Brussels, 26 October 2022 – Some of Europe’s largest international retailers have entered into collective tying arrangements via alliances that create wasteful market access barriers and prevent pass on of lower prices to consumers. An economic study published today by AIM, the European Brands Association, demonstrates the inaccuracy of retailer claims that these alliances bring lower prices to consumers.
“Inflation is putting a lot of pressure on everyone, and consumer purchasing power has rightly become a top priority in this time of great uncertainty”, said Michelle Gibbons, AIM’s Director General. “It is therefore essential that the European Commission ensures a fair and functioning competitive market so that supply chains are efficient and devoid of artificial hurdles such as gatekeeper alliances.”
The study conducted by economic consulting firm Compass Lexecon was commissioned after EuroCommerce, the principal European organisation representing the retail and wholesale sector, published a press release to report “a new economic study by INSEAD giving further evidence on how buying cooperation can bring about price reductions for consumers”. Both INSEAD and EuroCommerce falsely claimed that gatekeeper retail alliances such as AgeCore have a positive impact on price reduction and consumers’ purchasing power.
In its study, Compass Lexecon concludes that the INSEAD report, which examined the case of AgeCore / Edeka, is flawed and that its findings cannot be relied upon.
The report compares the retail prices of two groups of different products that differ across multiple dimensions instead of examining how the retail prices of a given group of products change depending on whether they are impacted by AgeCore.
Specifically, the data in the INSEAD report show that, out of the 20 product categories examined, the retail prices of AgeCore-impacted products are – in fact – higher than non-impacted products for 10 of these categories. By the report’s logic, AgeCore would therefore lead to increased retail prices for around half of the reviewed product categories.
Far from “increasing consumer welfare by passing on lower prices”, as EuroCommerce claims, gatekeeper retail alliances such as AgeCore constitute a source of unnecessary cost increases and inefficiencies.
EuroCommerce and the INSEAD study also failed to distinguish between genuine alliances whose members purchase jointly and gatekeeper alliances (such as AgeCore or Epic Partners) that engage in anti-competitive behaviour by coercing product manufacturers into paying hefty market access fees for the right to trade with their members.
“The INSEAD study contradicts a market reality that retailers such as Edeka know all too well: gatekeeper alliances are smoke and mirrors that harm end consumers by limiting their choice and stifling fair competition through artificially increasing supply costs”, said Michelle Gibbons. She added that “the multiple cases against retailer alliances and supermarket chains before European courts between 2012 and 2021 have underscored the reality of unfair trading by large parts of the retail market. Unfortunately, this may become even worse as the impact of the current cost inflation such as energy prices, which we are all grappling with, could lead to the exit of smaller retail players and an even more highly concentrated retail market.”
Gatekeeper alliances must be addressed in the revision of the Horizontal Cooperation Guidelines
Accordingly, the analysis of buyer cooperation in the draft Horizontal Cooperation Guidelines merits refinement and differentiation. AIM therefore reiterates its recommendation made in its May 2022 contribution calling the European Commission to “re-assess as part of its revision of the horizontal guidelines whether gatekeeper alliances should still enjoy the benefit of the rules meant to cover situations that ‘truly concern joint purchasing’”.
In particular, the Draft Guidelines identify only two forms of buy-side cooperation, joint purchasing and buyer cartels, whereas buyers can also work together in other ways, for example by collectively boycotting suppliers or by entering into joint tying arrangements that force suppliers to enter into distinct contracts. The definition of joint purchasing should be formulated with greater precision: joint purchasing takes place only if several buyers either purchase together or collectively negotiate the substantive contractual terms of the supply agreement under which they buy the contract products. Also, relative bargaining power, not company size, should be the key criterion for assessing restrictive effects, and collective purchase stops should not be treated as incidental to joint purchasing if they are not commensurate with the object of the joint negotiation.
READ COMPASS LEXECON’S REVIEW OF CORSTJENS’S REPORT ON THE PRICE EFFECTS OF INTERNATIONAL RETAIL ALLIANCES HERE
ERRATUM published on 26 October 2022 at 18h15: the version of Compass Lexecon’s report published earlier today contained typos and was replaced by this final version.
 Compass Lexecon, 20/09/2022, Corstjens’s Report on the Price Effects of International Retail Alliances – A review
 Marcel Corstjens, INSEAD Working Paper, 17/06/2022, International Retail Buying Groups: A Force for the Good? The case of AgeCore/EDEKA
 EuroCommerce, 23/06/2022, Retailers working hard to help consumers in a time of high inflation
 Coop Estense (28/06/2012, IT); Centrale Italiana (17/09/2014, IT); ICA-Norgesgruppen (19/04/2013, NO); Coop Italia/Centrale Adriatica (22/12/2015, IT); INCA Achats/Intermarché/Casino (13/04/2016, FR); Epiceries de Luxembourg (13/06/2018, LU); Kaufland/Markant (06/09/2018, CZ); Rewe Group (22/02/2019, CZ); Coop-GDO (27/06/2019, IT); E.Leclerc/Eurelec (22/07/2019, FR); Casino/Intermarché (04/11/2019, EU); Markant (03/09/2020, CH); Casino/Auchan/Metro/Schiever (22/10/2020, FR); Carrefour/Tesco (17/12/2020, FR); Intermarché/AgeCore (19/02/2021, FR); Carrefour/Provera (28/04/2021, BE).
 AIM, 20/07/2022, Brands suggest adapting the rules governing joint purchasing to tackle new market realities
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