New EU rules could restrict supermarket supplier relationships

Brussels published today a consultation paper asking for comments about the protection afforded to manufacturers and producers by national laws and whether they suffer from the impact of power imbalances on the EU retail market.

“We look at gathering facts here, no decisions have been made,” said Claire Bury, director of capital and companies in the European Commission’s directorate general for the internal market.

However, she did signal that Brussels thinks there is a problem and is prepared to act: “The kind of behaviour that we see is that when a retailer is contracting a supplier, there is not enough information about the contract terms or the terms are changed halfway,” Bury explained, noting that the small suppliers are obliged to accept unfair trading practices.

Another problem she cited is some retailers’ practice of reducing payments to suppliers when they make low sales or pay discounts. She also said that some small suppliers are afraid to complain or risk losing their main clients.

While some EU countries’ competition authorities have laws in place to address these issues, others do not, according to Bury. She said there might need to be EU legislation to impose minimum competition law protection for suppliers to large retailers.

Brussels is ready to draft such legislation, following a final assessment of the problem after receiving comment to this consultation paper, which will gather input from retailers, suppliers, wholesalers and others in the supply chain until April 30.