Inflation: MEPs work on a text to bring forward trade negotiations in the retail sector

Europe 1 , with AFP 12:10 p.m., October 09, 2023

The National Assembly is examining from Monday a bill that would bring forward trade negotiations between major manufacturers and supermarkets, in order to lower prices on the shelves but with an unguaranteed result, even if inflation slows down. For the fourth time in five years, Parliament will consider the legislation governing these trade negotiations. After several weeks of bitter discussions, they make it possible to set the conditions (purchase price, shelf space, promotional calendar, etc.) at which the companies E. Leclerc, Carrefour, Intermarché or Système U will obtain supplies from their suppliers for the whole year.

Reducing inflation

The government intends to bring forward to 15 January, instead of 1 March, the date by which negotiations for 2024 are due to be concluded. A majority of the products sold in supermarkets are affected by these annual negotiations: products with so-called national brands, such as Danone, Nutella, Nescafé or Cochonou. These products, for example, account for two-thirds of Carrefour's sales.

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The purpose of the previous laws on the subject, Egalim 1 (2018) and 2 (2021), and Descrozaille more recently, was to prevent agricultural producers from paying the price war, and to strengthen the weight of manufacturers vis-à-vis mass distribution. But especially since Russia's invasion of Ukraine, food inflation has emerged as a major issue in France. In mid-2022, the government had urged all companies to renegotiate upwards during the year to better remunerate manufacturers facing rising costs.

A drop in prices or a wage increase

In 2023, the executive intervened this time to ask for a certain number of wholesale prices to be passed on downwards, without this translating into significant price reductions on the shelves. Hence the desire to bring forward the 2024 calendar by a month and a half, in the hope of seeing lower prices sooner on the shelves. "If we want to fight inflation, companies that can do so need to pull on their margins, either to lower prices, which is why we are bringing forward the date of trade negotiations, or to increase wages," Economy Minister Bruno Le Maire told Sud Radio on Monday morning.

Even for a one-off change of calendar, it is necessary to go through the law because the usual deadline is set out in the Commercial Code. The government had announced that it wanted to bring forward the timetable only for the 75 largest manufacturers. However, the Institut de liaisons des entreprises de consommation (Ilec), which carries the voice of these giants, has already warned that the outcome of the negotiations will be "mixed", with some wholesale markets continuing "to increase", explained its director general Richard Panquiault at the end of September.

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The leader in food distribution E.Leclerc had only received requests for "upward" conditions of sale on Thursday, some of them by 15%" from their suppliers, its media representative, Michel-Edouard Leclerc, said on Thursday. This creates "concern" for Thierry Cotillard, head of the Intermarché/Les Mousquetaires group, about the ability of distributors to "obtain deflation". He even raised the possibility of a price increase "between 0% and 4%" on Sunday, which would be contrary to the bill's intent.

Signs of falling prices

In addition, the differentiated treatment of the largest industrialists is problematic for some: "multinationals will cannibalize the budgets of mass distribution and pre-empt a large part of the available shelf," fears the president of the Federation of Companies and Entrepreneurs of France (FEEF), Léonard Prunier, who asks that the small go before the big ones.

Adepale, an association of French SMEs and mid-caps in the food sector, called on Tuesday for "the removal of thresholds for the implementation of trade negotiations" which, in the text examined by the Assembly, should make it possible to differentiate between large and less large manufacturers. The deadline for negotiations is also a matter of debate. "The bill doesn't change much in terms of substance," Leclerc said. Some argue for year-round bargaining.

Food inflation, however, is showing signs of deceleration. Some prices on the shelves are even starting to fall, albeit to a much lesser extent than the increases of the last two years. In any case, manufacturers and supermarkets alike consider a return to 2019 prices very unlikely.