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Speaking today on the launch of the European Farm-to-Fork Strategy, EuroCommerce Director-General Christian Verschueren said:

“Over the months of the COVID crisis, food retailers and wholesalers have proved their essential role in delivering daily essentials to 500 million Europeans. The crisis has also shown how important cooperation between all actors of the chain was in achieving this.  May this cooperation across the supply chain continue in executing this ambitious Farm-to-Fork Strategy. Europe has the richest and most diverse agri-food sector in the world. All actors need to build on this, with the support of a vibrant single market to ensure that consumers have the choice of food they want, produced in a sustainable way.”

The retail and wholesale sector has for many years sought cooperation in the supply chain to create a more sustainable food system, so that consumers can find the right products in the shops, and farmers can benefit from selling sustainable, high quality produce. The Commission rightly identifies consumers, and their choices, as the starting point for the strategy. The current health crisis has accelerated the demand for healthy and sustainable food, and we expect this to continue in the future.

The Farm-to-Fork strategy will create an important framework for the many voluntary initiatives taken forward by our sector. Retailers and wholesalers can help sustainable products move away from niche to mainstream markets. They are engaging strongly in creating transparency, promoting healthy diets through consumer information, reformulation, the promotion of organic products and addressing food waste. In response to already strong customer demand, many are also directly supporting local farmers undertaking these changes.

To reinforce the EU single market and provide clarity and simplicity to all food business actors, we expect the strategy to deliver a more harmonised and science-based approach that is currently lacking in areas such as front-of-pack labelling, origin labelling, waste management, food donations, to name just a few.  Done right, and with close dialogue with the main EU stakeholders in work on legislative initiatives, Europe will be able to champion sustainability standards in the food chain internationally.

To facilitate the take up of sustainability commitments, we look forward to further and more precise competition law guidance on cooperation, currently being revised. We see better cooperation between farmers, already allowed under competition rules, as a means of helping strengthen their position in the chain, and encourage them to make more use of these arrangements for setting up producer organisations. We further see the need for support to help accelerate the sustainability transition across the whole supply chain as an important part of the EU recovery strategy.

In conclusion, Verschueren added:

“We face a difficult future for everyone, and need the same solidarity and cooperation in the supply chain we have seen during the COVID crisis. We want the farm to fork strategy to equip the whole supply chain to reap the opportunities of the sustainability transition.”

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EuroCommerce welcomes the opportunity to give feedback to the Commissions evaluation roadmap concerning the Market Definition Notice. 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. The existing framework has worked well and has been efficient in ensuring effective competition on both EU and national markets.

While some adjustments to keep up with time might be needed, we see no need for a fundamental overhaul of the Commissions market definition methodology. In particular, as the roadmap rightly points out, the economy has developed significantly since 1997, especially due to digitalisation and globalisation. In this document we will outline the impact of digitalisation and globalisation in retail and wholesale, how they are affecting competition conditions and how market assessments need to be adjusted to the new circumstances. We further highlight other developments which are not mentioned in the roadmap, that we think should be included in the evaluation to ensure a future proof framework. Finally, we will comment on the consultation strategy.

EuroCommerce Director-General Christian Verschueren today pressed the European Commission to act on the growing problems facing retailers and wholesalers resulting from the limited scope of the Interchange Fee Regulation (IFR). He asked for firm proposals to amend the legislation as a follow-up to the Commission report into the application of the IFR, due to be published in the coming weeks:

“We have consistently supported the Commission in its action over the years on interchange fees for credit and debit cards, and in producing the Regulation adopted 5 years ago. This has worked well in reducing consumer interchange fees. But its limitations are beginning to show – other fees have substantially increased, as have fees for unregulated cards, which most merchants have no choice but to accept. With strong evidence of fees rising steeply, we are today asking for the Regulation to be amended to allow the Commission to address actions which directly undermine its objectives.”

In March, we published an economic study reflecting a substantial input from our members’ experience of dealing with card fees. Card schemes have been steadily increasing the unregulated fees imposed on retailers, thereby substantially reducing the intended benefits to merchants and consumers, of the IFR. For example, data provided by the global payments consultancy CMSPi, shows that in the 3 years since 2018, i.e. outside the IFR review period, average fees imposed by one card scheme increased by 150% and inter-regional fees by over 35%: increases across both card schemes are estimated to cost EEA merchants an additional €794 million every year, representing a 47.5% increase on total scheme fee costs since the beginning of 2018.

We have now provided the Commission with a legal opinion by a distinguished academic expert in this area, which analyses how the rise in non-regulated fees directly undermines the stated objectives of the regulation, and points to ways in which these abuses can be readily addressed by amending the IFR.

Ahead of the Commission’s report on the functioning of the IFR, expected next month, we are asking the Commission to amend the Regulation 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 maintain consumer choice and cash alternatives and

- Strong and dissuasive penalties for non-compliance with the regulation.

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Commenting on the report issued today by the European Commission Joint Research Centre on retail alliances and their impact on the food supply chain, EuroCommerce Director-General Christian Verschueren said:

“The thorough and evidence-based JRC report helps clarify the reality of retail alliances and confirms that there is little evidence of an impact on farmers, and that existing regulation is sufficient. Retailers operate on low margins. Alliances allow them to slightly balance the stronger negotiating power of large suppliers to provide consumers the products they want at a reasonable price. The large multinational suppliers operate globally, achieve significant margins and have the power to set conditions in the supply chain. Most retailers are only present in a limited number of countries in Europe and join alliances to help create a reasonable basis of negotiation with these large manufacturers, and pass on the benefit to the consumer.”

The report responds to a call from the European Parliament following the adoption of the EU directive on unfair trading practices in the food supply chain in 2019. The report confirms that there is little evidence of an impact of alliances on farmers; that the existing regulatory toolbox is sufficient to address possible concerns. It concludes that alliances are diverse and should be analysed on a case-by-case basis.

Retail and wholesale alliances play a key role in making food and other consumer products more affordable and in widening the range of products offered to our customers. They go some way towards creating the real European internal market which should exist for sourcing consumer products. They also help strengthen competitive retail and wholesale ecosystems to the benefit of all Europeans, and:

- bring together individual, or groups of, retailers and/or wholesalers and buying groups, to negotiate better sourcing conditions by combining volumes and creating economies of scale;

- deal with large FMCG suppliers who are often global players, for which even the largest European retailers represent a negligible part of their turnover;

- offer private label suppliers access to international markets;

- respond to the need to create a European Single Market for sourcing when many large manufacturers seek to fragment the single market through Territorial Supply Constraints, which make it impossible to source where it makes most commercial and operational sense;

- are critical to the viability of retailers of all sizes, including SMEs;

- help suppliers in marketing and promoting their products across countries;

- operate in compliance with national and EU legislation, including competition rules, and are subject to regular scrutiny by EU and national competition authorities;

- do not handle agricultural commodities, fresh produce or deal with individual farmers.

Strong competition in the retail and wholesale market means that efficiency gains and improved sourcing conditions get passed on directly to consumers through better prices and/or improved customer experience and innovation. There is no evidence of higher retail and wholesale margins arising from participation in such an alliance. Concluding, Verschueren said:

“Alliances help consumers, and keep smaller food retailers alive in Europe, including in cities and rural areas where they play a crucial social role, as has been made even more obvious in the current crisis. They have no effect on prices paid to farmers, serve to moderate the negotiating power of already powerful multinationals, and support a single market for sourcing.”

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For more background information, the EuroCommerce slide deck presented at the JRC-DG AGRI workshop which was held on 4-5 November 2020 can be found here.

To mark Europe Day tomorrow, and the anniversary 70 years ago of the Schuman Declaration, Christian Verschueren, Director-General of EuroCommerce issues the following statement.

“Tomorrow, we celebrate Europe Day. Seventy years ago to the day, Robert Schuman launched his call for laying the foundations of what is today the European Union. Only five years after the final coming of peace, he published his declaration in an unbelievably bold drive for solidarity with France’s previous enemy over the ages. It is worth remembering his words: “L’Europe n’a pas été faite. Nous avons eu la guerre”.

The COVID-19 crisis is a war against a virus, mercifully not between people. Yet any crisis can make people forget the lessons of 70 years ago, and believe that they can gain an advantage over their neighbours by re-erecting barriers between people and countries. This fallacy is particularly dangerous in the present situation, where we face a recession potentially as bad as the depression of the 1930s.

It is easy to criticise the EU for the things it should have done, whilst at the same time not giving it the mandate or the resources to act.  It merits, on this day, to pause on what the EU has done for all of us, European people and businesses, in terms of peace, protection, safety, choice, rights, exchanges, opportunities. And Schuman and Europe’s founding fathers would be astounded to see a Europe where countries, who once stood confronting each other across barbed wire and concrete, can now sit to find common cause to benefit them all.

Merchants and traders are dependent on supply chains which span Europe and beyond; they are the engine of trade and the bellwether of the whole economy. When consumer confidence is low, people buy less. If this leads shops to shut, industry cannot sell its goods. Investment, innovation, and progress  stop. This can only be made worse if barriers among EU countries stop the single market working. With private consumption making up typically 50% of GDP across Europe, that matters to the whole economy - in every country of Europe regardless of its wealth or size.

That is why, with an uncertain future after the present crisis, all of us in Europe need, today as in 1950, to work together and make a European Union of cooperation and joint determination as the only way to build a sustained and sustainable recovery for Europe”.

Speaking today on the publication of the EuroCommerce paper on VAT and excise duties, EuroCommerce Director-General commented:

 “Twenty-seven years after the Single Market was meant to have been completed, very different VAT rules in Member States remain some of the most significant barriers for companies to trade cross-border. We acknowledge the improvements which have been made, such as the VAT One-Stop-Shop and the abolition of the VAT threshold on imports from third countries, which we expect to see implemented thoroughly next January. But further progress is both possible and urgently needed in making VAT and excise duties work for the economy. We need to make taxation greener, fairer and simpler, and transform customs procedures to help lift Europe out of the economic recession after the COVID-19 crisis.”

In its paper, EuroCommerce calls for VAT and environment policies to be aligned through, for example, harmonised VAT relief on reducing food waste through donations to food banks. An automated fast-track import process for certified operators and a mandatory VAT Import One-Stop-Shop for third-country imports would also help, while, at the same time, reducing VAT evasion. EuroCommerce proposes simplifying present excise duty registration and compliance regulations which make online cross-border sale of excisable goods to consumers almost impossible. We also call for a more effective coordination within and between European institutions to avoid clashes between customs facilitation initiatives and VAT/excise duty rules.

Verschueren added that there are also a number of measures which would ease the tax and customs  burden during and after this COVID-19 crisis:

“Many retailers and wholesalers have been hit hard by the present situation and have welcomed the measures taken by governments to lessen their tax burden in these difficult times. In the short term, we would ask the Commission and governments to waive import duties and allow zero-rating for VAT and duties on essential protective equipment for employees and customers. We would also ask them to postpone reporting obligations on cross-border tax arrangements until the crisis has passed. To avoid a wave of bankruptcies this and next year, measures to lessen the tax burden will need to continue for some time after the crisis has passed. Now and in the long term, simplified and harmonised taxation can play a major role in making the single market a tool for economic recovery and growth".

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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: Better alignment of VAT and environmental policies through harmonised rules on VAT reliefs on product donations to e.g. food banks.
• Fairer: Specific action to safeguard a level playing field: an automated fast-track import process for certified operators and mandatory VAT Import One-Stop Shop system for third country imports.
• 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

• Simplified excise duty registration and compliance regulation similar to VAT One-Stop-Shop for distance selling and B2B cross-border trade in excisable goods.

Customs

• More effective coordination within and between European institutions to avoid clashes between customs facilitation initiatives and VAT/excise duty rules.

Dear EU leaders,

In order to overcome the extraordinary challenges the COVID-19 pandemic brings, the European Union must show that it is more than the sum of its members. Pushed by the urgency at hand, Member States have rightfully taken the lead in recent weeks, but this unfortunately leads us to a scattered landscape of measures. Recovering from the crisis, only European solutions can work, putting the Single Market as the central instrument. More than ever we need a strong Europe, where its governments, businesses and citizens show their solidarity.

Examples of solidarity can be seen everywhere across our continent: from volunteers who sew masks at home for the bakery staff around the corner, to companies donating disinfectants and governments that organise joint procurement of medical devices. But the temptation to look inwards is strong. Here, European governments must be at the forefront, showing solidarity among each other, ensuring all Member States have market access to funds needed for their recovery, and also making sure their citizens understand the added value that our common European project brings in these unprecedented and difficult times.

In our daily business operations, we see that the response to the current crisis is not less Europe, but more Europe, and it starts with our common European market. It is vital to ensure transportation of essential goods and flow of services across our borders, such as medical, pharmaceutical, food and energy. The European Commission’s initiatives on ‘‘Green Lanes’’ and on the free movement of workers are highly welcomed to support the functioning of the Single Market. We urge you to do your utmost to ensure that it delivers on the ground without delay.

We take this opportunity to express our gratitude to all those who work relentlessly to reduce the spread of the virus, increasing our ability to cope with its impacts, and in particular to those showing exceptional courage both in treating the sick and in maintaining the vital goods and services upon which we all depend to be able to succeed.

Yours sincerely,

Speaking today, EuroCommerce Director-General Christian Verschueren called upon leaders across the world to drive the economic recovery after the COVID-19 pandemic by freeing up global trade:

“Before the virus became a global crisis, we saw a worrying spread of an equally pernicious development – the mistaken belief that economic growth can come from imposing tariffs and blocking imports. If we are to see the world economy start growing again after a downturn maybe as bad as in the 1930s, world leaders should get together now to agree on how to do so. Above all, they need to avoid the same mistakes made then of closing down international trade. Supply chains are complex and global, and these need to stay open if all of our economies are to recover quickly.”

Retailers and wholesalers depend on cross-border and global trade to get consumers the products they expect to see in the shops, or the components manufacturers need to stay in business. All economists are predicting the impact of the virus will depress all countries’ GDP significantly and, with uncertainty about the future of people’s jobs, consumer confidence is as low as it was after the financial crisis of 2009.

The WTO has warned, that unless governments act – and act together – to avert this, world trade may have dropped by 30% by the end of this year. While there may be sound reasons to look to onshore some activities to create additional resilience and achieve certain sustainability goals, the worst thing governments can do to their own and the world’s economy is to depress it further with protectionist policies, whether by imposing tariffs or by protecting uneconomic state-owned enterprises.

Verschueren added:

“Global trade has been the reason for the unprecedented rise in prosperity, lifting millions out of poverty since 1948 when the GATT was formed. The EU has led the world in resisting the mistaken policies of some major trading partners who believe that trade is a zero-sum game. It should continue to do so, and other trading partners do the same.”

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EuroCommerce is pleased that the Commission has sought to propose a number of ideas on how Europe can gradually return to normal once the immediate danger of the COVID-19 pandemic has eased. We recognise that the rate of infection differs from country to country and that decisions on the health of their citizens rests with national governments.

We support the Commission, however, in a number of important issues they raise in their welcome Communication issued today.  These include:

• The importance of a gradual opening of those retail and wholesale businesses at present facing the real risk of bankruptcy, particularly in non-food retail and wholesale, with appropriate safeguards for the health of customers and staff as adopted for example in food retail.

• Coordination and communication as far as possible between member states as they lift some of the current restrictions: complex cross-border supply chains mean that disruption caused by closure of suppliers in one country affects the supply chain in another.

• As much clarity and transparency as possible for businesses and consumers in government planning for such easing of restrictions.

• The single market to be used as a driver for recovery after the worst of the pandemic is over. We understand and support the measures aimed at supporting local agriculture, food production, and short supply chains to ensure the survival of local agri-food businesses and avoid food waste. However, other measures, adopted through rapid legislation during crisis times, may have a tendency to remain in place. Measures should preferably be voluntary, left to market operators working in solidarity with one another, and removed as soon as the pandemic is under control, so that the single market can operate again.

• Immediate removal of unnecessary controls at borders to allow the free flow of goods and people essential to maintaining a proper supply chain, including delivery drivers and retail and wholesale staff working in border regions.

• Financial support to continue to be available after the crisis, and to get through to all affected retailers and wholesalers, particularly retailers and wholesalers in non-food, and wholesalers serving sectors such as hospitality and catering at present closed. This should also include helping SMEs in adopting digital technology and going online.

• Work with trade partners to get international trade up and running as a further driver of renewed economic growth and in rebuilding European supply chains. Global trade is likely to be depressed as much as 30% post-virus.

• Review of timing of some proposals in its 2020 work plan: we understand that the Commission is considering this, and we join other industries in asking for all consultations and new proposals to be delayed 6 months until sectors are once more able to focus on other issues than keeping their business running and alive.  We would also ask for enforcement of some (non-safety related) measures coming into force now to be handled flexibly and recognising the difficulty facing businesses at this time.

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