4Th Retail and Wholesale Leaders' Meeting, 2 February 2021

Meeting record 8 February 2021

4th Retail and Wholesale Leaders’ meeting, 2 February 2021

Participants

GUEST OF HONOUR European Commission Thierry Breton Internal Market Commissioner European Commission Pauline Weinzierl Cabinet European Commission Joanna Zawistowska DG GROW

RETAIL/WHOLESALE LEADERS AHOLD DELHAIZE Frans Muller CEO AUCHAN Edgard Bonte Président CARREFOUR Alexandre Bompard Chairman & CEO CECONOMY Bernhard Duettmann CEO DECATHLON Michel Aballea Directeur-Général EL CORTE INGLES Jorge Pont Assistant to Chairman ESSELUNGA Sami Kahale CEO GRUPO IFA Juan Manuel Morales General Manager ICA AB Per Strömberg CEO IKEA Tolga Öncu Retail Operations Manager JERONIMO MARTINS José Nogueira de Brito Chief Commercial Officer KESKO Jorma Rauhala Deputy CEO KINGFISHER PLC Thierry Garnier CEO MAXIMA GRUPE UAB Mantas Kuncaitis CEO MARKANT Markus Tkotz Managing Director METRO AG Andrea Euenheim Management Board Member MUSGRAVE GROUP Noel Keeley CEO PRIMARK David Paterson CFO REWE GROUP Lionel Souque CEO SONAE MC Luis Moutinho CEO SONEPAR Alexander Dewulf SVP Business Development SPAR AUSTRIA AG Friedrich Poppmeier CEO TESCO Matt Simister CEO Central & Eastern Europe SPAR INTERNATIONAL Tobias Wasmuht Managing Director WALGREENS BOOTS ALLIANCE Sebastian James SVP, MD Boots UK & ROI

EUROCOMMERCE STAFF FUNCTION Régis Degelcke President Christian Verschueren Director-General Neil McMillan Director, Political Affairs & Trade Christel Delberghe Director, Commercial Relations Elen Guedes PA to the Director-General Jean-Albert Nyssens Chf Economist/strategic projects

LEGAL COUNSEL Contrast Law Herlinde Burez Legal counsel

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Exchange with Commissioner Thierry Breton

Regis Degelcke welcomed the Commissioner and underlined the importance of the retail and wholesale ecosystem, representing 1 in 4 companies, 1 in 7 European jobs. The presence in the meeting of 25 CEO leaders reflected the importance which we attached to the discussion with him.

Commissioner Breton said that it was a sector he knew well as an ex-member of Carrefour board. The ecosystem played a vital role in the health of the single market and of many other ecosystems. This had become clear during the COVID crisis, which our sector had shown how to overcome the clear challenges it had faced, maintaining supplies of daily essentials to EU citizens. It would be an ecosystem equally important to recovery. He had a number of priorities: • Ecosystems and recovery: He had reorganised the Commission’s work along the lines of 14 ecosystems, of which ours was one of the most important. He had worked with Commissioner Gentiloni to structure the Next Generation EU (NGEU) recovery programme in this way. Part of the money would be dedicated to issues of direct interest to our ecosystem, although design of recovery plans was for member state governments. The pandemic had accelerated the digital transformation of our sector. At least 20% of funding under the NGEU would be dedicated to digital to help investment in supporting that transition further in all sectors, and the Commission would assess national plans with this in mind. • Digital regulation: The Digital Services Act (DSA) and Digital Markets Act (DMA) addressed the behaviour of platforms, covering counterfeit and illegal products and content. The principle was: what is illegal offline must be illegal online. Platforms would need to be established in Europe and able to respond to concerns and regulation by national authorities on terrorist, illegal and abusive content with criteria and timing for removal. The DMA would organise the platform landscape, with more obligations on ‘gatekeeper’ platforms. This was aimed at a level playing field for all - consumers and sellers online and offline, EU and third country. Platform algorithms would also be audited. • Single market – a unique asset and key driver of recovery. He had acted to persuade Ministers to lift the catastrophic decision to close borders early in the pandemic. He was aware of the problems we faced in some (particularly CEE) countries, and was committed to tackle these further. • Sustainability – He saw the Green Deal and carbon neutrality by 2050 as essential. The supply chain needed to be more resilient, with more EU autonomy in some, but not all, sectors. The green transition attracted 37% of the NGEU; he suggested companies should use this to gain support for any plans they had in e.g., CO2 reduction, energy efficiency. Companies should press governments to include our sector squarely in their national plans for NGEU funding, the first of which the Commission was about to start assessing. • Skills – he was committed to up- and reskilling for digital as another driver of recovery, and invited members to join the Pact for Skills that he was initiating with Commissioner Schmit. In answer to questions and comments, Mr Breton added: • He was pleased at comments from many CEOs on their commitment to sustainability and was keen to encourage short supply chains, but without harming the single market. He responded to CEOs who raised the major problems they faced in Hungary, Czechia and other CEE countries. He was well aware of problems in CEE and had acted. Hungary was an extreme case, and he would look at the country also in terms of Rule of Law. He was also determined that COVID should not be an excuse for more protectionism. The new Single Market Enforcement Task Force was aimed at rapid action against such measures. For his part, he would not hesitate to take legal action. • He fully understood retailers’ frustration at many countries bans on Sunday opening which could otherwise spread customer presence more evenly and make up for lost sales. It was a matter for member states, but he undertook to raise the matter in the next Ministerial meeting he attended, and underlined that relaxation of these rules would be a real aid to recovery. • In response to many who raised the problem of Territorial Supply Constraints, he assured CEOs that the Commission would be active. He was unwilling to rush into legislation and would organise in the first instance a dialogue involving the whole supply chain and consumers. • On digital taxation, he was keen to see if an agreement in the OECD was possible, but the EU would be ready with its own – balanced – legislation if not.

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• The data economy needed to be encouraged, but within a suitable legal framework – hence the DSA and DMA. He saw the silencing of ex-President Trump after the invasion of Congress as a “9/11 moment” for the platforms. It showed that exemption from responsibility under the US Section 230 was no longer appropriate, and the platforms had realised it. He noted comments on the burden on SMEs under the GDPR, and that this was on top of their problems in accessing finance, which he was keen also to tackle. The regulation would be regularly assessed in this context. • He understood the importance of vaccination to allowing our sector to operate more normally. He revealed that he would be charged now to work with Health Commissioner Kyriakides to take forward the EU management of vaccine rollout. As an ex-industrialist he knew the difference between development and scaling up to mass production, particularly with complicated biological processes. He was confident that the companies whose vaccines had been approved would be able shortly to provide the 2.2 billion doses under contract. With new variants and uncertainty about how long immunity would last, he was working with Research Commissioner Gabriel for a cheap and reliable antigen test to ensure a reopening of schools and the rest of the economy. • Recovery plans: it was difficult to predict how quickly the economy would pick up. He urged CEOs to press their governments to reflect our sector’s needs in their proposals for cash from the NGEU recovery programme, and where companies were operating in different countries, make clear that the funding would be for cross-border projects. This would weigh heavily in the Commission’s assessment of the national plans.

Leaders internal meeting In a short session to discuss the exchange with Commissioner Breton, some leaders expressed disappointment on his remarks on TSCs: there had been movement by the Commission but there was a real need for rapid action. (Note: The Commission (DG Competition) is keen to receive concrete evidence from companies; leaders should consider providing this confidentially). They were optimistic that Commissioner Breton was ready to tackle problems in CEEs, which directly attacked the profitability of operations there. The Hungarian and Polish taxes on retail were a major worry. We needed to go on fighting these countries, also on their assertion on dual quality of retailer brands.

Christian Verschueren gave a presentation of major issues at EU level (slides attached):

The new ‘geopolitical’ Commission wanted to consolidate Europe’s global position. They have 6 strategic goals, each with (Executive) Vice-Presidents leading. The pandemic and Trump had made this more important. EuroCommerce had responded to the crisis situation in pushing for keeping borders open, and Breton had helped. We collected data and best practice to support members in tackling these problems. The data was also supported by infographics and a website on how our sector was helping in COVID. Events had gone online and attracted bigger audiences, and we had more Commissioners lined up for these Policy Talks. We also held a further Digital Lecture and asked members to put forward further speakers. We had launched the Pact for Commerce and got our sector identified as a priority ecosystem under the Next Generation EU. We had succeeded in seeing off an attack by farmers, brand manufacturers and European Parliament on retailer alliances – the economic and legal analysis helped to produce a helpful Commission report. Our work and Commission study on TSCs had a similarly positive impact. The pandemic and these other issues showed that Europe mattered to the bottom line of companies, and the new Commission initiatives would intensify this. The image of our sector was fragile – consumers and politicians appreciated us helping during the crisis, but national and EU politicians supported farmer lobbying and could be looking to retailers to carry the new burdens under e.g., Farm to Fork. EuroCommerce advocacy had improved, and merger with ERRT had provided focus. But the association landscape remained fragmented both nationally and at EU level. Our sector spent much less than comparable organisations (e.g. farmers, manufacturers). Only CEOs could change this in the choices they made of which organisations to join. We needed our sector to speak with a strong and united voice nationally and in the EU. This was the final year of 3 year-strategy, a new President and a new 3-year strategy in July, along with a possible reform of EuroCommerce.

Three asks to companies – EuroCommerce needed help to recruit more members, CEOs to make time to speak at events and engage in high level lobbying, and help to strengthen resources - options being considered are: raising member fees, growing membership, and funding projects for thought leadership.

Leaders made the following points:

• While COVID demanded all companies’ attention, there was a need to keep a focus on competitiveness as a priority for our survival. Manufacturers were driving many of the challenges – e.g., TSCs and UTP implementations. Money needed to be used smartly and spent on quality more than quantity. • Many agreed that our sector was underinvesting in resources for advocacy compared with farmers and manufacturers. Raising membership fees for larger retailers as Christian had suggested would be one possibility for rebalancing the position, and providing for thought leadership by project funding. It was important that we did not slip back in public perception. • Need to be pragmatic on projects and not be “penny wise, pound foolish”. We fought hard on UTP, but its implementation might cause real costs, and we needed to be on the front foot on initiatives such as the Green Agenda and Farm-to-Fork and avoid costs all ending up on us. Investigation of transition costs in these two areas might be a good first project. Given EuroCommerce staff constraints, companies could provide staff for a committee to scope specific projects, and companies could then commit the necessary funds. Funding decisions would need concrete project proposals. • With COP26 this year, the sector needed to show that it was active in sustainability. • Leaders also had a number of ideas on how to attract new members, including ensuring that (as with the Interest Groups already established) ensuring specific sectors had a ‘home’. They asked Christian to send a list of priority target companies for them to approach. • Christian responded that he would come back with concrete proposals, on which he had had a brainstorm with some members. • EuroCommerce members supported more staff resources in the single market and supply chain functions, which they recognised as critical.

Régis Degelcke thanked all who participated. He would not be there for the next leaders’ meeting, and mentioned that the appointment of his successor was underway. Retail was about politics and companies needed to be awake to risk to their survival from wrong decisions not just by national governments, but also the Commission and European Parliament. Splitting resources between multiple federations was suboptimal. Company representatives based in, and coming to Brussels, made real difference. National federations were important to EuroCommerce, and he asked companies to call on their associations to reinforce EuroCommerce’s work.

Contact: Christian Verschueren - +32 475 26 03 79 - [email protected] Neil McMillan - +32 479 40 22 41 – [email protected]