Making the Single Market Work for All

Local Farmer

EuroCommerce has called on the European Union and Member States to address the fragmentation of the single market caused by large manufacturers of consumer goods. According to the European association of retailers, the manufacturers restrict the freedom of retail companies to get the best deal throughout Europe and artificially raise prices for consumers.

These restrictions, the so-called Territorial Supply Constraints, are practices imposed by brand suppliers when dealing with retail buyers. They force retailers to source products domestically or prevent them from ‘parallel trading’ products from another Member State.

According to the association, the restrictions have the aim and effect of segmenting the market and maintaining significant price differentials across countries. They restrain retailers from freely purchasing goods in the countries of their choice. If retailers try to circumvent the TSCs, the large brand suppliers are well placed to withhold or ration supplies due to their market power.

This means consumers in certain countries are often charged more or have access to fewer products. The European Commission estimated that these market restrictions are costing European consumers at least €14 billion. Those retailers who seek to operate more efficiently by sourcing centrally or in another market may find their supplies curtailed or stopped completely.