Commission omits below-cost selling from trade reform plan

EFFORTS to omit below-cost-selling from European legislation which aims to counter unfair trading practices (UTPs) has been strongly criticised by ICMSA leader Pat McCormack.

Last week the EU Commission’s Competition Directorate (DG Comp) sought to dissuade MEPs from including below-cost-selling in legislation on UTPs.

DG Comp’s chief economist, Tommaso Valetti, maintained that below-cost selling and paying for shelf space were not viewed as anti-competitive, during a presentation to the European Parliament’s Agriculture Committee.

Legislative proposals on UTPs were first introduced in April this year with the aim of banning what MEPs considered the most damaging examples.

These included late payments for perishable food products, last-minute order cancellations, unilateral changes to contracts, and methods forcing the supplier to pay for wasted products.

These actions were included on a ‘blacklist’ and classed as UTPs.

However, below-cost selling, and other promotional actions went on a ‘grey list’ where agreement has to be reached by the Commission and parliament before a final ruling on their designation.

Wrangle

Commenting on the wrangle between the Agriculture Committee and DG Comp, Mr McCormack claimed that omitting below-cost-selling could “effectively undermine the whole drive to reform the supply-chain from farmer-producer to retailer”.

“In the case of food, below-cost-selling has been repeatedly shown to be a deliberate tactic whereby retailers use artificially low food prices as loss-leaders, trusting that the footfall this artificially cheap food will generate will lead to increased sales on other realistically-priced ranges,” he explained.

“Below-cost-selling is not just an unfair trading practice, it is sheer abuse of dominant corporate retailer power and it is the unfair trading practice,” said Mr McCormack.

“The idea that this would not be included in the list of UTPs is absurd because, in many respects, it is the most flagrant and ruinous method by which the corporate retailers have built up their own power and shielded their own margins while eroding the margins of everyone behind them in the food supply chain.”

The Agriculture Committee is planning to adopt its final position on the UTP legislation on October 1.

However, it could be the end of the year before the Commission and Council of Ministers agree a final position on the legislation.