EU ministers deal blow to below-cost-selling campaign

THE DRIVE to include below-cost-selling in EU legislation which aims to counter unfair trading practices (UTPs) received a serious blow last week when the Council of Ministers came out against the move.

The European Parliament has sought to include below-cost-selling among a number of UTPs which it wants banned.

Other actions which MEPs have identified as UTPs include late payments for perishable food products, last-minute order cancellations, unilateral changes to contracts, and measures that force suppliers to pay for wasted products. However, the EU Commission’s Competition Directorate (DG Comp) is opposed to the inclusion of below-cost-selling in the legislation, claiming that the practice is not viewed as anti-competitive.

The Council of Ministers’ decision to support DG Comp’s position is a serious setback for efforts to prohibit below-cost-selling.

‘Abuse’

The practice is regularly employed by supermarkets, where milk, bread and vegetables are used as ‘loss leaders’ to drive footfall in stores. However, these promotions invariably drive down supplier prices and, ultimately, returns to farmers.

ICMSA president Pat McCormack has described below-cost-selling as “sheer abuse” of the dominant position of retailers in the supply chain.

“The idea that this [below-costselling] 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,” said Mr McCormack.