Retail alliances in the agricultural and food supply chain Colen, Liesbeth Bouamra-Mechemache, Zohra Daskalova, Victoria Nes, Kjersti 2020 EUR 30206 EN This publication is a Science for Policy report by the Joint Research Centre (JRC), the European Commission’s science and knowledge service. It aims to provide evidence-based scientific support to the European policymaking process. The scientific output expressed does not imply a policy position of the European Commission. Neither the European Commission nor any person acting on behalf of the Commission is responsible for the use that might be made of this publication. For information on the methodology and quality underlying the data used in this publication for which the source is neither Eurostat nor other Commission services, users should contact the referenced source. The designations employed and the presentation of material on the maps do not imply the expression of any opinion whatsoever on the part of the European Union concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. Contact information Name: Pavel Ciaian Email: [email protected] EU Science Hub https://ec.europa.eu/jrc JRC120271 EUR 30206 EN PDF ISBN 978-92-76-18585-7 ISSN 1831-9424 doi:10.2760/33720 Luxembourg: Publications Office of the European Union, 2020 © European Union 2020 The reuse policy of the European Commission is implemented by the Commission Decision 2011/833/EU of 12 December 2011 on the reuse of Commission documents (OJ L 330, 14.12.2011, p. 39). Except otherwise noted, the reuse of this document is authorised under the Creative Commons Attribution 4.0 International (CC BY 4.0) licence (https://creativecommons.org/licenses/by/4.0/). 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Contents Abstract ............................................................................................................... 1 Acknowledgements ................................................................................................ 3 1 Introduction ...................................................................................................... 4 2 National and European retail alliances .................................................................. 6 2.1 What are retail alliances? .............................................................................. 6 2.2 Competition, consolidation and internationalisation in the retail sector ............... 6 2.3 Typology of retail alliances ............................................................................ 8 Groups of independent retailers ....................................................................... 8 National retail alliances .................................................................................. 9 European retail alliances ................................................................................. 9 Overlapping alliances, and alliances of alliances. .............................................. 10 Organisational structure and governance ........................................................ 10 2.4 Activities .................................................................................................. 13 Joint buying or on-top agreements with A-brand manufacturers ........................ 13 Joint buying ............................................................................................ 13 On-top agreements .................................................................................. 14 Joint sourcing of private label products ........................................................... 15 Market development and networking .............................................................. 16 Other activities ............................................................................................ 16 2.5 Product scope and type of suppliers ............................................................. 16 2.6 Evolution and size of retail alliances ............................................................. 17 Evolution of retail alliances in Europe ............................................................. 17 Size of retail alliances ................................................................................... 18 Relative position vis-à-vis suppliers ................................................................ 19 3 Economic analysis of retail alliances ................................................................... 21 3.1 Efficiency gains and bargaining position of retail alliances ............................... 21 Efficiency gains ........................................................................................... 21 Improved bargaining position ........................................................................ 22 Bargaining ability ..................................................................................... 23 Bargaining leverage ................................................................................. 23 Non-discrimination effect .......................................................................... 24 Additional benefits from improved bargaining .................................................. 24 Efficient contracting ................................................................................. 24 Breaking vertical contract restrictions ......................................................... 26 Summary ................................................................................................... 26 3.2 Impact of retail alliances on consumers ........................................................ 27 i Impact on consumer prices ........................................................................... 27 Countervailing power ............................................................................... 27 Empirical evidence ................................................................................... 28 Summary ............................................................................................... 30 Impact on variety and innovation .................................................................. 30 Impact on innovation ............................................................................... 30 Impact on variety offered to consumers ..................................................... 30 3.3 Impact on retailer competition .................................................................... 32 Waterbed and spiral effect ............................................................................ 32 Tacit collusion ............................................................................................. 33 3.4 Possible impacts of RAs on upstream supply chain actors ................................ 34 Impact on suppliers ..................................................................................... 34 Impact for farmers and small upstream firms .................................................. 36 3.5 Conclusions ............................................................................................... 38 4 Legal framework for national and European retail alliances ................................... 43 4.1 Legal framework for assessing retail alliances ................................................ 43 Legal form .................................................................................................. 43 Applicable legal framework ........................................................................... 43 Retail alliances: assessment under the EU competition law framework ............... 44 Relevant product and geographic markets ...................................................... 46 Purchasing markets ................................................................................. 46 Selling markets ....................................................................................... 46 4.2 Article 101 TFEU: agreements by undertakings and decisions of associations of undertakings ................................................................................................... 47 Restrictions ‘by object’ ................................................................................. 48 Analysis of restrictions ‘by effect’ ................................................................... 51 Theories of harm ..................................................................................... 54 Exemption criteria under Article 101 (3) TFEU ................................................. 56 4.3 Article 102 TFEU : abuse of dominant position ............................................... 56 4.4 Directive (EU) 2019/633 on Unfair Trading Practices ...................................... 57 4.5 Member State Legislation: unilateral conduct and unfair trading practices ......... 58 Germany: economic dependency and unfair practices under the Anzapfverbot .... 58 Italy: Article 62 of the Cresci Italia Decree .....................................................