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In our joint statement of 8 April, we highlighted the unprecedented impact of the COVID crisis on the viability of retailers and wholesalers and the resilience of their workforce. The tradition of social partnership and the prevalence of tailored working arrangements in our sector, often through collective agreements, have enabled companies to deal effectively with the sudden and radical adaptation to the ‘new normal’. The social partners are now proposing “A European Pact for Commerce” to EU and governmental authorities to help the sector improve its long-term resilience through targeted support measures and by accelerating the digital and green transitions.

A European Pact for Commerce to support Europe’s economic recovery

We congratulate the European Commission and the European Council on agreeing the historic Next Generation EU recovery programme and the Multiannual Financial Framework, which will allow the EU to deliver on an ambitious and far-reaching investment agenda for the coming years.

We welcome the recognition of the retail and wholesale sector as providing an essential service, as an ecosystem hit particularly hard by the COVID crisis, and a priority sector for investment support. We would like to stress the importance of a vibrant retail and wholesale sector to the overall economic recovery, which heavily depends on the recovery of private consumption. Current support measures will therefore continue to be needed as long as demand and confidence are still at very low levels, in order to achieve the twin objective of keeping people in viable employment and stimulating sustainable consumption.

As part of the “European Pact for Commerce”, we emphasise the importance of investment and policy support to increase the resilience of the European retail and wholesale, Europe’s largest employer, and accelerate its digital and green transition. The scale of our sector (10% of EU’s GDP, 1 in 4 companies, 1 in 7 jobs), connecting producers with customers, has a significant impact on the economy as a whole, in particular on other key ecosystems. Consumer confidence remains at an all-time low when workers are uncertain about their future. It is also important to the livelihood of local communities and the encouragement of sustainable consumption. Supporting retail and wholesale in undertaking the green and digital transition can provide an effective fast lane to change.

Funding should be conditional, targeted towards transition projects, easy to access at company level and disbursed quickly. We recognise that member states will be responsible for designing their recovery programmes along the EU’s overarching priorities – digitalisation, sustainability and resilience. Finally, we urge the Commission that EU funding should be made conditional on compliance with EU legislation, rule of law and single market rules, and that implementation of the Country-Specific Recommendations is followed up strongly.

Actions needed for improving resilience and up- and reskilling of staff in retail and wholesale

According to a recent report by the McKinsey Global Institute, COVID and automation combined are putting more than 5 million jobs at risk in retail and wholesale. This could affect the many women and young people employed in retail and wholesale. In addition to stabilising the economy, we need EU and national help to invest in the skill sets of these workers, e.g. through stronger vocational and educational training, individual learning accounts. Targeted up-skilling would enable us to retain a larger portion of our workforce by training them to use digital technologies, while re-skilling may enable others to access job opportunities in other sectors.

Therefore, EU employment and skills support measures need to be redesigned to allow easy and rapid access to funding for the restructuring of our sector and changing skills needs driven by acceleration of market changes driven by COVID.

The social partners in the retail and wholesale sector, representing 5.4 million companies and 29 million workers in total, have therefore the 4 main policy asks to EU and national authorities:

1. Policy ask: The Commission should foster coordination and exchange on VET and life-long learning among member states

The retail and wholesale sector already trains for core employability skills, including interpersonal skills. Retailers and wholesalers now need to equip their workforce with the basic and advanced skills needed to interact with sophisticated systems, using, for example, blockchain and artificial intelligence. A worrying

development in this respect is the current shortage of IT-experts, as labour markets and universities in Europe struggle to meet the rising need of our sector and the economy as a whole. However, education remains primarily a national, regional and local competence, which means that the EU can only add value through the coordination and exchange national and local competent authorities and experts (‘open method of cooperation’), and encouraging best practices.

2. Policy ask: The Commission needs to fund and help SMEs up- and reskill their workforce

When allocating EU funding from ESF+ (European Social Fund) to national programmes, the Commission and national policy-makers should take into account the best practices in training programmes at company level. Training programmes at company level have been tailored to the needs of employees and are teaching basic digital skills. They are essential to the future employability of employees, in particular older and less-skilled personnel with low digital literacy rates. However, with the sheer size of our sector (29 million employees), private sector initiatives alone may not result in training offers for everyone. Co-financing by the ESF+ will be necessary, especially for SMEs.

3. Policy ask: Member states need to reform their national education and training systems

Skills gaps are more prevalent and severe in some member states than in others. This is the result of the mismatch between what national education systems can offer, in terms of higher education and Vocational Education and Training (VET), and the needs of employers. In addition, advanced digital skills are badly needed to support the digitalisation of retail and wholesale, not only the growing number of e-commerce businesses, but also the digital transformation of independently managed, shop-based retailers and wholesalers (SMEs). National education and training systems should therefore be reformed to allow for the timely and continuous updating of curricula and qualifications. In this respect, the introduction of new curricula based on ‘digital job profiles’, such as the e-commerce merchant in Austria and Germany (see below), should be particularly encouraged.

4. Policy ask: EU and national authorities should support social partnership on VET and life-long learning at EU, national and company level

Social partners design digital job curricula. Retail and wholesale are major investors in education, training and apprenticeships. In Germany for example, retail and wholesale remain one of the largest investors in terms of spending on Vocational Education and Training (VET). Apprenticeships for retail professions are ranked first and second in terms of the number of young people it attracts in that country., devised recently by the Austrian and German social partners in retail and wholesale, is a prime example The new e-commerce merchant apprenticeship of social partner-induced innovation in national education systems to meet the changes in the job market and the growing needs of employers for digital skills in retail and wholesale.

Social partners ensure access to training and continuous learning in the workplace. Up- and reskilling remains fundamentally a shared responsibility between employers and employees. Access to training is facilitated by the many bipartite training funds in the sector – often part of collective agreements. Targeted social partner initiatives add value for companies and boost the employability of employees.

Social partners will need to ensure that the necessary infrastructure is in place that enables employees to catch up as well as to nurture the habit of continuous learning. Good examples of such an approach are individual learning accounts within collective agreements as well as work-based learning within companies. 

-ENDS-

In her State of the Union speech on 16 September, Commission President von der Leyen said:

“We must tear down the barriers of the Single Market. We must cut red tape. We must step up implementation and enforcement. And we must restore the four freedoms – in full and as fast as possible. The linchpin of this is a fully functioning Schengen area of free movement.”

The Commission has proposed a Council Recommendation (COM(2020) 499) with some helpful ideas on a common approach to dealing with a possible second wave of COVID-19 or future pandemics and avoid piecemeal border closures based on widely differing criteria for assessing risk.

Ahead of the European Council this week, the organisations below call upon Europe’s leaders to agree to establish such a common approach.

We fully support measures to contain the spread of the virus and the need for action by national governments to protect their citizens. However, the actions of some governments in maintaining major restrictions on European citizens moving from other EU member states can often seem haphazard, and ultimately damaging to the European economy. It makes little sense in terms of containing the virus to prevent travel from another member state with a similar level of infection if the member state taking that action still allows travel within its borders.

Such restrictions also affect the free movement of goods and services. At the start of the pandemic, we saw essential products, produce and service providers held up where borders were almost completely closed or people delivering these supplies and services subjected to unreasonable restrictions. The EU moved quickly to lift most of these restrictions, but we are concerned to ensure that in, any major new wave of infections, the same common, rules-based approach is adopted and supply chains kept open in a responsible and appropriate manner.

The present uncertainty about a new wave of infections needs action again at EU level. We therefore ask the Commission and European leaders to look at agreeing quickly the ideas set out in the draft Recommendation and to apply them consistently in their member state, so that there are:

- Common procedures and timescales for alerting citizens of changes in countries from and to which travel needs to be restricted

- Harmonised criteria for triggering such restrictions

- Harmonised criteria for choosing from and to which member states travel needs to be restricted

- Common definitions of a health crisis requiring border restrictions.

Speaking today on the UN First International Day on Awareness of Food Loss and Waste, EuroCommerce Director-General Christian Verschueren said:
 
“If food waste were a country, it would be the world’s third biggest emitter of greenhouse gas. Wasting food means wasting all the inputs and work which has gone into producing it. This is bad for people and bad for the planet. Retailers and wholesalers have been active for many years in helping to combat food waste – both in working with suppliers, donating food to those in need, and in informing and supporting consumers. We therefore welcome the profile which the international community is giving today to food loss and waste, and the commitment of all actors in the food supply chain is showing to tackle this issue” .
 
Retailers and wholesalers are actively participating in a wide range of individual and joint initiatives to reduce food waste significantly by 2030 in line with Sustainable Development Goal 12. Since our sector committed to the Retail Agreement on Waste in 2012, it has drastically reduced food waste in store, and worked to achieve similar reductions throughout their logistics and supply chain. The work of actors in the supply chain in this initiative has led to a set of cross-sectoral recommendations to continue this joint effort.
 
In-store losses now make up around 5% of total waste, and we are focusing tackling the biggest challenge of all: preventing food waste in households, where close to 55% of food waste arises. In conjunction with the efforts of other sectors, we have mounted consumer information campaigns and offered original ideas and recipes to use up food which might otherwise end up in the bin.
 
Some of this household waste arises out of confusion about ‘Best before’ and ‘Use by’ date marking and how long food may still be safe and palatable. Appropriate date marking can help in this, and retailers and wholesalers will be working further with others in the supply chain and EU and national authorities on designing marking and consumer advice which differentiates clearly between quality and safety.

Speaking today on the launch of the Commission’s communication on a Retail Payments Strategy for the EU, EuroCommerce Director-General Christian Verschueren said:

“The COVID pandemic has accelerated the existing trend for transactions to go online. At the moment, this inevitably means more use of credit and debit cards. Retailers and other merchants already pay a lot for accepting cards, and even more if a transaction is online. We are seeing, despite very welcome action on some card fees under EU legislation, other unregulated fees rising as much as 150% over the last 18 months. This has cost merchants, already struggling due to COVID, nearly €1 billion extra, and this trend looks likely to continue. We therefore welcome the Commission commitment in today’s communication to promote alternative payment systems. But these will take at least another 2-4 years to roll out, and merchants need urgent action now to address this growing problem.”

Creating a vibrant, competitive and robust European payments market is in everyone’s interest, as well as keeping access open to all alternatives, including cash. We are therefore very pleased to see the Retail Payments Strategy, and recently welcomed the announced collaboration between European banks in the European Payments Initiative. We fully share the Commission’s determination to get competition in retail payments moving through use of instant payment technology such as SCTInst and new applications for mobile payments, already important as people increasingly move to buying goods and services on their mobile phones.

We regret, however, while we wait for new alternative systems, the Commission’s decision not to use the review of the Interchange Fee Regulation (IFR), to widen its scope to deal with the ongoing rise in unregulated fees, particularly card scheme fees. Recent evidence suggests that these (and other fee increases) may cancel out much of the benefit of the regulation. This situation further strengthens the position of the two US card schemes, whose market power has been a contributory factor in the failure of at least four earlier EU initiatives. This could happen again, and, as we saw in other markets with powerful incumbents, regulation may be the only way to allow new competitors to grow. 

Verschueren added:

“As Mrs Vestager said yesterday: ‘Competition can help, but it cannot replace the essential role of regulation….to protect consumers and defend competition’. That is why we, and other sectors such as hospitality and travel, who are facing major challenges to their survival, need regulation - and need it soon - to address the loopholes in the IFR and to give new competitors a chance. And let’s not forget: it is consumers who ultimately foot the bill.”

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Speaking today at a virtual conference held by the World Retail Congress, EuroCommerce Director-General Christian Verschueren set out the challenges facing retail across Europe and the vital role of the sector in supporting European economic recovery:

“Retail has been affected in different ways during the pandemic, but the whole ecosystem will see major change resulting from it. We will see a number of well-known retailers close their doors for ever, with fashion retail particularly hard hit, and others cutting the number of shops and staff they presently have. The pandemic also accelerated the trend towards online sales, and consumers, now used to e-commerce, will use this channel more in future. Private consumption makes up some 60% of EU GDP, and if retail is in trouble, so will the rest of the economy be. Equally, with help in speeding up its already active engagement with digital innovation and sustainability, the retail and wholesale ecosystem can be a powerful driver for getting Europe back on its feet again”.

During the hight of the pandemic, food and grocery retailers faced a sudden upsurge in demand for daily essentials, while suppliers and logistics companies were either closed or struggled to keep up. Retailers who stayed open also incurred significant costs to keep staff and customers safe and find alternative sources where there was disruption. Employees in the sector went on working hard to ensure consumers were able to get the essential products they needed, and we pay tribute to their dedication and immense hard work in keeping the supply chain working to everyone’s benefit.

Non-food retailers were either closed by public order or suffered up to 90% drops in footfall and sales due to public health measures. Wholesalers supplying a largely closed catering and hospitality industry saw their sales fall away to nearly nothing.

Retail and wholesale was recognised by the European Commission as an essential ecosystem in driving European recovery, among those hardest hit by the crisis, and a clear priority in national recovery programmes seeking funding under the Next Generation EU recovery measures and EU budget. Retailers and wholesalers provide industry direct access to consumers, valuable intelligence about what they are buying, efficient distribution and professional expertise and services. This can make the difference between a manufacturer succeeding or failing with a new or existing product.

Employing 29 million Europeans, and thus an important revenue source for families in the local area, the sector is also a keystone in keeping rural communities and urban centres an attractive place to live and work.

Verschueren added:

“Without shops, communities fade away. Hence the need to ensure that national recovery plans help retailers and wholesalers, particularly SMEs, who make up 99% of our sector, step up their efforts to go digital, their already major efforts to make their operations sustainable across the board, and support to develop the skills of their workforce to meet these new challenges.”

Artificial Intelligence (AI) can offer significant benefits not just to businesses, but also to consumers and society. Retailers and wholesalers are central actors in the supply chain and are in daily contact with Europe’s 450 million consumers. Many retailers and wholesalers use and develop Artificial Intelligence applications to operate sophisticated and efficient systems ensuring reliable and safe sourcing and distribution of goods to meet consumers’ demand and keep them safe. In most cases, AI applications used by retailers and wholesalers carry no direct impact or risks for individuals but improve shopping experiences and internal efficiencies.

EuroCommerce welcomes the opportunity to provide input to the Commission’s Inception Impact Assessment for the upcoming legislative framework on AI. We believe that the combination of set objectives in the Option 1 and Option 3.b are the best to support and foster further AI developments in the EU.

To secure a future-proof framework that will support an innovative and competitive retail and wholesale sector, EuroCommerce believes that:

- Having a positive narrative towards AI technologies is a prerequisite to unlock Europe’s tech sovereignty.

- The future European framework for AI should be technology-neutral and focus more on achieving desirable outcomes rather than regulating AI tools, as it is already the case with existing legislation such as the General Data Protection Regulation.

- The future EU framework for AI should support the digital development of SMEs. SMEs need to be supported in their digital transformation and provided with the right set of digital skills and training that will help them responsibly use the potentials offered by AI.

- The future European framework for AI should rely on a simple, narrow, clear, and harmonised definition of ‘Artificial Intelligence’.

- The use of already existing AI applications should not be disrupted.

- Careful attention should be paid to avoid overregulation – especially considering recently adopted EU and national legislation, support the use of existing AI technologies and bolster innovation.

- Regulatory sandboxes for testing high-risk AI solutions could potentially enable businesses of all sizes to explore the potential of Artificial Intelligence.

- The European Commission’s priority should be to work towards a global framework that would secure a level-playing field beyond EU borders.

- Competition coming from outside the EU should not be ignored.

- B2B data sharing for the purpose of AI development should remain on a voluntary basis.

- Investing in skills, digital education and research should be a priority of the EU institutions.

This position paper is complementary to EuroCommerce’s contribution to the roadmap and public consultation Digital Services Act – deepening the internal market and clarifying responsibilities for digital services.

EuroCommerce has a broad membership of different types of service providers (B2C, B2B, intermediaries), selling online, offline and omnichannel, who also provide or are users of a wide range of information society services. Our members core business is selling products, and the focus of our contribution will be mainly on this service activity and related issues.

At the core of our discussions is that the EU legal framework should:
(i) ensure high consumer trust;
(ii) provide legal certainty for all market players irrespective of which sales channels they use to offer their services;
(iii) ensure balanced responsibilities for all market players depending on their position in the supply chain; and
(iv) create a level playing field for all businesses that offer products to EU consumers wherever they are established.

Key recommendations

EuroCommerce supports one horizontal framework applying to information society service providers, which takes into account the fundamental digital transformation of our sector and the merging of brick and mortar and online channels i.e. omnichannel. This will support the further development of a real Single Market without physical or digital borders for EU businesses and consumers, and provide clarity to all information society services targeting the EU market.

A new framework should also be flexible, supporting the wide diversity of existing and future business models of information society services providers and the services they offer. One of the most important trends, is the seamless integration of the offline and online world into an omnichannel environment, where consumers enjoy a personalised and connected experience. The digital world has become so divergent and intertwined with the physical world, that depending on the type of activity and associated risk with that activity, more tailormade rules are necessary that should be channel neutral, ensure a level playing field for all businesses and that consumer are safe and consumer trust is high.

EuroCommerce welcomes the opportunity to provide input to the consultations on an ex ante instrument regulating practices of “large online platforms with a gatekeeping role” as part of the DSA consultation. Digitalisation has increased competitive pressure in retail and wholesale and many players now have some form of online offering (pure play or in combination with brick and mortar - omnichannel) creating convenience and value for consumers. The COVID-19 crisis has accelerated the digitalisation of the sector and this trend is likely to continue in the future and should be supported as part of the recovery plans.

To remain competitive, retailers and wholesalers need a regulatory framework that supports strong European retail and wholesale ecosystems in a digital environment and gives them legal certainty and incentives to invest in robust omnichannel strategies. This framework should also enable EU authorities to enforce EU rules towards all players on the European market – including non-EU traders in order to create a level playing field and ensure consumer safety. We ask the Commission to take these factors into account when conducting their impact assessments.

We wish to make the following main points, which we will detail further below:

1. Online platforms are very diverse in the services they offer; they operate in a very dynamic environment and generate significant consumer benefits. This makes a one-size-fits-all approach difficult.

2. The concept “large online platforms with a gatekeeping role” is ill-defined and regulating on this basis could lead to legal uncertainty and disincentives to invest in and grow European platforms.

3. The European competition law tools are currently being revised to make them fit for the digital environment and developments in digital markets. Particularly the revision of the market definition notice is relevant in this context as it is vital for the competition assessment and hence for the way dominance is found. The existing tools allow a flexible approach to the functioning of markets taking into account the specificities of different markets and business models.

4. Before seeking to create an entirely new set of rules we would ask the Commission to consider an alternative approach allowing a case by case scrutiny based on dominance, and refining EU competition law where necessary to address new business models and practices enabled by digitisation.

5. We further highlight that the Platform to Business Regulation is a first step in regulating relations between platforms and business users. We would recommend the Commission to reassess the situation when the regulation, which only entered into force in July 2020, has shown whether it is effective.

EuroCommerce shares the Commission’s aim of ensuring that markets remain open and contestable for innovators, businesses, and new market entrants. Markets, and in particular digital markets, are developing fast and are expected to continue to do so, with new services and business models constantly emerging. It is therefore critical that any possible policy intervention aimed at addressing certain business practices or models does not unintentionally stifle innovation or the dynamism on the market and thus undermine the ability and incentives of European players to grow and compete.

To remain competitive and grow, retailers and wholesalers need a regulatory framework that provides legal certainty and a level playing field and gives incentives to develop their businesses online as well as offline. We ask the Commission to take these factors into account when conducting their impact assessments.

We wish to make the following main points, which we will detail further below:

1. We are, not convinced that a New Competition Tool would contribute to creating such a framework. Rather, we are concerned that this would represent a fundamental change in how markets are assessed, and competition policy enforced, by focusing on market structures rather than on infringements. We would ask the Commission to provide a much clearer justification for the development of a completely new tool, in any of the forms proposed.

2. A new tool allowing the imposition of remedies without a finding of infringement could lead to a disproportionate interference in the market economy and have a chilling effect on innovation, growth and investment.

3. In our opinion, Articles 101 and 102 TFEU and the related EU competition law tools are sufficiently flexible to catch all new forms of conduct that pose a threat to competition and the competition rules toolbox is under review, in particular to adapt it to digital developments. In addition, the Commission has the ability to undertake sector inquiries and regulate in cases of market failure.

4. We are also not convinced, that the legal basis proposed by the Commission is appropriate. Neither Art. 103 TFEU nor Art. 114 seem to be an appropriate legal basis.

5. We would welcome more detail on how the suggested approach could contribute to more competitive and innovative markets and consumer welfare. We also ask whether the same results could not be achieved by adapting some of the existing competition law toolbox through the ongoing review or by exploring self-regulatory instruments; and whether experience from other sectors can provide examples of successful alternative approaches.

6. If the Commission pursues this new tool we underline the importance of imposing proper safeguards and due process, and would recommend to limits its application to areas where competition problems have been observed and there is a significant impact on the EU market. Furthermore, the relationship with Art.101 and 102 would need to be clarified.

The Single Market is still far from complete. In many aspects, the European Union is still a mosaic of 28 different national markets. This overview provides some examples of barriers that retailers and wholesalers face in the Single Market. We ask the Member States, the Commission and the European Parliament to address the barriers identified here. The best way for the retail and wholesale sector to provide jobs and growth is to create a business-friendly environment where there is full competition and consumers can enjoy a wide range of high quality and safe products.

The main problems that the retail and wholesale sector still faces are:

• Flawed implementation and application of the Services Directive that hinders the freedom of establishment, the free movement of services and the freedom to provide a service;
• National trade laws that hinder business in the way they do business. Often these laws hamper competitiveness of the sector, are protectionist and undermine business models that are genuine and legal business models in other Member States. Particularly concerning are developments in Central and Eastern Europe;
• National requirements that hinder the free movement of goods. Member States don’t notify new national technical requirements according to the procedure laid down in Directive (EU) 2015/1535, don’t apply the principle of mutual recognition in non-harmonised areas, gold-plate directives, etc.

We also recognise some of the initiatives taken by the Commission to solve some of the examples mentioned in this paper. However, infringement procedures take a long time, are expensive and the outcome is uncertain. For businesses, this takes too long and they might decide to leave or not enter a market. In the end this deprives consumers of more choice, higher service and lower prices.

EuroCommerce welcomes an open dialogue with the Commission, the European Parliament and the Member States to improve the Single Market for Retail. This document is regularly updated.

The previous update was done on 17 June 2020.