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2001 EN Official Journal of the European Communities C 26 E/95

(2001/C 26 E/115) WRITTEN QUESTION E-0720/00
by Manuel Pérez Álvarez (PPE-DE) to the Commission

(17 March 2000)

Subject: Distribution in the food industry

In certain sectors of the economy distribution has traditionally played, or has come to play in recent years,
a crucial role in delivering products from the initial stage of production into the hands of consumers.

Although this is the case in other sectors of the economy as well, it is especially true of the food industry.

An excessive concentration of distribution can have negative consequences not only for consumers but
also for manufacturers, to the point that for no objective reason, distributors may refuse to handle the
initial or later stages of distribution for certain products.

What measures are being implemented to ensure that a balance is maintained between the concentration
of the food industry and that of the distribution sector?

Does the Commission intend to adopt, or has it already adopted, special measures for those sectors that
are most affected by any decisions taken by the distribution industry?

Answer given by Mr Monti on behalf of the Commission

(18 April 2000)

When examining recent cases (1) of concentration in the large-scale distribution business in Austria, the
United Kingdom and France, the Commission identified the risk which the Honourable Member outlines in
his written question.

Supplies to retail distributors with a strongly food-oriented business depend substantially on their position
on the distribution market. The greater their volume of purchases, the more favourable terms set by
suppliers of a distribution firm will tend to be. Thus, the distribution firm can operate targeted price-
cutting strategies vis-à-vis its competitors. An improvement in the position on the market leads in turn to a
fresh improvement in buying terms and so on.

This spiral could engender an increasingly high degree of concentration on both the distribution market
and the supply market. Final consumers can admittedly benefit from this process, as there could be a stage
of intensive competition on the distribution market during which the distribution firm, given its strong
purchasing power, can pass on the advantages it has gained in its selling prices. But, this situation will only
last until such time as only one or more firms dominate the market. At that juncture, the final consumer
will have only a very limited choice.

So far, whenever the Commission has been able to prove that a merger between distribution firms created
a dominant position, the firms have given the Commission undertakings that they will remedy the
situation. On the basis of notifications and complaints made to it, and to the extent that trade between
Member States is affected, the Commission will continue to evaluate the risk and, where necessary, penalise
abuses or prohibit dominant positions.

(1) Cases M1221  REWE/Meinl, M1612  Wall Mart/ASDA and M1684  Carrefour/Promodes.