Retail concentration and buyer power in the food supply chain
(2018) LAGM01 20181Faculty of Law
Department of Law
- Abstract
- Recently, the food supply chain and especially the grocery retail sector has been subject to a significant change in relationship structure. The retail sector has become increasingly concentrated. Many factors have contributed to this development, including changes in consumer preferences, the facilitation of cross-border trade, administrative requirements and local zoning laws and the popularity of private label products. Retailers have gained significant bargaining power from this change and can now dictate the terms of trade. Many competition authorities across Europe have gathered evidence of retailer-driven, potentially anti-competitive practises, including unfair contractual terms and transfer of risk. In addition to undermining the... (More)
- Recently, the food supply chain and especially the grocery retail sector has been subject to a significant change in relationship structure. The retail sector has become increasingly concentrated. Many factors have contributed to this development, including changes in consumer preferences, the facilitation of cross-border trade, administrative requirements and local zoning laws and the popularity of private label products. Retailers have gained significant bargaining power from this change and can now dictate the terms of trade. Many competition authorities across Europe have gathered evidence of retailer-driven, potentially anti-competitive practises, including unfair contractual terms and transfer of risk. In addition to undermining the viability of the suppliers, this creates a risk for the so-called 'waterbed effect', which affects the smaller retailers. Whilst the lower price that the retailers are able to extract is beneficial to consumers in the short term, the long-term effects of this development are uncertain. Considering that the protection of the competitive process and structure of the market are objectives of the EU competition law, the practices in the food supply chain could be subject to competition law enforcement. Since most of the practices are conducted by the retailers unilaterally, the application of Art. 102 would be relevant. However, the threshold for dominance is rarely reached by the retailers. Even if the practices are potentially abusive, the fact that the market shares on the total market do not reach the levels of dominance established in case-law hinders the application of competition law. Alternative solutions have been developed; The voluntary Supply Chain initiative has been signed by many but has not had the anticipated effect. Finland has opted for a fixed, relatively low threshold for dominance, while the German rules rely on the concept of economic dependence. (Less)
- Abstract (Swedish)
- Under den senaste tiden, har försörjningskedjan för livsmedel genomgått stora förändringar när det gäller strukturen av marknaden. Många faktorer har påverkat denna utveckling, till exempel ändrade preferenser hos konsumenterna, möjligheterna till internationell handel, administrativa krav och handels egna varumärken. Denna utveckling har medfört en obalans av marknadsmakt. Återförsäljarna har mycket makt i förhandlingsförhållanden, och kan till viss del diktera affärsvillkoren. Många konkurrensmyndigheter i Europa har samlat bevis om affärsmetoder, till exempel orättvisa kontraktsvillkor och överföring av risk, som återförsäljarna tillämpar mot sina leverantörer. Detta riskerar leverantörernas ekonomiska bärkraft, och även medför en så... (More)
- Under den senaste tiden, har försörjningskedjan för livsmedel genomgått stora förändringar när det gäller strukturen av marknaden. Många faktorer har påverkat denna utveckling, till exempel ändrade preferenser hos konsumenterna, möjligheterna till internationell handel, administrativa krav och handels egna varumärken. Denna utveckling har medfört en obalans av marknadsmakt. Återförsäljarna har mycket makt i förhandlingsförhållanden, och kan till viss del diktera affärsvillkoren. Många konkurrensmyndigheter i Europa har samlat bevis om affärsmetoder, till exempel orättvisa kontraktsvillkor och överföring av risk, som återförsäljarna tillämpar mot sina leverantörer. Detta riskerar leverantörernas ekonomiska bärkraft, och även medför en så kallad "waterbed effect", som mest påverkar mindre återförsäljare. Medan de lägre priser som återförsäljare kan uppnå är förmånlig för konsumenterna på kort sikt, det råder viss oklarhet om effekterna på lång sikt. Med tanke på att själva konkurrensen på marknaden och marknadsstrukturen ska säkerställas av EU:s konkurrensrätt, man kan ställa sig frågan om inte dessa affärsmetoder borde fångas av dessa regler. Eftersom många av dessa affärsmetoder begås av enskilda återförsäljare självständigt, är det Art. 102 TFEU som skulle vara relevant. Dock är det sällan återförsäljarna uppnår de marknadsandelar som har krävts i praxis för att uppfylla definitionen av en dominerande ställning. Även om affärsmetoderna liknar dem som tidigare bedömts vara missbruk av dominerande ställning, hindrar definitionen av dominant ställning tillämpningen av denna provision. Några alternativa lösningar och tillvågasätten har utvecklats. Den frivilliga Supply Chain Initiative har undertecknats av många men har inte haft den förväntade effekten. I Finland har gränsen för dominant ställning, som är relativt låg, definierats i lag. De tyska reglerna innebär ett koncept av om relativ dominans. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/8944411
- author
- Tukiainen, Laura LU
- supervisor
- organization
- course
- LAGM01 20181
- year
- 2018
- type
- H2 - Master's Degree (Two Years)
- subject
- language
- English
- id
- 8944411
- date added to LUP
- 2018-06-20 12:48:01
- date last changed
- 2018-06-20 12:48:01
@misc{8944411,
abstract = {{Recently, the food supply chain and especially the grocery retail sector has been subject to a significant change in relationship structure. The retail sector has become increasingly concentrated. Many factors have contributed to this development, including changes in consumer preferences, the facilitation of cross-border trade, administrative requirements and local zoning laws and the popularity of private label products. Retailers have gained significant bargaining power from this change and can now dictate the terms of trade. Many competition authorities across Europe have gathered evidence of retailer-driven, potentially anti-competitive practises, including unfair contractual terms and transfer of risk. In addition to undermining the viability of the suppliers, this creates a risk for the so-called 'waterbed effect', which affects the smaller retailers. Whilst the lower price that the retailers are able to extract is beneficial to consumers in the short term, the long-term effects of this development are uncertain. Considering that the protection of the competitive process and structure of the market are objectives of the EU competition law, the practices in the food supply chain could be subject to competition law enforcement. Since most of the practices are conducted by the retailers unilaterally, the application of Art. 102 would be relevant. However, the threshold for dominance is rarely reached by the retailers. Even if the practices are potentially abusive, the fact that the market shares on the total market do not reach the levels of dominance established in case-law hinders the application of competition law. Alternative solutions have been developed; The voluntary Supply Chain initiative has been signed by many but has not had the anticipated effect. Finland has opted for a fixed, relatively low threshold for dominance, while the German rules rely on the concept of economic dependence.}},
author = {{Tukiainen, Laura}},
language = {{eng}},
note = {{Student Paper}},
title = {{Retail concentration and buyer power in the food supply chain}},
year = {{2018}},
}