Resource centre

The below signatories call for the immediate setting up of a hospitality task force across the EU Institutions to discuss the impact that COVID-19 has had on business and jobs and deliver a road map for the recovery of the hospitality sector and its value chain.

COVID-19 has hit Europe hard, taking thousands of lives, destroying families and impacting the health of many more people. We would like to first and foremost commend the hard work and diligence of Europe’s health and frontline workers, who have proven themselves the true heroes of this crisis. We wish to express our heartfelt sympathy to all those who have been impacted by the COVID-19 pandemic. The arrival and distribution of successful vaccines gives us hope for 2021 and a successful recovery. 

The COVID-19 pandemic has also hit livelihoods and businesses hard, throwing Europe’s restaurants, bars, hotels, cafés, pubs and nightclubs into a deep crisis. The hospitality sector has been among the hardest hit, with businesses being forced to shut down at short notice as part of the collective fight against the virus and many workers being laid off temporarily or definitely.

It has led to a dramatic knock-on effect on its suppliers.  Many actors in the food supply chain such as farmers, processors, traders, wholesalers, and food and drinks manufacturers face severe hardship. Many of these sectors are primarily made up of SMEs and these businesses are intrinsic to the functioning of the hospitality sector.

We turn towards 2021 with the core objective of creating some predictability for the hospitality sector and its supply chain, through a safe, timely and sustainable reopening as soon as the economy starts to open up again.  

These hospitality businesses are part of the European social and economic fabric, bringing diversity and vitality to city centres, rural communities, villages and tourist areas across Europe. Bars, restaurants and cafés help attract people to town centre shopping districts and, likewise, these shopping destinations help bring custom to town centre hospitality venues. This is part of the European way of life, combining tourism, high quality food, services and culture.

In normal times, the hospitality sector accounts for up to 20-30% of overall food and drink consumption in the EU – and can represent far more in certain products. It employs more than 12.5 million people across the EU.  It is also a growth sector (between 5 and 12% growth per year before the pandemic, depending on the segment), adding tens of thousands of new jobs every year. It likewise represents a high value-added segment for specific agri-food products.

Hundreds of thousands of businesses have had to close due to the various lockdowns, shutdowns and restrictions, and all unfortunately face an uncertain future. This has resulted in millions of people currently temporarily unemployed, with a real risk of many drifting into permanent unemployment due to businesses not surviving this economic crisis. Some restaurants were able to focus on takeaway or food delivery services, but this can only help save a small percentage of traditional income streams.  During Q2 2020, the hospitality sector’s turnover in the EU dropped by 63.25% compared to Q2 2019. In employment terms, hospitality services employed 1.84 million fewer people in Q2 2020 than in Q2 2019.

Food & drink value chain businesses have taken their responsibility

Hundreds of thousands of businesses within the hospitality sector, with support of their partners, worked hard to invest in new infrastructure and implement all national health and safety protocols to protect the health of staff and guests alike. Together, these establishments can and will ensure that these measures remain effective to enable their business to reopen and stay open safely, helping to restore consumer confidence. 

The hospitality sector calls for strong and dedicated support to help its recovery

The unpredictability over measures opening and closing restaurants, bars, canteens and alike has generated huge uncertainty for everyone involved along the supply chain. Clarity is needed as soon as possible on when and under which conditions the hospitality sector will be able to reopen, to ensure sufficient time to refurnish stocks and adapt to additional measures, if any.

Re-opening in a well-regulated manner, following all the health and safety protocols developed at national level and keeping hospitality companies open safely, if the epidemiological situation allows, is in everyone’s interest. By helping the sector to stay open, moving progressively away from simply supporting it to stay closed, we can create much-needed stability and reliability in this crisis for the millions of people in the European Union.

Our needs are both immediate and long-term. Many businesses in the hospitality sector are at risk of collapse and will take down many other supporting industries in the process. Millions of workers and their families are facing great uncertainty and fear for the future. The necessary financial, fiscal and operational support must be extended for companies directly and indirectly affected by the lockdown, for as long as it is necessary, to provide liquidity to companies and to help avoid bankruptcies. State wage compensation schemes must also be extended until this crisis is not over to protect as many jobs as possible. Supporting the hospitality sector and its value chain now, can play a leading role in Europe’s recovery from the COVID-19 crisis.

Investing in the hospitality industry NOW will pay off for our collective recovery in the future, helping to kickstart the wider economy and society

EuroCommerce, Euro Coop, and Independent Retail Europe today joined Commission Executive Vice-President Frans Timmermans, Commissioner Stella Kyriakides, senior MEPs and other stakeholders at an event to launch work on a code of conduct under the Farm to Fork strategy.

Retailers and wholesalers of all sizes have been in the forefront of increasing the sustainability of the products they offer. They have launched initiatives all over Europe to drive and support sustainable production and consumption by working with their suppliers, supporting farmers in moving to organic and other sustainable production methods, and innovating in offerings to consumers, including via their own brands. Retailers’ doors are open to everyone, allowing daily engagement with, and scrutiny by, consumers. The direct interface between suppliers and consumers which our sector provides offers new and rewarding market opportunities for all producers of sustainable products and can help nudge consumers towards buying them. The scale which our sector can offer to producers can also allow a wider public to buy high quality, healthy food at an affordable price.

EuroCommerce Director-General Christian Verschueren commented:

“EuroCommerce is pleased to join the Commission and our partners in retail and the rest of the supply chain in this opportunity to work together on a code of conduct which is fit for purpose and that would eventually motivate as many actors as possible to join in. This initiative is an opportunity for our sector to highlight and further develop the many sustainability initiatives our members have engaged in all across Europe and over many years. But we cannot do this alone and the code will need to acknowledge that only by all parts of the supply chain and public authorities working together, can it succeed.”

Independent Retail Europe Director-General Else Groen said:

“We are eager to work with everyone to make this code a success, but to achieve its objectives, those objectives need to go with the grain of the actions and aspirations of those expected to deliver them. They should be grounded in the many initiatives our sector already undertakes and involve voluntary commitments to reach a common goal. This is also important if it is to enable the many SMEs, hard hit by the COVID-19 crisis, to participate at their own pace. Therefore, and in view of the very challenging  timeline, to succeed, the objectives need to be both ambitious and achievable.”

Euro Coop Secretary-General Todor Ivanov added:

“Retailers have a close relationship with their communities.  We work closely with local suppliers to offer them a ready outlet for quality healthy food sustainably produced, and access to consumers ready to buy them.  We pay a premium for that quality, but sustainable food should not be a privilege for the few. By creating volume can also help put those sustainable products more easily in reach of all consumers, who are the owners of consumer co-ops. It should be a clear objective for the code of conduct that it serves everyone involved, from the producer to the consumer - and not least our planet. As value-driven businesses, consumer co-ops are ready to work with the EU policymakers to make this code a reality.”

Throughout the ongoing COVID-19 crisis retailers and wholesalers have played an essential role in ensuring continued provision of an essential service to citizens and support society through the pandemic. The food supply chain was under significant strain during the first wave in spring 2020 as citizens horded to the shops to stock up on foods, while at the same time, member states started to impose restrictions to the free movement of goods and people in the internal market, leading to significant disruptions in the supply chains. Through intense cooperation in the chain and with the support of the Commission’s Green Lanes initiative it was possible for retailers and wholesalers to keep their shelves stocked and continue to serve citizens. We very much agree with the Commission that there are lessons to be learned from these experiences, and EuroCommerce welcomes the opportunity to provide feedback to the Commission’s roadmap on a contingency plan for food supply and security.

Speaking today after the adoption of Council conclusions on Circular Economy Action Plan, EuroCommerce Director General Christian Verschueren said:

“The conclusions drawn by Ministers echo our view that the circular economy offers major opportunities both for our sector and for society more generally. It allows everyone to rethink existing business models, offer alternative products and provide the means and support for consumers to adopt a more sustainable lifestyle. Our sector can help this process by working in two directions - both driving, and responding to, changes in the demands of consumers and society.”

Retailers and wholesalers have a long track record of commitment to improving the sustainability of their products and activities, and implemented numerous initiatives to achieve this. The sector has pioneered a range of actions, from fighting food waste, improving energy efficiency and resource use in their operations, reducing the amount of packaging, to companies setting clear targets to becoming carbon neutral. As societal commitment to the environment grows, the clearer it becomes that no single actor or sector can achieve these objectives alone. We will therefore  need to ensure a coordinated approach involving regulators, suppliers, and actors within each sector.

The Circular Economy Action Plan (CEAP) offers a unique opportunity to address these key issues. In examining it, we would ask the Council and Parliament to pay particular attention to the need for EU action to provide legal certainty and ensure that  legislative measures avoid overlapping or conflicting objectives. This means, for instance, that the definition of product sustainability should be addressed in the Eco-design Directive to help address issues such as durability with appropriate technical definitions, rather than addressing these issues in, for example consumer law. We very much support the Council’s conclusion that CEAP should address and reduce the current technological and regulatory barriers to upscaling recycled content in products.

As member of the Coordination Group of the European Circular Economy Stakeholder Platform, EuroCommerce will continue its commitment to cooperation in creating the right framework. Such a framework will encourage research and innovation in eco-design and digital technology, while also ensuring that the impact of the measures on all parts of the supply chain is properly assessed.

As the Commission launches its proposals for the Digital Services (DSA) and Digital Markets Acts (DMA), EuroCommerce Director-General Christian Verschueren said today:

“The Commission is right to look at the rules impacting e-commerce in line with the accelerating digital transformation of our sector. Consumers must be able to trust that what they buy is safe and complies with EU rules. We are therefore encouraged that the proposed DSA seeks to ensure products offered for sale online are compliant with EU rules and that the Commission has sought to clarify the responsibilities of online marketplaces. We take note of the proposed Digital Markets Act and ask EU decision-makers to ensure that new rules provide necessary legal certainty and support strong retail and wholesale ecosystems in the EU. We will work with the Commission, Parliament and member states to take forward these two proposals in a way which aids competition, innovation and consumer protection”

Consumer demand is driving innovation in retail, and numerous and diverse new digital and omnichannel business models are responding to this. EU policy therefore needs to reflect that in regulating online services, there is no single solution which can fit all of them. Offline and online business models are merging into omnichannel, and retailers need a coherent framework that:

- ensures a high level of consumer trust,

- offers legal certainty for all market players irrespective of how they do business,

- balances responsibilities for all market players appropriate to their position in the supply chain; and

- creates a level playing field for all businesses selling to EU consumers - wherever they are established.

We have underlined the need for effective enforcement of EU rules at borders against non-compliant and unsafe products, and to ensure a level playing field between EU-based businesses and those outside the EU. We welcome the distinction made between different types of service providers.  We are concerned at the proposal to treat very different types of illegal content all in the same way. Proposed fines of 6% of turnover in the DSA and 10% in the DMA are excessive: our sector is characterised by large turnover and very small margins, with many online businesses still operating at a loss.The framework should be flexible and match the wide diversity of existing and future services, providers and business models, where digitalisation has already led to a seamless integration of offline and online sales in an omnichannel environment, giving consumers a personalised and connected experience.

In order to achieve its stated objectives and support the digital economy, the Digital Markets Act needs to clearly and narrowly define the platforms and practices it seeks to address and ensure that companies continue to be able to engage in procompetitive activities to drive further innovation and consumer benefits. We also welcome the more limited scope of the market investigation elements in the DMA. We hope that the Parliament and Council will allow its focus to remain on these important objectives, provide legal certainty and ensure that the Act supports the development of strong retail and wholesale ecosystems fit for the digital future.

For further detail on our approach to the Digital Services Act, see our position paper.

Speaking today ahead of the Commission workshop on the results of their study on Territorial Supply Constraints (TSCs), EuroCommerce Director-General Christian Verschueren said:

“We are very grateful to the Commission for following up retailers’ and wholesalers’ concerns  at the fragmentation of the single market caused by large brand manufacturers simply refusing to allow them to buy their products where it makes most commercial sense.  We are pleased that the study shows the facts confirming that this problem exists, and that resolving it would save consumers no less than €14 billion, and – equally important – give consumers more choice. We are therefore asking for urgent action to make the single market a reality in this area.”

Every day, large manufacturers are insisting that retailers and wholesalers buy only from their designated distributor in the country where their product is sold to the consumer.  This means that retailers cannot buy centrally, nor move the products they have bought from one market they serve to branches in another. This makes no sense in a properly functioning single market, and makes no sense for consumers.  It cannot be ignored any longer.

The volume of trade at stake and the potential gains from allowing sourcing at EU level are so great, that the issue can no longer be ignored. This and previous studies point in the same direction: large suppliers of certain product categories are able to use their market power to impose these restrictions, leading to significantly higher prices, and product differences which reinforce them, from one county to another.  The study confirms previous findings from Benelux and the ECB that only part of the price differences between countries can be explained by cost factors such as labour, logistics and taxation. This means that consumers in one country get a much worse deal than consumers elsewhere - for no particular reason, other than bolstering the already large profit margins of global brand manufacturers.

Giving retailers and wholesalers the possibility to freely source in the single market would bring down wholesale prices and allow consumers access to a wider range of products. Choice at the best price is something retailers want to provide their customers, and what the single market is designed to deliver. Removing TSCs would also drive innovation and investment, all to the benefit of consumers. Verschueren added:

“The Commission has already done European consumers a major service with this study. We call upon the Commission now to look at action on TSCs as a core priority in supporting the retail ecosystem. In doing so, we would ask them to consider using a combination of tools, including stronger competition law enforcement, to make the single market in sourcing work as effectively for retail and therefore consumers, as it already does for the large manufacturing companies.”

EuroCommerce today released a study by retail payments consultancy CMSPI and antitrust and economics advisers Zephyre on the rise since the adoption of the EU Interchange Fee Regulation (IFR) in the fees paid by merchants accepting card payments. EuroCommerce Director-General said:

“We have been a strong supporter of the Interchange Fee Regulation (IFR) ever since its adoption in 2015, as a means of limiting the amount paid by merchants and consumers for credit or debit card transactions.Unfortunately, as we have warned before, the large international card schemes have meanwhile raised the fees not regulated by the regulation to such an extent that all the benefits to consumers and merchants have now disappeared. We are therefore asking the Commission urgently to look at action to restore the balance originally achieved by the regulation”.

The study shows very significant increases in Visa and Mastercard scheme fees since the entry into force of the IFR. These figures are based on specific data drawn from invoices and acquirer notices received by leading merchants from their card acquirers. It registers the following:

- Additional annual costs since 2015 to merchants accepting cards of €1.46bn. No less than €1.06bn of these annual cost increases have arisen since 2018, when the EY study, commissioned by DG Competition as part of its review of the regulation, stopped collecting new data. Fee increases already announced for January 2021 will add an additional cost of some €100m on merchants. These are unlikely to be the last increases we see in fees over the coming year.

- Two scheme fee increases occurred during the period up to 2017 covered by the Commission review. In the years since, there have been a further eleven increases in various fees not regulated by the regulation.

- The IFR resulted in a reduction in consumer card interchange fees for merchants. The increases in other charges mentioned above have now exceeded the reductions brought about by  IFR.

- This means that the average cost of card payments in the EU is now higher than it was when the IFR came into force in 2015, nullifying any benefits previously derived from the regulation.

Most retailers make on average no more than 1-3% net margin, and have little choice but to ultimately pass on to consumers increases in the fees unilaterally imposed on them by an unavoidable trading partner like the card schemes. 

The ability of the card schemes to take out such significant additional revenue from the system with apparent impunity is particularly worrying at a time when the ecosystems identified by the Commission as hardest hit by the COVID shutdown – travel, hospitality, mobility and (particularly non-food) retail are exactly the ones in which card use is most concentrated. 

The COVID shutdown has inevitably driven a massive growth in online sales, and this means more intensive use of cards. Fees for such ‘card not present’ transactions (i.e. when purchases are made over the internet or on a mobile), are more expensive than to those made at a physical point of sale.

We very much welcome the plans for the European Payments Initiative (EPI) as a European competitor to the US card schemes. But EPI is planned to go live in 2025, and it will be some time before its impact on the market will be felt. In the meantime, merchants – and through the price of the goods and services they buy – consumers, are paying ever-rising fees for what has become an everyday and in many cases unavoidable way of paying for them.

At its 2020 flagship conference today, EuroCommerce is bringing together high-level speakers from the European Commission and the European Economic and Social Committee, senior retail HR executives, and trade unions representatives, for an exchange on how retailers and wholesalers are keeping pace with the rapidly changing world of work. Retail and wholesale – Europe’s largest private sector employer – provide stable and fulfilling jobs for 29 million people. They have a strong track record in also equipping them with the skills they need to meet ever changing consumer demands and changes in how and what they want to buy

Addressing the conference, European Commissioner Nicolas Schmit said to retailers and wholesalers:

“Reskilling and upskilling of your workforce are going to be key for the resilience of your sector. The EU is mobilised to support the necessary effort in partnership with member states and most importantly, the private sector.”

Emphasising the important role of social dialogue, EuroCommerce Director-General Christian Verschueren said:

“Constructive social partnership can help the resilience of retailers and wholesalers and support and equip employees in a changing world of work. We have discussed examples of best practice today for attracting and retaining talent as well as up- and reskilling existing employees. These show that real change is often best made incrementally at the workplace level rather than through legislation. We are looking to the European Commission to leverage best practice in training to help SMEs up- and reskill their workforce. We also ask that they invest in the capacity of social partners to promote these examples through autonomous social dialogue throughout Europe.”

Retail and wholesale are a people business, serving people. Retail and wholesale companies and their workforce have worked hard in ensuring that consumers have a reliable supply of daily essentials during the Covid-19 crisis. The pandemic has massively accelerated the trend towards digitalisation and online sales, and those businesses with an online and physical presence have been those who have weathered the crisis best. Our sector is also actively engaged in supporting the green transition.

Together with our social partner UNI Europa we have asked for support in these challenging times to take the next steps in helping achieve the ambitious goals Europe has adopted under the New Generation EU plan. Autonomous social dialogue and education and training will be key factors in preparing our workforce for these challenges and the resulting new ways of working.

EuroCommerce Director-General expressed support for the conclusions in the Commission report on the working of the Geoblocking regulation issued yesterday:

“We are pleased that the Commission has decided to leave the Geoblocking Directive unchanged until their next review in 2022. We fully support the creation of a single market for e-commerce, and call on the relevant parts of the Commission to look at the major differences in member states’ consumer rules, and risk of exposure to legal action in an unfamiliar jurisdiction. Both act as a powerful disincentive to e-traders actively expanding cross-border.”

The Geoblocking regulation adopted 2 years ago obliged online traders to sell to any consumer regardless of their location, but, due to problems relating to the Rome and Brussels regulations, did not oblige traders to deliver outside their own jurisdiction. The Commission decision to wait another 2 years before looking to revise the Geoblocking regulation makes sense, and retailers and wholesalers welcome the conclusion in the report not to change the provisions related to delivery.

The Rome and Brussels regulations allow consumers to pursue legal action against a trader in another jurisdiction and have that judgment apply in the trader’s country. We and other traders pointed out at the time that an obligation to deliver to the home country of the consumer would expose a trader to the provisions of Rome and Brussels regulations. This would mean that a trader selling a relatively inexpensive item could end up paying many thousands of euros defending a case against them in a jurisdiction whose laws they are unfamiliar with. The Commission concluded that the trader could choose not to deliver outside the countries he actively served, so that the transaction would remain under the trader’s legal framework.

This of course means that the consumer has to find his or her own means to get the product delivered to their home – indeed any help in doing so from the trader would, under the regulation, expose the trader again to action in a foreign jurisdiction, and a multiplicity of different consumer rules. This is not ideal for the consumer, and we very much share the Commission’s wish for a vibrant single market in e-commerce.

We hope that the Commission services responsible for the consumer law might look again at harmonising consumer rights across Europe and reconsider whether a trader delivering a product or service across border cannot be treated in the same way as a shopkeeper who sells a product to a foreign visitor – with the trader’s law being applied. E-commerce is growing rapidly, and the present consumer rules hold back, particularly smaller European traders - and consumers - from taking full benefit of the single market.

EuroCommerce supports the direction set in the European Green Deal. Retailers and wholesalers understand that challenges are significant and are in many ways pioneering by providing consumers with sustainable choices at an affordable price, and developing sustainable business practices, such as recyclable packaging1, CO2 neutral stores and investing in electrical delivery fleets. They do however also face challenges in driving this transition in a sector with high fixed costs and low margins and realise that the challenge is such that they need to cooperate with peers, suppliers and other stakeholders to have a real impact.

Companies need legal certainty, clear incentives, and scale to invest in a fundamental business transformation with a long payback such as those needed under the Green Deal. They need public support to facilitate the transition and invest in new technology, to support investment in infrastructure and to promote research in greener technologies.

Competition policy is already supporting the green transition, by helping to achieve effective and competitive outcomes for consumers and by ensuring that companies compete on sustainability aspects. Nevertheless, there is scope for more clarity to allow further cooperation with peers and supply chain partners, help address the first mover disadvantage, facilitate the transition in a competitive environment and offer consumers a wider choice of sustainable options. We thank the Commission for the opportunity to comment on how competition policy can support sustainability efforts in the most effective way.

Our response focuses first on questions relative to antitrust rules. We will then comment on the other aspects of the consultation, namely state aid control and mergers.