EURELEC welcomes the ruling by the Court of Appeal of Brussels in favour of EU law primacy

EURELEC welcomes the judgement of the Court of Appeal of Brussels of 19 February 2024, acknowledging that only Belgian law applies to EURELEC. This is a positive signal for upholding EU law and the EU internal market and therewith for European consumers who are the main beneficiaries of a well-functioning internal market.

EURELEC welcomes in particular the recognition given by the Court of Appeal of Brussels, which confirms that only Belgian law is applicable to the contracts between EURELEC and its suppliers. It also recognises that the French Ministry of Economy and the DGCCRF are not competent to implement inspection measures – either directly or indirectly – against EURELEC.

In this context, EURELEC also welcomes the complaint lodged before the European Commission in 2023 by EuroCommerce – the principal European organisation representing the retail sector, with members from 27 countries – against “the French law which restricts the freedom of retailers and wholesalers to source in the single market in breach of EU law”. Such – purely formalistic – provision as an annual deadline for the signature of purchasing agreements between retailers and suppliers interferes with any pan-EU negotiation. This protectionism fragments the internal market, which all the Member States wanted several decades ago.

EURELEC, one of the first European Retail Alliances (ERAs) created in 2016 by independent retailers, is eager to contribute to a fair, well-working internal market for retailers, wholesalers, producers, and consumers. Its mission as an experienced ERA is to counter the attempt by big international industrial manufacturers of branded goods to partition the internal market. EURELEC’s mandate is to purchase products from worldwide fast-moving consumer goods (FMCG) manufacturers, and not from farmers or Agri SMEs. In 2020, a report of the Joint Research Centre of the European Commission stated that retail alliances have no direct or indirect impact on farmers. By bringing benefits from the internal market to the European consumers, ERAs, - which are recognized by every EU Member State as legal - are becoming essential, as they help to achieve a better balance with global suppliers through pan-EU negotiation of purchasing conditions for FMCGs.

Indeed, ERAs’ positive impact on the internal market is recognised by the European Commission, which confirmed in July 2023 that retail alliances could play a key role in “maintaining the capacity of retailers to reduce prices to consumers as well as ensuring competition between retailers” and that these alliances are “particularly important in the current context of high inflation”. ERAs aspire to mitigate the negative effects of so-called Territorial Supply Constraints (TSCs) to the ultimate benefit of consumers. The Belgian Competition Authority recently reminded that TSCs occur from “multinational firms supplying identical or very similar products at different prices to retailers across countries, typically in the disadvantage of relatively small countries” and stated that it “remains an important topic to keep on the (Belgian and EU) policy agenda”. Retailers in Netherlands see it as a business solution to TSCs to buy through a joint purchasing organization. The European Commission published in 2020 a study that calculated that the consumer welfare loss due to TSCs amounts to at least €14,1 billion annually.

EURELEC’s daily work is to negotiate justified and realistic cross-border purchasing conditions with some 50 multinational manufacturers of A-brands, which are making double digit billions of euros of turnover across Europe and the world, and from which EURELEC amounts only for a very limited share of its suppliers’ global turnover (under 5% generally). Most of the products sourced by EURELEC are manufactured outside the country in which they are sold. But this commitment to create a true European internal market for FMCG procurement is weakened by some protectionist laws at national level.