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The European Banking Authority’s (EBA) statement on consumer and payment issues in light of COVID19 of 25 March1 included relaxation of some aspects of Strong Customer Authentication (SCA), and a willingness to consider other measures in respect of their Opinion.

In this context, Ecommerce Europe, EuroCommerce and Independent Retail Europe call on the EBA and the European Commission to seriously consider such additional measures and especially the granting of an extension of the current deadline for the migration to Strong Customer Authentication (SCA) of 31 December 2020.

EuroCommerce has issued a joint letter (co-signed by Independent Retail Europe) which was sent to Commissioner Sefcovics on dealing with regulatory burdens in the retail and wholesale sector during the COVID-19 pandemic.

Brussels, 26 March 2020 – Copa-Cogeca, FoodDrinkEurope and EuroCommerce represent the core actors in the European food supply chain: farmers and agri-cooperatives, food and drink manufacturers, and wholesale and retail distribution.

In these challenging times, our farmers and businesses strive day and night to get food and drink to all Europeans every day. We are working together, also with many other businesses in the agri-food supply chain, and with the European institutions to ensure our collective response is coordinated and effective, both in the short and long-term.

We pay tribute to all of those across society who are working tirelessly to deal with the Covid-19 public health crisis. In the food supply chain, committed people on our farms, in our factories, on the roads, and in our shops and supermarkets are giving all their energy, time, and dedication to fulfil this important mission: feeding people.

We will do all in our power to ensure our food systems continue to function sustainably and effectively throughout the health crisis and the confinement measures taken.

We emphasise that our industries and workforce must be recognised as essential to maintain our activities and ensure safe, affordable and quality food for our consumers. We ask that the borders remain open for people and for freight to fulfill this essential mission.

We offer to work with the European institutions through a structured dialogue to ensure that the response to Covid-19 is coordinated and effective, both during the crisis and in its aftermath.

EuroCommerce has sent a letter to Commissioners Breton and Schmit to draw their attention to a pressing problem for a number of food retailers and wholesalers which is the treatment of cross-border workers in our sector.

The sector has faced problems with the borders into Luxembourg earlier this week, where the vast majority of retail workers live in a neighbouring member state. Whilst these seem to be being resolved, we have since heard that the Czech authorities are stopping workers crossing the border to Austria and Germany without a special pass issued by them, and similar issues may arise at other borders.

We would ask that all member states should be reminded of the guidelines agreed by heads of government this week, which underlined the obligation to guarantee the free passage of workers across borders. We should add that the same issues arise with the passage of seasonal workers, who are being held up at borders, preventing them help farmers whose fresh produce also needs to be harvested and delivered to consumers in a reliable manner.

Speaking today, EuroCommerce Director-General called for non-food retailers to be added to the EU list of hardest-hit sectors:

“We fully support national governments’ decisions to take urgent measures to protect all Europe’s citizens as far as possible from the spread of COVID-19. Rightly so, the focus hitherto has been to protect health and ensure access to food and other daily essentials. But we need to start looking at the economic fallout of the pandemic as well.”

In anticipating the economic consequences of the pandemic, the European Commission has produced helpful guidance and proposed measures – in their communication last week (COM (2020) 112) on the response to COVID-19 – to help the EU economy overcome the substantial disruption and damage. The communication was, however, written before a large number of member states imposed severe restrictions on the opening of shops selling non-food items, and therefore did not include it in those sectors it identified as being hard hit.

Shops selling clothes, furniture, electronics, cosmetics, home improvement or many other items are in many member states already losing half of their daily turnover. If, as is now planned or implemented in some countries, these shops are obliged to close completely, we expect a massive wave of bankruptcies, job losses, and disappearance of shops from town and village centres. This is a pattern across all European countries who have taken the necessary strict measures.

“The Commission has identified a number of sectors as worst-hit by the pandemic. However, it drew up this list before a large number of countries decided to close other shops fully. Non-food retailers, already facing major challenges from online competition, now face a major crisis, and many, particularly but not only, SMEs risk never opening again. In Germany alone, non-food retailers are reporting losses of more than €1bn a day. Extrapolated to the whole EU and the days since national restrictions have been imposed, the loss is in many billions of €.

We therefore ask that non-food retailers are included in any EU and national initiatives aimed at helping them over this difficult period. These financial stimulus measures, whether at EU or national level, are essential to maintaining a healthy EU economy during and after the crisis.

We also ask the Commission and member states to consider the impact of implementing new EU or national legislation that is not related to the pandemic. At a time when all company resources have to focus on dealing with the coronavirus epidemic and put in places new emergency measures every day, a delay in the application of other new legislation would be helpful.

We are also asking governments that have mandated the full and continuous closure of some of types of non-food retailers, such as those selling petfood or DIY material, to consider opening those stores, albeit with some restrictions. For some families, these and other non-food retailers sell essential goods as well.” Verschueren continued.

Finally, we hear reports of retail property owners demanding that closed stores keep strictly to their rent payment deadlines, whilst others seem to be more helpful and understanding towards retail tenants. We are asking that the commercial property industry shares the burden of rental costs carried by retail companies whose shops have to remain closed.

The following statement was issued today on behalf of the European retail and wholesale sector by Christian Verschueren, Director-General of EuroCommerce:

First, I want to pay tribute to the 29 million people working in our sector, who have been working extra hours and giving up holidays to make sure that customers receive the service they need in these exceptional times. Retailers and wholesalers have been working with all parts of the supply chain to ensure that there are adequate supplies of the things European citizens need every day. 

Second, coming into contact daily with millions of customers, we have taken a wide range of steps to support public authorities in seeking to minimise the risk of infection to customers and to our own staff.  We are cooperating with and supporting all public authorities – at European, national and local level, in the measures they are taking to limit the spread of the virus. We are calling on our social partners to cooperate with us in protecting our employees.

Third, we support and reiterate recent calls from European Commission President von der Leyen and Commissioner Breton to governments and customs authorities to keep borders open for lorries carrying the goods that people need on a daily basis. We ask that governments follow the Commission guidelines issued today calling on member states to ensure the free circulation of food, including livestock, medical supplies and protective equipment. All our members have been clear that we have enough supplies ready to meet demand for food and daily essentials, but this could be compromised if disproportionate measures are taken at country borders to make it impossible for deliveries from one member state to another. Also, in some border regions, vital workers in retail and wholesale live in one member state and work in another: we ask that national authorities allow these employees to get to work and carry on serving customers.  

Fourth, our supply chains depend on regular and smooth, on-time deliveries, and these need to be maintained unless there are real risks involved. In a number of member states, retailers, manufacturers and farmers have joined together publicly to underline their commitment to these initiatives. Retailers have been clear that they will show flexibility and understanding if suppliers are delayed in delivering to them. 

Fifth, retailers have also been cooperating to share information on supplies and arranging deliveries to the homes of people who cannot get out. We are pleased that governments and competition authorities have indicated that, under these very special circumstances, they might waive normal competition rules to allow such exchanges in order to save lives, and keep supplies flowing. We ask that they indeed allow such cooperation to take place while the coronavirus crisis continues.   

Finally, we wish to reinforce the message from governments to all Europeans that it is not necessary to buy large amounts of daily necessities. Food retail shops remain open everywhere, albeit with some restrictions in some countries. Emptying the shelves of a product creates a vicious circle of panic buying, and that is a pattern of demand that makes replenishment more difficult. We appeal to consumers to act with restraint and solidarity - and leave some products for others who need them as well.”

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EuroCommerce Director-General Christian Verschueren commented today on the publication of an Ernst & Young study for the European Commission on the effectiveness of the Interchange Fee Regulation (IFR) and the launch of its own report on retailers’ on-the-ground experience of the IFR’s application:

“We are pleased to see that the EY study shows that the Commission was right to place a cap on interchange fees for credit and debit cards, and that this is working. Card fees place a major burden on small retailers and are reflected in the prices they have to ask consumers to pay. With strong competition and low margins, retailers have passed on the benefit of lower fees to consumers. But we face very significant rises in other card fees which are not as yet covered by the regulation. Today we are providing evidence of this unhelpful trend in our report and are asking that the Regulation be revised to fix this.”

The EuroCommerce/Zephyre study, published today, includes substantial input from our members’ experience of dealing with card fees. It shows that since 2016 card schemes have been steadily increasing the unregulated fees imposed on retailers, thereby substantially reducing the intended benefits to retailers, and in turn consumers, of the IFR.  For example, data provided by the global payments consultancy CMSPI, shows that in the 3 years since 2018, average fees imposed by one card scheme increased by over 29% to 0.104% and inter-regional fees by over 35% to 1.15%. Ahead of the Commission’s report on the IFR, therefore, we are asking for the Regulation to be revised to include:

• Regulation of the total fees charged to payment card acquirers;
• Removal of all substantive exemptions in the Regulation so as to cover commercial cards, three-party card schemes, cash withdrawals at ATMs, inter-regional cards, and virtual card transactions;
• Independent acquiring of three-party card schemes
• Mandatory minimum interchange fees for cash withdrawals and deposits at ATMs in order to maintain consumer choice and cash alternatives and
• Strong and dissuasive penalties for non-compliance with the regulation.

Responding to the Commission Circular Economy Action Plan published today, EuroCommerce Director-General Christian Verschueren underlined the retail and wholesale sector’s support for the plan’s objective of for speeding up the transition to a circular economy:

“We applaud Europe’s leadership in responding to urgent and global environmental pressures and scarcity of resources.  Retailers and wholesalers are already showing their commitment to circularity and working with suppliers on many fronts - redesigning their own-brand packaging to ensure more recyclability, launching new business models such as repair and re-use of furniture, or renting electronic devices.  These and many other activities are part of shift to a products-as-a -service business model. And consumers are responding to this positively, creating a virtuous circle of demand for sustainable, repairable and more recyclable products.”

Retailers and wholesalers will engage in helping the Action Plan succeed, but face some hurdles where the EU and governments can help:

- Responsibility needs to be spread throughout the supply chain from producers down to the consumers.

- We need consistency and harmonisation in EU and national legislation to remove numerous regulatory barriers to doing the right thing with valuable resources:  different rules covering waste and recycling and in the treatment of, for example, taxation on food donations

- EU waste legislation needs revision to allow a strong EU market for secondary raw materials. This needs harmonising end-of-waste criteria EU-wide and an EU one-stop-shop for EPR. Regulation needs to encourage the uptake of recycled material in new products and give customers the information they need to make sustainable choices, without overwhelming them with unnecessary or confusing information.

- The Commission should conduct a full impact assessment, including consumer behaviour studies, before considering extending labelling requirements related to sustainability

Last but not least, in promoting circularity, EU retailers and wholesalers cannot be put at a competitive disadvantage against traders from outside Europe. Verschueren added:

“The EU and national governments need to create positive incentives for change in a way which does not put EU actors at a disadvantage against direct imports from, especially, China which do not contribute to the cost of circular initiatives or observe EU rules.”

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Commenting today on the Commission package of the Industrial Strategy, strengthening the single market and on SMEs, EuroCommerce Director-General welcomed the concrete steps proposed, but added some thoughts on how to ensure that the Commission ideas were successful in making the whole EU economy globally competitive:

“We strongly support the objectives of Commissioner Breton’s proactive approach in all of the Commission communications released today.  We would counsel implementing them in a way which ensures that the whole EU economy and society benefits.   Services represent over 70% of EU’s GDP, and services and manufacturing are increasingly difficult to distinguish. The EU needs the ‘two sides’ of industry to be competitive, and being competitive internationally means being competitive at home, and not forgetting that it is consumers who ultimately determine the success of any industry. This can also only work by focussing, as the separate Commission communication does, on helping SMEs, who make up 99% of our sector, thrive.”

We look forward to seeing the strategy work for a competitive retail and wholesale sector: digitalisation has fundamentally transformed retail and wholesale, and further raised competitive pressure on an already very competitive market. Digitalisation allows manufacturers and third-country merchants to sell direct to European consumers online. Retailers and wholesalers need an industrial strategy that ensures strong competition in the Single Market and avoids concentration, for example in consumer goods, where manufacturers are already strong. Strong competition at home is the best way of achieving global competitiveness and ensuring that both business customers and consumers continue to have a wide choice of innovative and affordable products and services.

We support the new commitment toremoving internal barriers, making the single market work. Chinese and US companies can use a large, single home market as a springboard to compete globally. The EU market remains fragmented, and member states are constantly introducing new national rules on products and services, nibbling away at the single market. This needs to change. Every year, 700 new national rules are notified to the Commission; we need the Commission to step up enforcement, and member states remove unnecessary or discriminatory national rules as soon as possible.

There is also a need to ensure a level playing field for all, online and offline. Unfair competition from online players in third countries is undermining the competitiveness of European retail businesses. These third-country merchants often sell non-compliant and unsafe products to European consumers, ignoring EU standards, tax obligations, safety and consumer protection rules. This allows them to sell products much more cheaply than EU retailers and puts consumers at risk. European consumer organisations recently published a study giving graphic examples of these problems. The Single Market Enforcement Action Plan proposes some measures to address this issue but to make it work, Member States need the resources to enforce the rules. A coordinated EU approach is desperately needed.

The Commission’s renewed commitment to support SMEs is very important. SMEs are a major driver of innovation and growth, and Europe’s largest employers. Hence their competitiveness and ability to embrace the latest technology will be as important to the EU’s global competitiveness as the performance of large companies.  99% of businesses in retail and wholesale are SMEs and 90% micro enterprises. They play a key role in local communities and the livelihood of cities and villages. We therefore very much welcome the Commission’s emphasis on dedicating new resources to make sure the SME dimension is properly understood and acted on across all EU institutions. We very much support the proposed strengthening of the SME Envoy Network and the proposal for it to work more closely with the regulatory scrutiny board on better regulation, and a strategic sounding board of SME entrepreneurs to complement the Commission’s work. It will now be critical that policymakers take concrete action to underpin these measures with a strong and coherent process to make sure that SMEs are in the centre of EU and national policy-making, that “think small first” is systematically applied.

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The paper contains the short-term key asks of retail and wholesale related to VAT and excise duties in the following areas:

VAT:

• Greener: We ask for a better alignment of VAT and environment policies through harmonised rules on VAT reliefs on product donations
• Fairer: Specific Action to safeguard level playing field: automated fast-track import process for certified operators and mandatory VAT Import One-Stop Shop system
• Simpler: Extending EU VAT One Stop Shop to all transactions by remote sellers, including pan-EU inventory storage and further harmonisation of classification of products eligible for reduced VAT rates

Excise Duties

• Excise Duty registration and compliance obligations regarding distance selling and B2B cross-border trade

Customs

• More effective coordination within and between European institutions to avoid blockages between customs and VAT or excise duty facilitation initiatives.