EU min­is­ters deal blow to below-cost-sell­ing cam­paign

Irish Independent - Farming - - FINANCE - DE­CLAN O’BRIEN

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.

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