (e.g.  milk  in  Estonia,  vegetables  in  The 
Netherlands, citrus in Spain). 

Further  reflection  would  be  needed  by  the  Commission,  together  with  Member 
States' Authorities on the interface between agricultural policy and competition 
rules, in light of the critical debate regarding the role of POs, cooperatives and 
other forms of horizontal cooperation between suppliers.  

Such cooperation, subject to the limits and conditions laid down by competition 
rules, may help agricultural entrepreneurs to devise market oriented strategies, 
aggregate  supply  and  integrate  assets,  as  well  as  benefit  of  efficiency  gains  and 
reach synergies that may ultimately benefit consumers. 

4.3.4.  Hindrances to parallel trade 

In  the  context  of  the  current  exercise,  a  number  of  concerns  were  reported,  alleging 
that  certain  suppliers  of  processed  food,  and  in  particular  of  branded  products,  have 
set  up  exclusive  distribution  networks  that  prevent  parallel  imports.  In  this  sense 
passive  sales  by  appointed  distributors  to  clients  located  in  the  territory  of  another 
distributor  would  be  prohibited  or  seriously  hindered.  NCAs  are  also  aware  of  such 
concerns. 

4.4. 

Other practices linked to unfair trading 

One  of  the  main  findings  of  this  exercise is  that,  when  asked  to  comment  about  the 
practices  that  they  perceive  as  most  seriously  affecting  their  business,  all  of  the 
suppliers mentioned practices related to unfair trading, rather than to breaches of EC 
competition  rules.  Such  buyer  practices  amount,  among  others,  to  late  payments, 
unilateral  changes  in  contracts  or  ad-hoc  changes  to  contractual  terms,  payments 
demanded  in  return  of  no  real  service  being  provided,  upfront  sums  of  money 
perceived as entry fees to negotiations, etc. A number of suppliers have conveyed the 
message that such practices amount to abuses of bargaining power from their stronger 

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buyers, who are often perceived as gatekeepers to consumer markets. This means that 
suppliers  are  de-facto  compelled  to  accept  the  conditions  imposed  by  their  retail 
counterparts who have therefore the capacity to strike advantageous deals from their 
suppliers, to the detriment of the profit margins of these suppliers. 

As  discussed  in  detail  in  Section  4.1  above,  it  is  important  to  recall  that  EC 
competition  rules  are  not  in  principle  designed  to  address  the  above-mentioned 
practices, which in most cases amount to contractual imbalances and therefore pertain 
to the field of contractual or commercial law, as regulated by the laws of the different 
Member  States.  The  above-mentioned  practices  do  not  prima  facie  entail  direct 
consumer  harm,  but  are  rather  revelatory  of  commercial  tensions  deriving  from 
different  bargaining  positions.  Such  commercial  tensions  may  be  symptomatic  of 
certain  malfunctions  in  the  food  supply  chain  due  to  the  difference  between  what 
supplier  perceive  as  a  “just  price”  for  their  products  and  the  real  price  they  obtain 
from  the  negotiations  with  their  buyers.  In  this  context,  the  concept  of  “just  prices” 
becomes  related  to  the  socio-political  sphere  and  departs  from  the  economics  of 
competition policy. Considerations related to “just prices”, if at all needed, should be 
tackled  by  national  and  possibly  EU  regulators  on  the  basis  of  social  interests, 
innovation and competitiveness of the EU food supply chain on world markets. 

Contractual  imbalances  associated  with  unfair  trading  practices  are  tackled 
through  policy  tools  other  than  competition  law  instruments,  such  as,  for 
example,  contract  law,  common  agricultural  policy,  SME  policy,  or  unfair 
commercial  practices  laws.  Most  Member  States  have  already  enacted  specific 
laws dealing with such issues and have established an adequate legal framework 
in  the  context  of  their  commercial  laws.  EC  competition  law  is  not  concerned 
with particular outcomes of contractual negotiations between parties unless such 
terms  would  have  negative  effects  on  the  competitive  process  and  ultimately 
reduce consumer welfare. It is not the aim of EC competition rules, as currently 
devised,  to  interfere  in  the  bargain  struck  between  contractual  parties,  in  the 
absence of proven competitive harm.  

Considerations related to fairness concepts, if at all needed, should be tackled by 
national  and  possibly  EU  regulators  on  the  basis  of  social  interests,  innovation 
and competitiveness of the EU food supply chain on world markets. 

5. 

CONCLUSIONS 

Competition  policy  plays  a  key  role  in  maintaining  a  level  playing  field  in  the 
food  supply  chain  and  ensuring  that  competition  is  not  distorted  in  the  food 
sector by any market player operating within the chain: producers, processors, 
traders,  wholesalers  and  retailers.  For  this  reason,  the  roadmap  set  out  in  the 
Commission  Communication  on  "Food  Prices  in  Europe"  of  December  2008 
called for a pro-active monitoring of the food supply chain and, where necessary, 
for a vigorous and coherent enforcement of competition rules in food markets by 
the Commission and National Competition Authorities.  

As a follow-up to this Communication, and in order to implement its roadmap, 
the  Commission  launched  a  fact-finding  exercise  involving  stakeholders  and 
National  Competition  Authorities  with  a  view  to  better  understand  the 
competitive  structure,  interplay  of  actors  and  degree  of  competition  in  food 

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markets.  Firstly,  the  Commission  held  meetings  with  relevant  European 
associations  of  producers,  processors,  traders,  wholesalers  and  retailers 
representing  several  food  sub-sectors,  so  as  to  obtain  insights  into  recent 
economic  developments  and  specific  factors  influencing  competition  within 
different  food  supply  chains,  including  cereals  and  breakfast  cereals,  milk  and 
dairy,  livestock  and  meat  processing,  pasta,  confectionery,  branded  foodstuffs 
and  beverages,  fruit  and  vegetables,  oils  and  oilseeds,  sugar,  poultry  and  eggs. 
Secondly,  given  the  national  or  regional  scope  of  food  retail  markets,  the 
Commission strengthened its dialogue with National Competition Authorities on 
food  related  issues  in  the  framework  of  the  European  Competition  Network 
(ECN).  In  particular,  ECN  members  exchanged 
information  on  recent 
enforcement, monitoring and advocacy initiatives undertaken at national and EU 
level, as well as on policy issues raised by recurrent commercial practices which 
may affect the functioning of food supply chains.  

As  evidenced  by  the  significant  efforts  deployed  over  the  last  two  years  by 
competition authorities, ECN members have granted due priority to case by case 
investigations, as well as to broader inquiries regarding food markets, which has 
led  to  the  finding  of  an  appreciable  number  of  serious  infringements,  such  as 
cartels  and  resale  price  maintenance  cases.  These  infringements  were  swiftly 
remedied  through  cease-and-desist  orders,  accompanied  where  appropriate  by 
substantial  fines.  Such  cases  spanned  a  variety  of  product  markets,  such  as  the 
dairy,  milk,  flour,  bakery,  pasta,  eggs,  poultry,  beef,  vegetables,  fruit,  olive  oil, 
chocolate and herbs markets. A number of abuses of dominance cases targeted at 
the  food  industry  have  also  been  assessed  in  different  Member  States  but 
remained limited in scope. Where National Competition Authorities applied EC 
competition law, the Commission ensured a consistent and coherent application 
of the rules.  

in 

Moreover,  the  information  shared  with  the  Commission  by  stakeholders  and 
National Competition Authorities confirms the view that, depending on the type 
of  products  involved,  food  supply  chains  are  characterized  by  a  high  degree  of 
complexity  and  diversity 
terms  of  market  structures,  number  of 
intermediaries  operating  at  different  stages  within  each  chain,  size  and  market 
power  of  incumbent  producers  and  retailers,  degree  of  concentration,  entry 
barriers  and  other  factors  liable  to  affect  competition  in  the  relevant  markets. 
Such  product-specific  structural  differences  are  further  amplified  by  diverse 
market  conditions  prevailing  across  Member  States.  To  reflect  such  diversities, 
an  important  distinction  should  be  made  between  supply  chains  for  non-
processed food (agricultural produce, perishable) and processed food (stockable).  

Overall,  supply  chains  for  non-processed  food  are  generally  characterized  by 
atomized  suppliers  and  stronger  buyers  who  are  in  most  cases  intermediary 
operators, and more rarely retailers. Such buyers are often unavoidable trading 
partners  for  the  weakest  producers.  Given  farmers'  difficulties  in  aggregating 
their output with complementary products so as to supply retailers directly with 
the  required  product  ranges,  such  an  aggregation  function  is  still  largely  being 
performed  by  intermediaries  who,  however,  operate  mostly  at  local  level  and 
sometimes  at  sub-optimal  scale.  Where  it  still  exists,  such  an  overlap  of  several 
layers of wholesaling may result in structural inefficiencies which, in turn, may 
influence negatively price transmission to end consumers.  

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By contrast, within supply chains for processed food, negotiations generally take 
place directly between producers and large retailers. While suppliers of leading 
brands  tend  to  hold  a  relatively  strong  bargaining  position  vis-à-vis  retailers,  a 
significant number of SMEs active in agro-food industries also enter into direct 
supply  relationships  with  retailers,  which  adds  to  the  complexity  of  the 
competitive  interactions  between  producers  and  retailers  within  supply  chains 
for  processed  food.  These  transactions  may  entail  restrictions  of  competition 
depending on the nature of the agreements concluded between the parties and on 
whether  the  supplier,  or  the  buyer,  has  sufficient  market  power  to  maintain 
prices at a supra-competitive level to the detriment of consumers. 

Most  stakeholders  concur  in  saying  that  competition  between  large  retailers  is 
generally  fierce,  both  between  traditional  supermarkets  and  increasingly 
between  different  retail  models,  including  discounters.  This  has  translated  into 
relatively low net operating margins for retailers and has contributed to cheaper 
prices  for  consumers  on  the  long  term.  It  should  be  emphasized  however  that 
retail market structures strongly differ from one Member State to another, due 
inter  alia  to  different  regulatory  constraints  and  local  traditions,  which  implies 
that in certain countries or regions retail markets may display a lower degree of 
competition between distributors. 

Against  this  backdrop,  it  appears  that  the  ability  of  suppliers  and/or  buyers  to 
exercise  their  market  power  in  a  manner  that  would  distort  competition  to  the 
detriment of consumers depends, primarily, on the type of supply chain and on 
local  market  conditions  which,  in  turn,  are  the  result  of  structural  factors  and 
regulatory  barriers  specific  to  each  Member  State.  National  Competition 
Authorities  are  therefore  well  placed  to  tackle  possible  restrictions  of 
competition which could affect the functioning of certain food supply chains. 

In  accordance  with  its  Communication  of  December  2008,  the  Commission  has 
also  examined  the  relevance  of  certain  commercial  practices  both  in  terms  of 
their likelihood to arise and their ability to raise competition concerns within the 
relevant  food  supply  chains.  In  addition  to  classic  cartels  and  resale  price 
maintenance,  other  practices  were  quoted  by  certain  stakeholders  as  deserving 
special attention by Competition Authorities in appropriate cases, and requiring 
a  careful  balancing  of  efficiency  enhancing  and  potentially  anti-competitive 
effects.  Such  practices  include  joint  commercialization  agreements,  tying  and 
bundling, joint purchasing agreements (buying alliances) and the increasing use 
of private labels. National Competition Authorities converge in recognizing that 
a case-by-case analysis is required for such practices, based on the specificities of 
local market conditions. 

In supply chains for non-processed food, joint commercialisation or joint selling 
agreements  occur  with  relative  frequency 
in  the  context  of  producer 
organisations.  Such  agreements  may  raise  concerns  for  competition  when  they 
lead to price fixing. However, when they entail an integration of complementary 
assets, they may help the supply of agricultural produce to become more efficient 
by  cutting  some  of  the  intermediary  stages  that  lengthen  the  supply  chain  and 
drive  prices  upwards.  Competition  Authorities  can  therefore  assess  such 
agreements  in  a  way  that  can  help  farmers  to  grasp  the  efficiencies  of  their 
cooperation, whilst ensuring that benefits are passed onto end consumers. 

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For processed food, tying and bundling, often involving branded goods marketed 
by  major  industrial  suppliers,  are  quoted  by  certain  stakeholders  as  potential 
sources  of  concern.  In  certain  situations,  such  practices  may 
lead  to 
anticompetitive foreclosure effects in the tied market, the tying market, or both 
at the same time, and may also lead to higher prices for consumers. In addition, 
foreclosure of competing suppliers may have a knock-on effect on the revenues of 
upstream producers of agricultural products by strengthening the market power 
of  their  industrial  customers  and,  as  a  result,  by  weakening  their  capacity  to 
negotiate prices with the latter. At the same time, however, tying obligations may 
help  to  produce  efficiencies  arising  from  joint  production  or  joint  distribution, 
and may also help to ensure a certain uniformity and quality standardisation. In 
absence of market power, such efficiency gains could be passed on to consumers 
in the form of lower prices or better products. 

Additionally, certain stakeholders also refer to the development of transnational 
buying  alliances,  pointing  out  that,  in  certain  circumstances,  such  forms  of 
cooperation  between  large  retailers  may  reduce  the  participants'  incentives  to 
expand 
into  each  other's  domestic  markets  or  may  contribute  to  a 
standardisation of their purchasing policies, which could have a negative longer 
term impact on product variety and/or the ability of food suppliers to innovate. 
While  joint  purchasing  agreements  may  give  rise  to  important  efficiencies,  the 
extent  to  which  such  benefits  are  passed  on  to  consumers  depends  on  the 
specificities of each market, as well as on the scope and type of cooperation that 
takes place within each buying alliance.  

Lastly,  another  concern  raised  by  some  stakeholders  is  the  increased  use  of 
private labels enabling retailers to compete with established brands. In principle, 
private labels provide retailers with a way to satisfy consumer demand for cost-
efficient  alternatives  to  branded  products,  while  ensuring  value  for  money  and 
quality  products.  Also,  they  are  the  expression  of  a  competitive  dynamic  which 
may  contribute  to  rationalizing  the  food  supply  chain  by  allowing  retailers  to 
enter  into  direct  procurement  and  purchasing  negotiations  with  their  suppliers 
and  participate  in  the  productive  process.  However,  when  the  extensive  use  of 
private  labels  leads  a  retailer  and  its  competing  leading  brand  supplier  to 
in-store 
coordinate 
competition  between  brands  may  be  restricted  and,  absent  a  sufficient 
competitive  pressure  from  other  retailers,  consumers  may  suffer  from  higher 
prices or reduced choice for the relevant products. 

their  respective  pricing  and  assortment  strategies, 

It  stems  from  the  above  that,  as  regards  these  practices,  no  sweeping 
generalisation can be made and a case by case analysis is necessary in order to 
establish  the  existence  of  a  possible  competitive  harm.  Competition  Authorities 
will  continue  to  ensure  a  rigorous  enforcement  of  the  rules  in  all  cases  where, 
after a careful balancing of efficiency enhancing and potentially anti-competitive 
effects, it appears that a significant harm for European consumers could result 
from these practices, be it at Community or national level. 

For this purpose, and as explained above, National Competition Authorities play 
a  key  role  in  ensuring  the  application  of  competition  rules  to  anti-competitive 
practices  affecting  both  non-processed  and  processed  food  markets.  Given  the 
national  or  regional  scope  of  such  markets,  the  Commission  considers  that  the 
European  Competition  Network  (ECN)  is  the  appropriate  forum  to  further 

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develop  an  efficient  and  coherent  policy  to  ensure  sound  competition  in  food 
markets throughout the EU. Therefore, further improvements in the cooperation 
between  Member  States  and  the  Commission  within  the  ECN  will  facilitate  the 
development  of  a  common  approach  to  relevant  competition  issues,  the  swift 
identification  of  problematic  cases  and  an  efficient  allocation  of  tasks  amongst 
the ECN members. 

In order to make the best use of the resources and competition expertise of the 
ECN, the Commission has invited National Competition Authorities to consider 
the  possibility  of  creating  where  appropriate  joint  working  teams  dedicated  to 
the  analysis  of  specific  practices  and  markets  which  may  be  critical  for  the 
functioning  of  the  food  supply  chain.  Going  beyond  the  mere  exchange  of 
information,  this  approach  would  encompass  monitoring,  advocacy  and 
enforcement  actions  geared  towards  specific  product  markets  and  coordinated 
by the Commission with a view to steering the collection of relevant information, 
identifying best practices for the prosecution of possible infringements. Through 
these  comprehensive  efforts,  the  Commission  and  National  Competition 
Authorities  should  be  able  to  better  detect  endemic  problems  specific  to  food 
markets  and  promptly  coordinate  future  actions,  so  as  to  improve  the 
functioning of the food supply chain to the benefit of European consumers. 

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