AIM welcomes IMCO report tackling non-tariff and non-tax barriers in the Single Market
Brussels, 24 November 2021 – AIM, the European Brands Association, welcomes the adoption by the European Parliament’s Internal Market and Consumer Protection Committee of a report on tackling the non-tariff and non-tax barriers in the Single Market.
The Single Market provides European consumers with access to a wide choice of innovative products and services, and a framework that ensures legal certainty and fundamental freedoms to operate in their best interest. Branded goods manufacturers are consumer-centric: they place consumers at the heart of all they do to provide safe, innovative and diverse products to Europe’s 450 million consumers on a daily basis. Operating in a dynamic and highly competitive consumer goods market, brands must deliver to consumer expectations by considering local and national market preferences, traditions, culture and laws, while complying with the EU’s competition law framework and supporting the EU’s Single Market goals.
Not all EU consumers are the same, as evidenced by the BCE and JRC studies: “Not all are inclined to consume pasta like the Italian regions or consume sparkling water like the Austrian regions.” It is the reason why products and services offered are tailored to respond to consumer needs, as recently outlined by retailers themselves: “Retail is about details. What works in one country is not necessarily appreciated in another.” In its practice, the European Commission also confirms this reality: “Distribution systems are often national, rather than multinational, and cater for local demand idiosyncrasies and customer requirements.”
However, there are also significant differences in national laws that must be adhered to but can cause fragmentation in the Single Market ecosystem. Specific consumer information on ingredients or dosage to comply with existing local laws can act as non-tariff barriers and lead to differences in ingredients, in packaging, or on labels. It is estimated that there are currently over 200 labels providing environmental information, which can be both confusing to consumers and disruptive to manufacturers.
After the European Parliament called upon the European Commission to act on Territorial Supply Constraints, the latter commissioned a study on the Single Market in the retail sector, which was published in November 2020 and concluded that “there is no hard or documentary evidence available” on the use of territorial supply constraints – such as refusals to supply or quantitative restrictions. However, it confirmed that large multinational retailers apply different prices to their own identical private label products in different markets, concluding that “this could be considered price discrimination, which also puts pressure on pricing policies of branded goods manufacturers. The impacts of these pricing differences fall directly on the consumer.” The private label market represents 30% – 50% of products sold in Europe.
In 2019, the Luxembourg Competition Authority rejected retailer claims of alleged TSCs as relying on “perceptions and feelings” on the issue, as opposed to facts. Should TSCs exist and be removed, the retailers themselves doubt whether this would have an impact on consumer prices. Also in 2019, the French Competition Authority reviewed the private label retail market and acknowledged the importance of local markets. This is a reality of the retail sector, which itself states that they “purchase 80% of products locally.” Branded goods manufacturers have always highlighted that responding to consumer preferences and needs is paramount. The Covid-19 crisis has recalled to mind the significance of local supply and local competition in an industry structured upon local markets, as opposed to one single market.
For further information, please contact: Amaury Libbrecht
Tel: +32 2 736 03 05 / Email: Amaury.Libbrecht@aim.be
AIM (Association des Industries de Marque) is the European Brands Association representing manufacturers of branded consumer goods in Europe on key issues that affect their ability to design, distribute and market their brands. AIM’s membership comprises 2500 businesses ranging from SMEs to multinationals, directly or indirectly through its corporate and national association members.