The food and drink industry is the EU’s biggest manufacturing sector in terms of jobs and value added.
EU food legislation is highly harmonised and the sector benefits significantly from the opportunities offered by the EU Single Market. There is no single, homogeneous, and common food supply chain at the European level. The length and the degree of complexity of food supply chains depend on the product and market characteristics. The market structure varies at each level of the food supply chain depending on the products and Member States concerned.
The European Commission is working to improve the competitiveness of the EU food sector and the functioning of the Single Market for Food.
The European Commission:
- leads on policy measures to support the competitiveness of the European Food and Drink Industry and the smooth functioning of the food supply chain
- provides space for dialogue and exchange of good practices among EU countries and stakeholders along the chain
- works to combat unfair trading practices among operators
- monitors European food prices to increase transparency
- publishes studies to assess the competitive position of the food and drink industry and other issues, relevant to the sector.
The High Level Forum for a Better Functioning Food Supply Chain is an EU-wide platform, involving all actors along the chain, to discuss the main issues affecting the EU Food Sector from competitiveness to innovation, sustainability, creating value and fostering better trading relations.
Food Task Force
DG COMP is faced with an increased workload regarding the food sector. This is due to the activities of the National Competition Authorities, food issues arising in relation to initiatives from other Commission services, such as the High-Level Forum on the food supply chain, complaints, and demands by the European Parliament to investigate the food supply chain and food prices in more detail.
In order to cope with this workload and to be able to carry out the appropriate investigations, it was decided in January 2012 to set up a "Food Task Force". The mandate of the Food Task Force was prolonged at the end of 2013.
Trends in retail
A combination of different factors have contributed to the evolution of the current food supply chain on both the demand and supply side. Consumers have become more demanding in terms of terms of food quality, variety and price. The economic and financial crisis of 2008 had a significant impact on EU consumers' purchasing power, and lower prices have become a priority. Changes in household composition, an ageing population, increased interest in healthy food and increased environmental awareness have all had an impact on the food retail market in Europe.
Modern retail has developed strongly across the EU, although big differences in the share of modern retail in total edible grocery sales still exist across Member States. Large modern retail chains (especially discounters) have been opening stores in their domestic markets and in other Member States, where they have increased their market share. The top 10 European food retailers accounted for 26% of edible grocery sales in the EU in 2000, compared to 31% in 2011.
Finally, retailers' own brands or private label products have become more and more successful in Europe. Private label market share increased across most product categories in most Member States.
Modern retail study
The Commission received complaints from operators in the food supply chain, as well as requests from the Parliament to investigate the impact of concentration in the chain. The complainants alleged that large operators, in particular large modern retailers, often impose detrimental conditions on their suppliers and as a result these suppliers are not able to invest in new products. They alleged that this had reduced choice and innovation in food products for European consumers.
In 2014, the Commission published a comprehensive study on the modern retail sector, The economic impact of modern retail on choice and innovation in the EU food sector (the "modern retail study") to measure how choice and innovation have evolved for consumers over the decade before the launch of the study. The study also measured the evolution of a number of factors affecting the market and identified which of these had driven choice and innovation in the EU food supply chain over the previous 10 years.
The results of the study were presented at a conference held in Brussels on 2 October 2014.
Press release - Speech by Director-General Alexander Italianer - Presentation
The Study was revised post conference, and a new version was published on 5December 2014 modern retail study Executive summary of the retail study (FR version , the EN version is included in the study)
The study also includes six additional case studies which analyse the supply chain and the evolution of choice and innovation for certain agricultural products in several EU countries: tomatoes, apples, olive oil, milk, cheese and pork meat.
Follow-up on retail issues
Following the publication of the modern retail study in October 2014, the Commission ran a public consultation inviting stakeholders in the food industry to give their views and comments. Download all responses received (zip file).
One important part of the follow-up to the Modern Retail Study has been an investigation into the role of private labels and innovation For a summary of the results of these investigatory steps, please see this presentation.
Clarification of the scope of competition rules in the TFEU with regard to sustainability in collective actions
Under the Green Deal, Europe is to become the first climate-neutral continent by 2050. To achieve this goal the EU economy needs to become sustainable, turning climate and environmental challenges into opportunities across all policy areas. For the food system in particular the Green Deal objectives of designing a fair, healthy and environmentally-friendly value chain are laid down in the Farm to Fork Strategy. The Strategy offers a comprehensive approach on how to reduce the climate and environmental footprint of the EU food system while strengthening the resilience of all economic actors involved in it. It involves actions to be undertaken at all stages of the value chain: ensuring sustainable food production and security, stimulating food processing and retail, promoting sustainable food consumption, reducing food loss and waste, etc.
As part of the action on ensuring sustainable food production, the EU plans to unfold various regulatory measures such as on reduction of the use of chemical pesticides, reduction of nutrient losses, improvement in terms of animal welfare legislation, etc. To achieve the goal of sustainability in food production and to support primary producers in the transition towards the latter, the Farm to Fork Strategy will also rely upon voluntary initiatives of actors within the private sector aimed at achieving sustainability. Such initiatives would raise the bar above the minimum requirements prescribed by the law or would set a voluntary standard in the lack of applicable provisions. To encourage collective cooperation and ensure that the threat of non-compliance with competition rules does not stand in the way of any sustainability initiatives, the Commission will issue guidance on the scope of collective action permissible under EU competition rules (DG COMP is the service in charge of this work). It is envisaged that such collective action would be both in the form of horizontal as well as vertical cooperation.
Directive on unfair trading practices (UTPs) in business-to-business relationships in the agricultural and food supply chain
On 25 April 2019 the Directive on unfair trading practices (UTPs) in business-to-business relationships in the agricultural and food supply chain was formally adopted. Thanks to this act, the European Union improves the protection of farmers - as well as of small and medium and mid-range sized suppliers - and provides mandatory rules that outlaw certain unfair trading practices. These rules will complement existing rules in the majority of Member States as well as voluntary initiatives of the industry. Some Member States will have to adopt such rules and designate an enforcement body for the first time.
The UTP Directive is part of a wider approach of the Commission to countervail occurrences of UTPs and ineffective competition in the food supply chain. This also includes increased possibilities of producer cooperation as part of the Omnibus initiative that entered into force on 1 January 2018 as well as measures by the Commission to enhance market transparency.
The UTP Directive bans a number of clearly inefficient and unfair trading practices in the food supply chain to ensure fairer treatment for small and medium sized food and farming businesses. Smaller operators in the food supply chain, including farmers, often lack bargaining power in their bilateral relations with buyers and alternatives to get their products to consumers.
The directive provides for minimum harmonisation at EU level of certain unfair trading practices which are to be banned by Member States as well as minimum enforcement standards. It also requires setting up or assigning a national enforcement authority. This authority will be vested with the necessary powers to conduct investigations upon its own initiative or following a complaint, terminate and fine infringements. Parties filing a complaint will also be able to request confidentiality and anonymity to protect their position towards their more powerful trading partner. Inspired by the European Competition Network (ECN), the directive foresees a coordination mechanism between enforcement authorities to enable the exchange of best practices.
It is important to emphasise that in line with the Commission Impact Assessment, the directive avoids regulating efficient business arrangements that can be beneficial for both suppliers and buyers.
Finally, it is important to emphasise that UTP regulation has a scope that is different from competition law. Competition rules prohibit unilateral practices of a dominant operator and anti-competitive agreements between undertakings that affect the market overall. EU competition rules are not concerned with problems faced by small suppliers in the context of their bilateral contractual negotiations with stronger buyers which have no negative effects on the competitive process or on consumer welfare. Such contractual imbalances associated with unequal bargaining power, but which having no effect on the market overall, are addressed by UTP rules.