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Brussels, 29 October 1999
Euro Coop Comments on the Commission's Proposal for a Regulation on Vertical Agreements between Producers and Distributors 1999/C 270/07
Euro Coop is the European Community of Consumer Co-operatives, whose members are the national organisations of consumer co-operatives in 13 of the 15 member states of the EU and in 5 central and eastern European countries. Created in 1957, Euro Coop today represents over 3,200 local or regional co-operatives, membership of which amounts to over 19 million consumers in the EU and 2 million in the associated countries of central and Eastern Europe.
Euro Coop has taken note of the Commission's proposal for a regulation and guidelines on vertical agreements between producers and distributors pursuant to Article 5 of Council Regulation No 19/65/EEC of 2 March 1965 on the application of Article 81(3) of the Treaty to categories of agreements and concerted practices.
Euro Coop is very concerned because consumer co-operatives would be assimilated with the wording "associations of distributors selling to final consumers" in the text of the proposed Article 1, § 2 and would as a consequence be excluded from enjoying the benefits of the regulation.
In Euro Coop's opinion the rules of competition should apply equally to all vertical agreements with producers - notwithstanding whether they are made by retailers organised as share holding companies or retailers organised as co-operatives. This is particularly true when the decisive criterion in the proposed regulation is market share.
In order to avoid such discrimination Euro Coop proposes the following:
1. Market share
Euro Coop asks the Commission to increase the threshold market share for block exemption from 30% to 35%. A market share threshold of 30% is too low.
2. Discrimination against retailers not organised as share holding companies
As mentioned above, the proposal has not taken into consideration the way consumer co-operatives across Europe are constructed. Therefore in the present context of Article 1, § 2, consumer co-operatives would be discriminated against compared to companies organised as share holdings in two respects:
- Consumer co-operatives would not be able to enjoy block exemption for their distribution agreements with producers as opposed to share holding companies.
- Consumer co-operatives would not have the same freedom to organise and regulate their internal matters as share holding companies have.
In order to eliminate the first point of discrimination, Euro Coop strongly urges the Commission to amend Article 1, § 2. We would be happy to discuss an alternative form of wording.
As regards the second point, Euro Coop recognizes that an association's internal matters may contain a number of horizontal elements, that should not be dealt with in a regulation concerning vertical agreements. Euro Coop suggests that this issue should be dealt with in a separate regulation similar to the national block exemptions in Denmark and Sweden for voluntary retail chain agreements.
3. "Exclusive supply obligations"
It is quite usual that a particular retail chain places an order with a producer for its "own" version of a particular product (e.g. skinned tomatoes or a toaster) which the producer already produces. The buying retail chain simply provides its own trademarks and asks the producer to make a few simple modifications or amendments to the existing product which do not require much work or investment. The retail chain now wants exclusivity on its own version.
Euro Coop would like to have clarified if the exclusivity required by the retail chain in such a situation would fall under § 1 or § 2 of the proposed Article 2.
If it is qualified as falling under Article 2, § 1 block exemption will be available as long as the market share held by the supplier and by the undertakings connected with the supplier does not exceed 30 (35?)%. However, if it is qualified as falling under Article 2, § 2 it would mean that the buyer only can have exclusive right on its own product variant in question if the buyer's market share is below 30(35?)%.
If the last scenario is the case, the proposed Regulation must be amended so that such obligations would come under Article 2, §1. It would be quite unacceptable that larger retail companies would be prevented from demanding that the producer refrains from supplying others with their own brand products. This is an important point as it is a quite common situation among larger retail companies to have own brand products.
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