Study on the legal framework covering business-to-business unfair trading practices in the retail supply chain : final report

etail services are a key intermediary service in the modern economy acting as the conduit between thousands of product suppliers and consumers: according to Eurostat (2013), retail services account for 4.3% of the EU's GDP, 8.3% of European employees and 17% of SMEs. Over the past decade, the European retail sector has undergone significant changes: globalization of distributive trade has led to increased competition from multi-national conglomerates and, to some degree, entry of large players or acquisition of existing firms by larger players in many European countries over the past three decades. This evolution led to the emergence of complex contractual relationships between various types of suppliers and increasingly large retailers. Where suppliers can count on a global footprint, a well-known brand and sufficient consumer loyalty, they are likely to hold more bargaining power than their distributors, whose revenues depend on their ability to display these products (so-called "must have" products); at the other extreme, local small producers that wish to market perishable goods (e.g. fresh fruit) might end up having weak bargaining power vis-à-vis large retailers, even in cases that would not be considered by competition law as problematic for the degree of competition of the relevant market as a whole. The main result, under these conditions, is that contracts between these players might end up being imbalanced to the detriment of the weaker party: the stronger party will seek to impose unfair price and contract terms, and more generally to transfer commercial risk onto its counter-party.