Brussels, 9 December 2022 – As the EU prepares to celebrate the 30-year anniversary of the Single Market, a new report by NERA Economic Consulting demonstrates the need for a fact-based discussion in the consumer goods industry, to provide even further benefits to consumers for the next three decades, and beyond.
The opening of borders in 1993 enabled a leap forward in the choice of innovative products available across the EU, as the internal market framework ensured legal certainty and fundamental freedoms to operate in the best interest of Europe’s consumers. Local traditions and cultural elements, taste preferences and social habits were not neglected, and continue to be very specific determining factors for local and regional market conditions within the Single Market.
Published for AIM, the European Brands Association, the NERA report explains the facts of how consumer goods are sold across Europe. Brand manufacturers structure operations to deliver the best possible value for all stakeholders in the value chain, whilst remaining conscious of their legal obligations. Specific consumer information on ingredients or dosage to comply with existing local laws plays a role, as do differences in regulatory obligations at national level on packaging, recycling, and labelling requirements.
“We continue to ensure local taste and traditional preferences are served across markets, so that consumers still enjoy their favourite, trusted brands, many of which they have grown up with”, commented Michelle Gibbons, Director General of AIM. “At the same time, the Single Market has opened up whole new possibilities for consumers to experience other brands, flavours and tastes, which we now take for granted as they seamlessly cross borders, but it is important to remember how far we have come and to celebrate that.”
NERA shows that further regulatory hurdles need to be addressed to truly complete the Single Market, although much is already in place. For instance, the recently revised and adopted guidelines to the Vertical Block Exemption Regulation clarified that differentiated features on manufacturers’ products, such as different labels or languages, “are not in themselves restrictions of competition”, thereby confirming that various reasons can justify “measures that allow a manufacturer to verify the destination of the supplied goods”.
On the issue of “territorial supply constraints”, the recent study by Valdani Vicari & Associati and London Economics (VVA study) falls short in its assessment, according to NERA, as it suffers from fundamental flaws both in its information basis and in its analysis of the prevalence and impact of TSCs on consumers. The authors of the VVA study themselves conceded that they found “no hard or documentary evidence of such behaviours”, and that none of the 17 national competition authorities surveyed had anything to report on the matter. It observed cross-country price differences equally for retailers own private label products as for branded manufacturers’ products. Unsurprisingly, the packaging assortments and prices of retailers’ own brands also vary greatly, depending on regulatory constraints and other relevant market factors. More facts on differences in assortments can be found in AIM’s Insight Paper on this topic.
“For many years, retailers have claimed that manufacturers constrain supply through territorial restrictions without ever providing facts supporting such statements,” said Michelle Gibbons. “The TSCs argument is misleading and used as a smokescreen for the anti-competitive behaviour of some retailers that aggregate their bargaining power within gatekeeper retail alliances. These gatekeepers are not designed for the purpose of joint buying or joint negotiating, and therefore cannot alleviate any alleged restrictions to cross-border trade anyway. That these are apparently being justified as retaliatory to ‘alleged’ actions is questionable in and of itself – self-administered justice is illegal and quite unacceptable.”
An efficient and effective Single Market continues to be top-of-mind for the branded consumer goods industry, with the consumer front and centre of the entire framework. “All of us as consumers have benefitted substantially from the Single Market”, said Michelle Gibbons. “Likewise, it is critical for the success of Europe’s competitiveness on the global stage and continues to pave the way with great opportunities for all branded goods manufacturers, no matter what their size – from start-ups to multinationals – to deliver trusted brands for consumers.”
 See, for example, 5 September 2022, Le Soir, https://www.lesoir.be/463585/article/2022-09-05/supermarches-le-grand-ecart-des-prix-entre-la-belgique-et-la-france
Read the NERA report: Study on territorial supply constraints in the EU retail sector: A critical review
For further information, please contact: Laurent Cenatiempo
Tel: +32 2 736 03 05 • Email: Laurent.Cenatiempo@aim.be
AIM (Association des Industries de Marque) is the European Brands Association, which represents 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.
More information: www.aim.be