Buyer Power and the Regulatory Toolbox: What Role for Competition Law

Ever since the 1970s, the grocery retail sector in the EU has experienced substantial concentration. Concentration has result in a change in the balance of power between retailers and producers. EU producers have complained about aggressive bargaining on the part of retail chains, including ever increasing demands for low prices and dubious commercial practices such as unfair use of proprietary information and unilateral changes to contract terms. Complaints have resulted in action both at the EU level and at the Member State level. At the EU level, Members of Parliament have pressed for enforcement of the competition rules and for reform of the Common Agricultural Policy (CAP). Additionally, a pan-European self-regulatory initiative has been started in an effort to solve the issues. At the national level, complaints from producers have resulted in the introduction of new laws, sector-specific regulation and self- and co-regulatory schemes. Paradoxically, EU competition law – a legal discipline in the very heart of the European economic constitution – has played a limited role in the debate on and regulation of the exercise of buyer power. Even more interestingly, the Commission and national competition authorities have encouraged the developments in other fields of law. The curious position of competition authorities can be explained by misguided perceptions that the issues at stake in the buyer power debate concern “fairness” and are therefore better dealt with by “other laws”. The question is: how much is known about the nature and effectiveness of “other laws”? To what extent can they replace competition law or complement it without resulting in protectionism or fragmentation of the EU internal market? To answer these questions, the paper builds on available reports on national initiatives in the EU and their effectiveness and uses the EU Better Regulation criteria as a benchmark. Firstly, it gives an overview of the available regulatory approaches. Secondly, the paper proposes a categorization of these approaches into contract law approaches, self-regulatory approaches, and stricter competition law approaches. Based on this categorization, the paper identifies possible pros and cons of these approaches from the perspective of EU Better Regulation. The paper concludes that even if some approaches may be effective, the role of EU competition law should not be under-estimated.