Source: EURLEX
Language: en
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EUROPEAN

COMMISSION

Brussels, 31.1.2013
COM(2013) 36 final

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

**SETTING UP A EUROPEAN RETAIL ACTION PLAN**

(Text with EEA relevance)

# **EN EN**

## **TABLE OF CONTENTS**

1. INTRODUCTION ....................................................................................................... 3

2. ACHIEVING A SINGLE MARKET IN RETAIL...................................................... 4

2.1 Change in the Retail Sector.......................................................................................... 5

2.2 The Retail Sector Faces Multiple Challenges.............................................................. 5

2.3 A Retail Single Market for the Benefit of All Actors.................................................. 5

3. FIVE KEY DRIVERS FOR MORE COMPETITIVE AND SUSTAINABLE

RETAIL SERVICES.................................................................................................... 6

3.1 Consumer empowerment ............................................................................................. 7

3.1.1 Consumer Information ................................................................................................. 7

3.1.2 More Sustainable Consumer Choices .......................................................................... 8

3.2 Access to More Competitive Retail Services............................................................... 8

3.2.1 Commercial Establishment .......................................................................................... 9

3.2.2 E-commerce ............................................................................................................... 10

3.3 Developing a More Balanced Business-to-Business Food and Non-Food Supply
Chain .......................................................................................................................... 11

3.3.1 Addressing UTPs ....................................................................................................... 12

3.4 Developing a More Sustainable Retail Supply Chain................................................ 12

3.4.1 More Sustainable Production and Consumption........................................................ 12

3.4.2 Reducing Food Waste ................................................................................................ 13

3.5 Developing More Innovative Solutions ..................................................................... 13

3.5.1 Product Labelling....................................................................................................... 14

3.5.2 Electronic Payments................................................................................................... 15

3.6 Creating a Better Working Environment ................................................................... 16

3.6.1 Skills-Needs Mismatch .............................................................................................. 17

3.6.2 Informal Economy ..................................................................................................... 18

3.7 International Dimension............................................................................................. 19

4. CONCLUSION: CONTINUOUS DIALOGUE WITH THE RETAIL SECTOR .... 19

2

**1.** **INTRODUCTION**

Retail and wholesale services, also known as distributive trades, represent 11 % of the EU’s
GDP and account for almost 15 % of the EU’s total employment. More than 6 million
companies, i.e., 29% of all EU undertakings, are active in this sector. The retail sector is
characterised by a very high share of SMEs, particularly micro companies (more than 95%) [1] .
Retail and wholesale are closely linked to each other, and to other economic sectors such as
agriculture, manufacturing, IT services, energy, logistics and transport [2] . These sectors are
becoming more and more integrated, and the distinction among them is increasingly blurred,
as some retailers are now acting also as wholesalers, or even manufacturers.

The retail and wholesale sectors have an essential role to play in stimulating growth and job
creation under the Europe 2020 strategy: they are among the key sectors that can drive the
transition to both a more sustainable economy and consumption patterns. Efficiency in this
sector has implications for competition, innovation, price trends and competitiveness.

Retailers play an important role in bringing the Single Market to the EU's consumers.
However, barriers remain that hamper the creation of an efficient and competitive Single
Market in Retail. According to the Consumer Conditions Scoreboard of May 2012, the EU
Retail Single Market is “still far from being fully integrated” [3] . There are also various barriers
that hinder processes such as cross-border sourcing or market entry by retailers themselves.
Obstacles to the development of the Single Market in Retail have been identified in the
Commission’s _Retail Market Monitoring Report_ [4], the European Parliament Report _‘Towards_
_a more efficient and fair retail sector’_ _[5]_ and the workshops [6] organised by the Commission
during the preparation of this Action Plan. While the Services Directive [7] and its follow-up
measures [8] define a general strategy in the field of services, this Action Plan specifically
targets the retail and wholesale sector. It provides a roadmap towards a Single Market in
Retail.

The bottlenecks identified in the retail sector - often cutting across various policy areas - need
to be addressed through a coherent plan to enhance the sector's economic, social and
environmental performance, and to ensure that it fully contributes to the goals of the Europe
2020 Strategy. As already identified in the context of the Country Specific Recommendations

1 Source: Eurostat SBS (2010).
2 This Action Plan covers all distributive trades (Section G of the NACE Rev 2 classification: NACE),
including automotive, wholesale and retail trade. Therefore, the title "Retail Action Plan" is intended to
have a wider scope than "retail" _stricto sensu_ .
3 [http://ec.europa.eu/consumers/consumer_research/editions/docs/7th_edition_scoreboard_en.pdf](http://ec.europa.eu/consumers/consumer_research/editions/docs/7th_edition_scoreboard_en.pdf)
4 Retail market monitoring report, _‘Towards more efficient and fairer retail services in the internal_
_market for 2020’_ (COM(2010) 355 final, of 5 July 2010).
5 European Parliament resolution of 5 July 2011 on a more efficient and fairer retail market
(2010/2109(INI)).
6 Organised during the first quarter of 2012 with representatives of the main stakeholders in the retail
supply chain (summaries of the meetings are available at
[http://ec.europa.eu/internal_market/retail/index_en.htm).](http://ec.europa.eu/internal_market/retail/index_en.htm)
7 Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on
services in the internal market (OJ No L 376 of 27 December 2006, p. 36.)
8 Communication from the Commission to the European Parliament, the Council, the European and
Economic Social Committee and the Committee of the Regions on the implementation of the Services
Directive: “ _A partnership for new growth in services 2012-2015”_ (COM(2012) 261final of 8 June
2012); and Staff Working Documents (2012)146 final, 147 final and 148 final of 8 June 2012.

3

(CSRs) issued by the Council in July 2012, two major challenges exist in the EU retail sector:
(i) restrictions on establishment; and more generally, (ii) lack of competitiveness in the retail
sector, in particular in some Member States, and a need to lower barriers and reduce
operational restrictions.

This Action Plan aims at addressing the above-mentioned key obstacles to achieving a Single
Market in Retail by setting out a strategy to improve the competitiveness of the retail sector
and enhance the sector’s economic, environmental and social performance. Its strategic goals
cannot be met, however, simply by top-down measures, but will require the active
collaboration and initiative of the retail sector itself. For example, responsibility for the
investment in skills will have to be shared, and the retail sector must play an important role
here, alongside governments, individuals, and the educational sector.

European retail services present a diverse and complex picture. Hence, there is no "one size
fits all" solution or approach to the challenges they face. The diversity of the retail sector
includes differences in terms of the type of providers (SMEs or larger companies),
organisation (groups of independent retailers, cooperatives, corporations, etc.), outlet sizes,
formats, product lines, the supply chains involved, locations, business models, levels of
vertical integration, ownership structures and size of operations.

Productivity levels in the distributive trades sector need to be improved in Europe, while
preserving the quality of jobs and current levels of employment. Micro companies and SMEs
contribute a relatively large share to EU value added, which is why actions are needed that
will stimulate their productivity even further so as to bring both more growth and more jobs to
the EU. Some of the measures proposed in this Action Plan (e.g., the measure on labelling)
will help companies reallocate resources to those activities that generate real growth, thereby
boosting their productivity. This is especially true for SMEs, which often have to devote a
large proportion of their human and financial resources to information gathering, in particular
on rules applicable in other Member States. Some of the other measures proposed in this
Action Plan (e.g., the measure on electronic payments) will encourage distance sales through
the internet and thus create opportunities, in particular for SMEs, to expand their consumer
base, possibly beyond national borders. They will also help achieve the objectives defined in
the Communication "A Digital Agenda for Europe" [9] and the "E-Commerce Action Plan" [10] .

**2.** **ACHIEVING** **A** **SINGLE** **MARKET** **IN** **RETAIL**

Over the last decades, the EU Retail Sector had undergone sweeping changes, and currently
faces a number of challenges that hamper the ability of the sector to fully contribute to the
Europe 2020 goals of growth and job creation.

Therefore, it is essential to propose a strategy for achieving a well-functioning Single Market
in Retail, thereby contributing to the EU’s territorial and social cohesion - through improved
access to more sustainable and competitive retail services. Such a strategy would make a

9 Communication from the Commission to the European Parliament, the Council, the European and
Economic Social Committee and the Committee of the Regions ‘ _A Digital Agenda for Europe’_
(COM(2010) 245 final of 26 August 2010).
10 Communication from the Commission to the European Parliament, the Council, the European and
Economic Social Committee and the Committee of the Regions ‘ _A coherent framework for building_
_trust in the digital single market for e-commerce and online services_ ’ (COM(2011) 942 final of 11
January 2012 also known as the E-Commerce Action Plan).

4

substantial contribution to economic growth, and would enable retailers to deliver even
greater value to European consumers.

**2.1** **Change in the Retail Sector**

Over the past two decades, modernisation of the EU economy has resulted in many changes in
retail. Networks of outlets have emerged selling multiple product lines. Vertical integration
has enabled retailers to benefit from more efficient distribution and logistics. Large retailers
have come to enjoy significant economies of scale in the purchasing process, increasing their
bargaining power _vis-à-vis_ suppliers. Centralised purchasing has led to a gradual
internationalisation of supply, both within the EU and when buying from third countries.
Buying alliances and groups of independent SME retailers have been created to pool their
expertise and to benefit from economies of scale. Finally, the retailers’ quest to respond better
to consumer demand has led them to increase their control over the supply chain (e.g.,
through private labels) [11] .

Together, such changes have led to an increase in outlet numbers, formats and product lines,
and a relative decrease in end-consumer prices. However, increased competition and squeezed
margins have also driven many small independent shops and SME producers/suppliers out of
business. Increased pressure on working conditions has not necessarily produced only
advantages for consumers, and has sometimes even increased the EU’s environmental
footprint.

**2.2** **The Retail Sector Faces Multiple Challenges**

Currently, retailers face varied challenges depending on their size and sectors of activity. The
development of e-commerce is also putting pressure on the retail sector to reinvent its
business models. In addition, a blurring of the borderline between sectors (the scope of retail
services continues to broaden through the constant addition of new products and services,
including financial, telecommunications and travel services, utilities, etc.) means that business
models are becoming more and more multifaceted. Global phenomena, such as the
consequences of the financial crisis for consumers' purchasing power, rising commodity
prices, demographic trends, in particular the aging of the EU population, and the drive for
sustainability, all challenge existing retail business models and processes.

As explained above, the challenges in the retail sector may be different for various types of
retailers and may differ across Member States due to differences in national markets. For
example, new technologies for paying via smart phones (mobile payments) are emerging.
However, this requires setting up the necessary infrastructure for accepting these payments at
the point of sale. For large retailers, operating in more than one Member State, one of the
main challenges in this respect is the absence of pan-European standards for the acceptance of
mobile payments. Smaller retailers may not always have the necessary skills for dealing with
new technologies.

**2.3** **A Retail Single Market for the Benefit of All Actors**

Addressing the key bottlenecks in achieving the Single Market in Retail has the potential to
bring benefits to all the actors concerned, and to the environment:

− _Consumers_ : improved access to quality retail services and products, more competitive
prices and better information on quality and prices, as well as on the environmental

11 Staff Working document accompanying the Retail Market Monitoring Report (SEC(2010) 807), p. 11.

5

characteristics of products, would enhance consumer choice within both ‘bricks and
mortar’ and e-commerce retail formats.

− _Businesses_ : retailers and their suppliers, especially SMEs, would benefit tangibly from
the Single Market through the development of a more predictable legal environment,
enabling them to deliver even greater value throughout the supply chain. Similarly, by
addressing unfairness in the supply chain, upstream and downstream players would
enjoy more sustainable relationships and would be encouraged to increase both
innovation and investment. Further development of e-commerce will benefit retailers by
providing them with more opportunities to find new markets.

− _Employees_ : the retail sector should benefit from more qualified staff and improved
working conditions, leading to higher job satisfaction. Improving employee training
would also help provide better job opportunities, especially for the young and less
qualified.

These varied issues cannot be addressed in isolation. The policy actions proposed must strike
the right balance between economic freedoms and public-interest objectives. To achieve these
goals, this Communication sets out a European Retail Action Plan based on 11 concrete
actions, forming a coherent, holistic European strategy [12] .

In addition, the Commission will set up a permanent _**Group on Retail Competitiveness**_
involving Member States and all relevant stakeholders, especially SMEs, to help trigger a
_‘retail reflex’_ in the political agenda, increasing awareness of retail issues and concerns. This
Group will help develop further specific objectives for the areas identified, monitor progress
achieved, issue recommendations to ensure full implementation of the actions included in this
Plan and, where necessary, will advise the Commission on additional new actions that could
be proposed.

**3.** **FIVE** **KEY** **DRIVERS** **FOR** **MORE** **COMPETITIVE** **AND**

**SUSTAINABLE** **RETAIL** **SERVICES**

The Commission has identified the following five key priorities:

(1) _Consumer empowerment_    - through, _inter alia_, more transparent, more reliable
and more directly comparable information on the price and quality of products.

(2) _Improved access to more sustainable and competitive retail services_    - both
‘bricks and mortar’ and e-commerce retail could benefit from improved market
access, in particular through clearer and more transparent establishment rules.

(3) _Fairer and more sustainable trading relationships along the retail supply_
_chain_       - stakeholders would benefit from a framework effectively tackling
unfair trading practices.

(4) _More innovative solutions_    - stakeholders would benefit if research results were
brought more rapidly to market.

12 The proposed approach is in line with the principles announced in the Communication from the
Commission to the European Parliament, the Council, the European and Economic Social Committee
and the Committee of the Regions “ _EU Regulatory Fitness_ ” (COM (2012) 746 final of 12 December
2012). In this context the Commission is committed to reviewing existing legislation in the retail sector
with a view to identify the potential for simplifying rules and reducing regulatory costs for business and
citizens without compromising public policy objectives.

6

(5) _Better working environment_    - both employees and employers will benefit from
creating better working conditions and addressing mismatches between skills
required and those available.

**3.1** **Consumer empowerment**

The European Consumer Agenda [13] emphasised that empowering consumers in an integrated
Single Market requires a robust set of principles and tools. Such a framework ensures a proper
enforcement of consumer rights, as well as access to effective redress, reliable and meaningful
information and improved consumer education.

Empowered consumers can make better purchasing decisions. They search for information
and make use of it. They also know and use their rights. More knowledgeable and involved
consumers are not only more capable of finding the _‘best value for money’,_ but are also more
interested in sustainable and ethical consumption. Consumer choices and preferences are
among the key factors driving the development of the retail sector. Retailers are wellpositioned to inform consumer purchasing decisions positively: through day-to-day contact
with their clients and the influence they have on other actors in the supply chain, retailers can
inform consumers of products that are of higher quality, ethically produced, or which are
distinguished by their better environmental and/or social performance.

By improving transparency for consumers, the retail sector has the potential to create a true
Single Market in Retail. Giving consumers easier access to reliable, relevant and meaningful
information about the variety of offers available across the EU will enable them to take full
advantage of the Single Market. Facilitating the comparison of offers would help consumers
choose the products and services that best fit their needs, thus promoting healthy competition.
In combination with other measures that can address the persistent cases of fragmentation of
the EU market, this should contribute to EU-wide price convergence. Actions to improve the
transparency and reliability of information for consumers would be especially beneficial if
implemented at EU level, given that strictly national measures, however well-designed, would
fail to capture the benefits that could be derived from a truly integrated Single Market.

_3.1.1 Consumer Information_

According to existing research, a majority of Europeans who use the Internet search for
information in order to compare price or quality, before buying goods on- or off-line. Faced
with an information overload, they often turn to intermediaries, such as online comparison
tools, that can help them identify the best offers available. Although this type of websites can
help consumers compare offers, the practices of such information intermediaries also show
significant shortcomings [14] . To really be of benefit to consumers, comparison tools should be
relevant to their needs, as well as transparent, reliable and comprehensive and easilyaccessible. The inclusion of cross-border offers by comparison websites is important for
consumers to be able to take full advantage of the Single Market.

13 Communication from the Commission to the European Parliament, the Council, the European and
Economic Social Committee and the Committee of the Regions “ _A European Consumer Agenda -_
_Boosting confidence and growth_ ” (COM(2012) 225 final of 22 May 2012).
14 Consumer market study on the functioning of e-commerce and internet market and selling techniques in
the retail of goods, CIVIC consulting, 2011:
[http://ec.europa.eu/consumers/consumer_research/market_studies/e_commerce_study_en.htm](http://ec.europa.eu/consumers/consumer_research/market_studies/e_commerce_study_en.htm)

7

Moreover, better consumer information entails not only raising consumer awareness so as to
support their ability to uphold their rights, but also raising businesses' awareness of their
obligations stemming from consumer legislation applicable across the Single Market.

As indicated in the European Consumer Agenda and the E-Commerce Action Plan, the
Commission will work with intermediaries and traders with a view to developing codes of
good conduct, good practice guidelines, and/or other tools for price comparison, as most
appropriate.

In addition, as part of the Digital Agenda, the Code of EU online rights compiles legal
consumer rights set in EU legislation related to the digital environment in a transparent and
comprehensive way. The Code is an important tool for inspiring trust and confidence among
consumers and contributes to greater use of online services [15] .

_3.1.2 More Sustainable Consumer Choices_

The environmental performance of organisations and products is currently measured and
communicated using a range of channels and formats, under different private and public
initiatives, with different levels of ambition, and using different assessment methodologies.
This leads to a diverse landscape of labels, claims and reporting schemes. Introducing
harmonised European methodologies will bring more transparency for consumers. While
developing such methodologies, the Commission will ensure that a level playing field exists
for businesses and that costs are kept to a minimum, especially for SMEs.

**3.2** **Access to More Competitive Retail Services**

The accessibility of retail services has substantially increased in recent years, in terms of both
location and availability. The development of e-commerce has become an integral part of
retailers’ business models, increasing the range of products/services available and facilitating
price comparison. Nevertheless, a number of issues remain to be addressed to boost
competition in retail services.

The need to eliminate existing barriers to establishment, and more generally to strengthen
competition in the retail sector, was one of the main CSRs arising from the 2012 European
Semester whose goal was to bring more growth and more jobs to Europe. Introducing procompetitive measures, in particular those linked to e-commerce, would help strengthen the
Single Market, especially for SMEs. Moreover, according to some recent estimates [16], the
economic impact of the Services Directive could lead to an increase of up to 2.6% in the EU's
GDP if fully implemented. Given that the retail and wholesale sectors represent a quarter of

15 [https://ec.europa.eu/digital-agenda/en/code-eu-online-rights](https://ec.europa.eu/digital-agenda/en/code-eu-online-rights)
16 [http://ec.europa.eu/economy_finance/publications/economic_paper/2012/ecp456_en.htm](http://ec.europa.eu/economy_finance/publications/economic_paper/2012/ecp456_en.htm)

8

the value added of all sectors covered by the Services Directive, the impact of eliminating the
remaining barriers in these sectors should be significant.

_3.2.1 Commercial Establishment_

Competition between retailers can be boosted by facilitating market entry. Selecting the right
location for retail development and the timely start of operations are decisive for business
success. Execution depends not only on the availability of suitable real estate, but also on the
existence of commercial and spatial planning rules and procedures that do not inappropriately
hamper competition.

The responsibility to ensure balanced and sustainable territorial development lies primarily
with Member States. Their action may lead to restrictions on the location or the range of
products/services retailers can offer. Such restrictions have a major impact on: (i) territorial
organisation (e.g., traffic and transport infrastructure); (ii) the scope businesses enjoy to open
and operate shops; (iii) retailers’ formats; and (iv) consumer choice. As recognised by the
Court of Justice of the European Union, restrictions on the freedom of commercial
establishment may be justified by overriding reasons in the public interest, such as
environmental protection, town and country planning and consumer protection, provided that
they are appropriate and proportionate [17] .

It is therefore important to ensure, on the one hand, respect of the freedom of establishment
and avoiding distortion of competition, and, on the other hand, respect for other relevant
objectives and interests enshrined in the EU’s general policies. There is a need for a balanced
approach which can take into account, _inter alia_, planning for sustainable development, for
territorial cohesion, and for a high quality of both urban and rural life, as well as minimising
environmental impacts [18] .

The Services Directive, which applies in this field, also contains a number of unequivocal
obligations for Member States. One of these is the obligation to eliminate requirements
prohibited by the Services Directive, such as economic tests which make the granting of an
authorisation to carry out a service activity subject to proof of the existence of an economic
need or market demand, an assessment of the potential or current economic effects of the
activity, or an assessment of the appropriateness of the activity in relation to the economic
planning objectives set by the competent authority. In the Communication on the
implementation of the Services Directive [19], the Commission has announced a zero-tolerance
policy to eliminate the remaining cases of non-compliance with unequivocal obligations such
as the one to remove economic tests that still apply in some Member States despite being
forbidden by the Services Directive. The zero-tolerance policy does not, however, concern
those planning requirements that serve overriding reasons relating to the public interest [20] .

Therefore, taking into account certain important EU objectives such as territorial cohesion and
environmental protection, efforts should be made to identify and disseminate good practices

17 CJEU judgment C-400/08, _Commission v/ Spain_ of 24 March 2011.
18 To assess the appropriateness of environmental measures, various tools will be used, including the
Strategic Environmental Assessment (SEA) Directive (Directive 2001/42/EC). In addition, for concrete
projects such as the construction of shopping centres and car parks, a 'screening' under Article 4(2) of
the Environmental Impact Assessment (EIA) Directive (Directive 2011/92/EU) has to be carried out, on
the basis of which it will be decided if a full EIA procedure is necessary.
19 COM(2012) 261 final.
20 Staff Working Document to the Communication on the implementation of the Services Directive
(SWD(2012)148 final of 8 June 2012).

9

of commercial planning that can ensure the successful marriage of a competitive retail sector
with fair and sustainable development of cities, towns and rural areas across the European
Union.

_3.2.2 E-commerce_

The significant spread of e-commerce has led to enhanced competition between traditional
retailers and on-line distribution channels, and is generating fresh opportunities that can
unleash significant growth potential. However, e-commerce currently represents only 5% of
total EU retail sales [21], and only 10% of EU citizens have shopped online in another Member
State, while 39% do so in their own Member State [22] . These numbers demonstrate the vast
unexplored potential of the digital economy. Adapting to these new realities by developing
multichannel strategies would pave the way for SMEs to tap the potential for growth linked to
the on-line channel. Indeed, SMEs that make substantial use of Internet technologies grow
and export twice as much as others. They also create twice as many jobs [23] . For example, 97%
of eBay "commercial sellers", including 94% of the smallest 10% of "commercial sellers",
sell goods abroad [24] . This shows that, with limited investment, SMEs can use an on-line
platform to reach foreign markets and develop a potentially significant cross-border activity.
In this changing environment, the Commission will follow developments closely in both the
on- and off-line retail markets, examine their respective roles in modern retailing, and shape
its possible actions so as to respond positively to this dynamism.

In this context, it is important to verify that new legislative proposals would have no
detrimental impact on either traditional retail or e-commerce, especially as regards crossborder sales. Careful reflection is therefore needed when contemplating any new legislative
proposal. The Commission will pro-actively examine these issues in preparatory work on all
such new proposals.

21 Source: Eurostat, ICT usage and e-commerce in enterprises, 2011.
22 Source: Eurostat, ICT usage in households and by individuals, 2011.
23 Internet Matters, the net's sweeping impact on growth, jobs, and prosperity, McKinsey Global institute,
May 2011.
24 Source: EBay study, "Enabling traders to enter and grow on the global stage", June 2012.

10

**3.3** **Developing a More Balanced Business-to-Business Food and Non-Food**
**Supply Chain**

Unfair Trading Practices (UTPs) are practices and terms that grossly deviate from good
commercial conduct and which are contrary to good faith and fair dealing in business-tobusiness (B2B) relationships. The B2B retail food and non-food supply chain is the chain of
transactions between undertakings or between undertakings and public authorities that leads
to the delivery of goods destined mainly to the general public for personal or household
consumption or utilisation. It is composed of a number of actors
(producers/processors/distributors). A well-functioning B2B food and non-food supply chain
is key to achieve the maximum economic potential of those sub-sectors. UTPs are typically
imposed in a situation of imbalance of power by a stronger party on a weaker one.

Fairness in B2B relationships ensures the proper functioning of the B2B food and non-food
supply chain. It is alleged that UTPs' negative impact may affect the capacity of companies,
especially SMEs, to invest and innovate. An example of a UTP could be the case of practices
enabling retailers to transfer back to suppliers part of the risk involved in retailing. This may
be applied in case of low sales, sales discounts, season-end inventory, etc. Further example of
a UTP could be the case where territorial supply constraints imposed by certain multi-national
suppliers impede retailers from sourcing identical goods cross-border from a central location
from where they could be distributed to other Member States. Such constraints segment the
market and can result in significant wholesale price differences between countries.
Addressing these issues would diminish such differences and help retailers bring the benefits
of the Single Market to consumers.

Different approaches exist to address UTPs at national level. Where UTPs are addressed,
national (regulatory or self-regulatory) rules usually differ from one Member State to another.
In Member States where no specific frameworks on UTPs exist, the reasoning usually
provided is that general competition law is sufficiently effective to address the issue or that
there is a certain reluctance to interfere with the contractual freedom of the parties, especially
in the absence of a breach of competition rules.

In the food sector, the work of the High Level Forum for a Better Functioning Food Supply
Chain represented a concerted effort by stakeholders to bring forward a self-regulatory
solution to this problem. The Expert Platform on B2B Contractual Practices has delivered a
set of principles of fair practices in vertical relations in the food supply chain signed by eleven
organisations representing different interests across the European food supply chain [25] and has
been working on an enforcement mechanism. Despite common efforts, the proposed
framework did not gain the support of representatives from across the entire supply chain and
failed to identify effective remedies for non-compliance. Work is on-going to find a
compromise through this sector-specific approach, and the Commission will continue to
monitor the specific developments in the food supply chain.

In order to ensure that effective solutions can be found, the issue of UTPs in relationships
throughout the B2B supply chain should be approached through a broader perspective.
Evolution in the retail sector, in particular "mixed" formats, means that UTPs may occur in
other sectors of the B2B food and non-food supply chain.

25 AIM, CEJA, CELCAA, CLITRAVI, Copa-Cogeca, ERRT, EuroCommerce, EuroCoop,
FoodDrinkEurope, UEAPME and UGAL.

11

_3.3.1 Addressing UTPs_

As a part of this Action Plan, the Commission is adopting in parallel a Green Paper on UTPs
in the B2B food and non-food supply chain. The Green Paper will open a consultation on this
topic, the results of which are expected to be available by late spring 2013. Based on the
results of the consultation, the Commission will consider appropriate next steps in 2013.

**3.4** **Developing a More Sustainable Retail Supply Chain**

Optimising the environmental performance of the EU's retail and wholesale sector (e.g., by
reducing food-related waste and unnecessary packaging, and by promoting sustainable
sourcing) could result in an increased standard of living and better quality of life in the EU,
while at the same time saving resources and supporting innovative SMEs which promote
environmentally friendly activities.

_3.4.1 More Sustainable Production and Consumption_

Retailers are in a pivotal position to promote more sustainable consumption patterns, not only
through their daily contact with millions of European consumers, but also through their own
actions and their partnerships with suppliers. Research results [26] illustrate that it is crucial that
retailers strive to offer product ranges that are more sustainable and environmentally-friendly
and thus move towards greener supply chains [27] . Some retailers have already developed such
strategies, and have successfully implemented them as part of their daily business practices.

Retailers have an important role in guiding consumers to make more sustainable choices and
in tackling confusion generated by multiple green-labels and claims, by promoting clear and
comparable product environmental footprinting [28] and awareness of the EU Eco-label.

Another key question is the issue of energy savings. The potential for food retailers to
improve their energy efficiency is especially big. The most important measures would be

26 E.g., the EU EMAS Sectoral Reference Document on Best Environmental Management Practices
(BEMPs) in the Retail Trade Sector.
27 JRC/IPTS Pilot Reference Document on Best Environmental Management Practice in the Retail Trade
Sector (2011), [http://susproc.jrc.ec.europa.eu/activities/emas/documents/RetailTradeSector.pdf](http://susproc.jrc.ec.europa.eu/activities/emas/documents/RetailTradeSector.pdf) and
JRC/IPTS (Styles et al), Environmental Improvement of Product Supply Chains: A Review of European
Retailer' Performance, Resources, Conservation and Recycling 65 (2012) 57-78, and, Environmental
Improvement of Product Supply Chains: Proposed Best Practice Techniques, Quantitative Indicators
and Benchmarks of Excellence for Retailers, Journal of Environmental Management 110 (2012) 135150.
28 As announced in the Single Market Act, the Commission will adopt a Communication on the Single
Market for Green Products in 2013 including harmonised criteria and methodologies for environmental
footprinting for certain product categories.

12

covering display cases, and recovering refrigeration heat waste in order to use it for space
heating, as well as using natural refrigerants [29] .

_3.4.2 Reducing Food Waste_

Building awareness and helping consumers fight food waste are vital to achieving sustainable
patterns of consumer choices. Such waste stems mainly from: (i) supply-chain inefficiencies;
(ii) stock-management inefficiencies; (iii) marketing strategies; and (iv) marketing standards
(product rejection due to packaging issues, where neither food quality nor safety is affected).
To address this pressing issue, the Commission is assessing how best to limit food waste
throughout the food supply chain in order to achieve the milestone of reducing by 50% edible
food waste by 2020 set in the Resource Efficiency Roadmap.

The role of retailers as intermediaries is crucial for food-waste reduction. The Retail Forum
for Sustainability [30] is a multi-stakeholder platform set up in order to exchange best practices
on sustainability in the EU retail sector and to identify opportunities and barriers that may
further or hinder the achievement of sustainable consumption and production. It was set up
following the Sustainable Consumption and Production and Sustainable Industrial Policy
Action Plan [31] and it is already tackling key environmental issues, including food waste
through common voluntary action [32] .

**3.5** **Developing More Innovative Solutions**

Innovation is one the most crucial factors in ensuring economic growth. Retailers are major
drivers of innovation. They closely follow consumer trends, which they also help to form, and
they pass this information on to suppliers. They act as _‘innovation multipliers’_ that rapidly
adopt and deploy novel technologies throughout the supply chain. Retailers are early adopters
of new technologies, bringing innovation and added value to the whole of the retail chain. In

29 JRC/IPTS Pilot Reference Document on Best Environmental Management Practice in the Retail Trade
Sector for a description of techniques to explore the Retail Sector's significant energy-saving potential.
30 [http://ec.europa.eu/environment/industry/retail/index_en.htm](http://ec.europa.eu/environment/industry/retail/index_en.htm)
31 Communication from the Commission to the European Parliament, the Council, the European and
Economic Social Committee and the Committee of the Regions “ _on the Sustainable Consumption and_
_Production and Sustainable Industrial Policy Action Plan_ (COM (2008) 397 final of 16 July 2008).
32 The Retail Agreement on Waste (http://ec.europa.eu/environment/industry/retail/event_2012/pdf/retailagreement-on-waste.pdf) was signed in October 2012 at the Retail Forum annual event by 19 retail
companies and associations that committed to implement at least two awareness-raising initiatives on
waste reduction by mid-2014.

13

the logistics sector, for example, intelligent retailers’ warehouses allow heavy loads to be
moved effortlessly and faster than they can be manually, and therefore more efficiently, thus
reducing the risk of occupational accidents, while increasing productivity. Some retailers have
also developed dedicated facilities allowing the pick-up and delivery of goods ordered online, contributing to a more sustainable supply chain.

However, many EU retailers have not reinvented themselves fast enough to reap the full
potential of new technologies. This may be partially due to the specific features of retail
services (e.g., easily copied, always customer-driven, often non-technological and serviceoriented). Nevertheless, in an international context, most players in the United States can be
seen to have invested heavily in retail innovation.

Adequate mechanisms should, therefore, be put in place to improve retailers’ involvement in
the Innovation Union flagship initiative that provides for a comprehensive innovation strategy
from research to retail [33] . Innovative technological solutions should be explored to help
overcome the fragmentation of markets due to divergent regulatory regimes between Member
States, and to relax burdensome and costly mandatory rules. Bringing research results and
ideas to the market faster through better involvement of retailers in this process would also
help boost productivity levels in the retail sector.

Achieving a level playing field for actors in the area of innovation could help promote even
closer integration of the Single Market, while at the same time promoting the best practices
coming from SME innovators. Most SMEs have a great capacity for innovation regardless of
whether they are young high-tech companies or traditional craft enterprises, whether they are
mainly active in local markets or have customers world-wide. More than a quarter (27%) of
SMEs pursuing innovation activities in the EU introduced new or improved products to the
market in 2008 alone [34] .

In the retail sector, SMEs perform a very important role in ensuring the availability (in terms
of space, time and range) of products and services for consumers. Since retail is a consumer
oriented sector, SMEs' in-depth market knowledge allows them to rapidly identify where new
technologies can help meet consumer demand. Moreover, due to their organisational
flexibility, SMEs are able easily to develop new products and services, or modify existing
ones, so that they best meet consumer needs.

_3.5.1 Product Labelling_

Different mandatory labelling requirements can hinder operators from freely sourcing across
the EU when looking for a better price. The existing EU regulatory regime on labelling of
foodstuffs [35 ] harmonises mandatory food information. However, it also allows for the
introduction of additional mandatory labelling requirements at national level on certain
specific grounds. Thus, even though the rules applied in the Member States are similar, in
some cases product marketing requires country-by-country compliance assessment. The
resulting legal complexity can hamper cross-border sourcing, and make it difficult to reap the
benefits of economies of scale.

33 Communication from the Commission to the European Parliament, the Council, the European and
Economic Social Committee and the Committee of the Regions “ _Europe 2020 Flagship Initiative_
_Innovation Union_ ” (COM (2010) 546 final of 6 October 2010).
34 Innovation Union Competitiveness Report (2011); [http://ec.europa.eu/research/innovation-](http://ec.europa.eu/research/innovation-union/index_en.cfm?section=competitiveness-report&year=2011)
[union/index_en.cfm?section=competitiveness-report&year=2011](http://ec.europa.eu/research/innovation-union/index_en.cfm?section=competitiveness-report&year=2011)
35 Directive 2000/13/EC harmonises general provisions on labelling of foodstuffs; to be replaced by
Regulation 1169/2011 as of 13 December 2014.

14

Increased transparency in this area would bring benefits to all stakeholders. A feasibility study
for a pilot database bringing together both EU and national labelling requirements in the food
sector will be launched, in order to make information on labelling rules accessible to all.
Innovative technological solutions can be explored (e.g., using bar-code scanners in shops to
provide the required information _in lieu_ of traditional labels), that could provide cost-efficient,
consumer-oriented solutions.

_3.5.2 Electronic Payments_

According to a recent study published by the European Central Bank [36], the costs to society of
providing retail payment services are substantial. On average, they amount to 1% of GDP, or
some €130 billion for 2009. Around half of these social costs are incurred by banks and
payment infrastructures, while 46% are borne by retailers. Social costs exclude fees paid to
other market actors in the payment service transaction chain. If such fees are included, the
total cost of payments for retailers is even higher than for banks and infrastructures. Hence,
payments represent a significant component of the cost of doing business for EU merchants.

Electronic payments offer important opportunities in this field. The market for retail payments
is dynamic and has seen significant developments with the emergence of e-commerce. While
banks and card schemes are still dominant in retail payments, other payment methods have
emerged, such as non-card-based internet and mobile payments, driven by the growing
penetration of smartphones, and show strong future growth potential [37] .

The Commission Green Paper on card, internet and mobile payments [38] strives to promote an
integrated European market in these areas for the benefit of consumers and merchants. The
benefits stemming from greater integration include:

−
More competition between payment providers, and a level playing field between
incumbents and new players.

−
More choice and transparency in payment services for consumers and merchants.

−
More innovation in payment services, and enhanced security supporting the
development of e- commerce.

The Green Paper and the ensuing stakeholder consultations identified a number of possible
hurdles for the market integration of card, internet and mobile payments. These include:

−
Restricted market access for new, card- or non-card-based, payment service providers;
(e.g., access to information on payment accounts by third-party providers, or access to
clearing and settlement systems for new payment providers).

−
Strongly varying (between Member States) and possibly excessive levels of multi-lateral
interchange fees (MIFs) for card payments. Such fees represent the major share of the
fees being charged by acquirers to merchants for accepting card payments.

−
Obstacles that prevent merchants from benefitting from cross-border or centralised
acquisition of card payments.

36 "The social and private costs of retail payment instruments: a European perspective", Occasional Paper
Series, ECB, No. 137, Frankfurt, September 2012.
37 Report of the Working Group on Innovations in Retail Payments — Bank for International Settlements,
May 2012.
38 Green Paper _"Towards an integrated European market for card, internet and mobile payments",_
(COM(2011) 941 final of 11 January 2011) _._

15

−
Standardisation and inter-operability gaps for the provision of card, internet and mobile
payments, and resulting disincentives for merchants to invest in the necessary
infrastructure, such as payment terminals;

Some of the measures addressing these issues could be introduced through the revision of the
Payment Services Directive [39] and the introduction of an enhanced governance model for retail
payments in the EU. The Commission has also announced a legislative proposal on MIFs in
its Communication on the Single Market Act II [40] .

**3.6** **Creating a Better Working Environment**

The fluidity of the job market is extremely important in enabling the retail sector to provide
access to jobs for young, unqualified and/or seasonal workers (32 % of all retail employees
are unskilled or semi-skilled, compared to an average of 27 % in the workforce as a whole).
Retail services act often as a starting point for those who are entering or re-entering the job
market (15 % of all workers in the retail sector are under 24-years old, compared to an
average of 9 %; 30 % of retail-sector employees work part-time, compared to an average of
20 %) [41] .

Given the significant labour force employed in the retail sector, the sector should fully benefit
from facilitated mobility for workers, so that skills can be employed where they are most

39 Directive 2007/64/EC of 13 November 2007 on payment services in the internal market amending
Directives 97/7/EC, 2002/65/EC, 2005/60/EC and 2006/48/EC and repealing Directive 97/5/EC (OJ No
L 319, of 5 December 2007, p. 1).
40 Communication from the Commission to the European Parliament, the Council, the European and
Economic Social Committee and the Committee of the Regions _"Single Market Act II -Together for new_
_growth"_, (COM(2012) 573 final of 3 October 2012).
41 _Structural features of distributive trades and their impact on prices in the euro area_, ECB, Occasional
Paper, No 128, September 2011.

16

relevant. This is essential to maximise the contribution of the sector to EU growth. The
measures proposed will help make better use of available skills, especially for SMEs, given
the high share of self-employed in the sector.

_3.6.1 Skills-Needs Mismatch_

Existing mismatches between labour force skills and the needs of the retail sector pose
significant challenges for the optimal functioning of the sector. To address this shortcoming,
the current and future workforce needs to have the right skills portfolio, which will require an
accurate _ex-ante_ analysis of skill needs. Identification of the skills needs and mismatches are
particularly relevant to enhancing the employability of young people entering the labour
market, the long-term unemployed, older workers, immigrants and the disabled. In addition,
on-going innovation and the resulting increase in levels of automation in the retail sector
would require workers to update their skill sets frequently in order to adapt to changing work
and tasks.

To achieve the above aims, public investment alone will not be sufficient. Responsibility for
the investment in skills will have to be shared, and the retail sector must play a greater role
alongside governments, individuals, and the educational sector. Even in the current situation,
where the focus is on controlling budgetary expenditures, reducing investment in education
and training should not be an option. On the contrary, substantial and smart investment in
skills development will not only secure the best "value for money", but will also help reap the
benefits of people's potential. As underlined in the Communication “Rethinking Education” [42],
in order to ensure an adequately and appropriately skilled workforce, efforts to modernise
education and training systems will have to be multiplied. Retail sector enterprises should
play an important role in shaping the new curricula, developing training and apprenticeship
programmes, and cooperating closely with education systems to identify the areas on which to
focus, such as increasing environmental skills amongst employees, or achieving better
supplier relations. Enhancing school-business partnerships, including dual training systems
for apprentices supported by the European Alliance for Apprenticeships [43], and introducing
different forms of traineeships and scholarships, can be useful for both parties: businesses in
the retail sector can thus ensure that they have access to a well-trained workforce with the
right skills, while schools can attract more students if their curriculum provides a diploma that
has a higher value on the labour market. In addition, at EU level, sector specific instruments
have been recently developed and tested to support stronger and more structured partnerships
between skills providers and businesses. One of them, the Sector Skills Alliances [44] proposed
under the new Erasmus for All Programme [45], might be particularly fitted to address the
specific needs of the retail sector. Regeneration projects are good examples of how retailers
can work together with local authorities to tackle long-term unemployment.

42 Communication from the Commission to the European Parliament, the Council, the European and
Economic Social Committee and the Committee of the Regions “ _Rethinking Education: Investing in_
_skills for better socio-economic outcomes_ ” (COM (2012) 669 final of 20 November 2012).
43 Communication from the Commission to the European Parliament, the Council, the European and
Economic Social Committee and the Committee of the Regions “ _Moving Youth into Employment”_
(COM (2012) 727 final of 5 December 2012)
44 http://ec.europa.eu/education/news/20120425_en.htm
45 Communication from the Commission to the European Parliament, the Council, the European and
Economic Social Committee and the Committee of the Regions “ _ERASMUS FOR ALL: The EU_
_Programme for Education, Training, Youth and Sport”_ (COM(2011) 787 final of 23 November 2011).

17

Skills mismatches vary widely across sectors and across the EU, and also differ in their
duration. In order to reduce the skills gap faced by companies and jobseekers all stakeholders,
including companies and social partners in the retail sector, should get involved in defining
the qualitative and quantitative skills needs of the sector in the short, medium and long term.

The launch in 2012 of a European Sectoral Skills Council for the commerce sector – covering
retail and wholesale – is expected to play a crucial role in building up sector skills intelligence
together with national skills councils in this sector. Feeding into the recently launched EU
Skills Panorama [46] the work of these skills councils will contribute to anticipate and prevent
gaps and mismatches by providing stakeholders with information on the evolution of skills
needs and employment. Better anticipation will allow Member States companies, as well as
individuals, to make better-informed choices and investments.

_3.6.2 Informal Economy_

Undeclared work is an important issue in the retail sector. Workers in the informal economy [47]
are excluded from existing health coverage and social benefits. This entails high social risks,
and low income and social protection, for these workers. Moreover, the existence of an
informal economy leads to budget revenue losses through reducing taxes and social security
contributions paid. Therefore, it adds a higher tax burden on registered labour and affects the
competitiveness of Member States.

The Commission will engage all interested parties in a dialogue to assess the impact of the
informal economy on working conditions and to determine how to design an EU approach to
fight it [48] .

The Commission services will work together to ensure that the particularities of the retail
sector are taken into account when implementing any action designed to combat the informal

economy.

**3.7** **International Dimension**

International trade barriers in retail (to establishment and other supply modes, such as
restrictions on franchising and e-commerce) constitute a major constraint on growth and jobs
creation. Currently, as many as 36 million jobs in the EU depend, directly or indirectly, on

46 http://euskillspanorama.ec.europa.eu/
47 Activities and income falling fully or partially outside government regulation and taxation.
48 In particular the 2013 Commission Work Programme mentions the establishment of a "European
platform to fight undeclared work". This platform will aim to cover all the key areas influenced by
undeclared work and to support a more effective fight against undeclared work by way of improving
cooperation, sharing best practice and identifying common principles. This initiative was announced in
the Communication from the Commission to the European Parliament, the Council, the European and
Economic Social Committee and the Committee of the Regions " _Towards a job-rich recovery_ "
(COM(2012)173 final of 18 April 2012also known as the "Employment Package").

18

trade. Accessing third-country markets opens important channels for European actors,
especially SMEs, allowing them to tap into the growth of those markets. Retail access to
third-country markets has a significant growth-multiplication potential for the EU economy.
European retailers can play an important role as export drivers by supplying EUmanufactured products to third countries, paving the way to SMEs' access to markets outside
the EU. It is accordingly proposed to set up, in close dialogue with the retail sector, an EU
strategy to open up international trade and address existing barriers, in particular by means of:

−
Better gathering of information on third-country trade barriers to retail, in order to help
the relevant Commission services monitor the implementation of existing Free Trade
Agreements and prepare future negotiations; and,

−
Improving the SME Helpdesk [49], as well as the Export Helpdesk and the Market Access
databases, in order to extend their respective scopes to cover services.

**4.** **CONCLUSION:** **CONTINUOUS** **DIALOGUE** **WITH** **THE** **RETAIL**

**SECTOR**

Given the potential for growth and employment that retail services can contribute to the EU
economy as a whole, there is a need for a coherent and holistic strategy addressing the
bottlenecks which currently hamper their full development.

Enabling access to more competitive and sustainable retail services, empowering consumers
to make better informed choices about the products they wish to purchase, developing a more
balanced retail supply chain, supporting innovative solutions, bringing research results to the
market faster, and creating a better working environment in retail will all contribute to this
goal.

The 11 concrete actions [50] set out in this Action Plan should be implemented by 2014 in order
to achieve a Single Market in Retail. It is essential that this Action Plan be executed in
parallel with other initiatives, in particular those concerning the full implementation of the
Services Directive, the E-Commerce Action Plan, and the on-going initiatives in the payments
field.

The Commission will monitor developments and report on the progress in implementing this
Action Plan by issuing a report in 2015. This monitoring will be done on the basis of the ongoing discussions within the EU institutions, with Member States, and with representatives of
the retail sector and other relevant stakeholders through the Group on Retail Competitiveness.

49 A specific facility operated by the Commission to address traders’ concerns and enquiries by improving
its targeted approach towards SMEs.
50 All actions proposed to be taken up by the Commission in this document are consistent and compatible
with the current Multiannual Financial Framework (2007-2013) and with the proposal for the new
Multiannual Financial Framework 2014-2020.

19