German Ban on Selling Below Cost Price

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May 7, 2008

It is now 4 months since an amendment to German law aimed at counteract unfair pricing in the food retailing sector entered into force. German Wholesale Market Association (GFI) Chairman, Mr Andreas Foidl, noted that the German wholesale markets united under GFI “wholeheartedly supported the Federal Government in its efforts to take action against price dumping through new economic policies and laws to protect consumers. The GFI, as a professional association, was actively involved in the process of drafting revisions to the law on monopolies (GWB). Nearly all the proposals for stricter regulations in the monopolies law were approved and included in the draft bill.” As the law now stands, it is illegal to sell food below cost price in Germany. There are only two exceptions to the ban, one is if the food is in danger of perishing and the other is if it is supplied to a charitable organization(s). Legislators have recognized the engagement on the part of GFI and numerous other organizations that have lobbied against price dumping and the irresponsible destruction of added value this entails, especially in the case of fruit and vegetables. The amendment to article 20 par. 4 of the monopolies law (GWB) is seen as a huge success in the fight for recognition of the GFI objectives, representing as it does a considerable tightening of the law on competition in the food retail sector. In particular, smaller green-grocer shops and street market traders have often, in the past, faced potentially ruinous competition and been severely disadvantaged by price wars between the large food chains. It was agreed these quality suppliers had to be protected. An initial survey of the mood in the German value chain has revealed some signs of a brighter outlook, with less pressure on price benefiting all the market’s actors – including the growers, independent traders, and consumers. “We are increasingly observing that large retail groups, especially the discount stores, are scaling back their advertising of cheap prices for fruit and vegetables. Their scope for practising unfair pricing has been drastically reduced.” Foidl continues. The stricter ban was initially imposed for a period ending 31 December 2012, when the old version of article 20 par. 4 of the GWB is to become effective once again. Foidl notes, however, that “we are fairly relaxed about this time limit. It is forcing large retail organizations to rethink their pricing policies and strategies. They are now obliged to focus more strongly on quality, freshness and variety if they want to demonstrate their competitive skills in the trade. The amendment is an effective instrument in the fight against unfair food pricing. We therefore hope that by stopping the downwards spiral on the price front, future food scares can be avoided.” About GFI German Wholesale Markets. GFI German Wholesale Markets was founded in 2000 and represents the interests of Germany’s 18 major wholesale markets. GFI is the central point of contact for national and international growers seeking to market their produce through quality, independent food retail channels. GFI offers its members a forum for the structured exchange of information and insights on ways to market wholesale markets; it also offers public platforms such as a joint stand at the Fruit Logistica and its own website, www.grossmaerkte.org About German Wholesale Markets. These fresh produce centres guarantee a wide variety of top quality fresh produce, especially fruit and vegetables. At these central, urban trading platforms around 2,600 small and medium sized wholesalers, importers and growers supply fresh produce from the region and all over the world to more than 53,000 customers in the specialist, independent food retail business such as greengrocer shops and street markets and to large-scale caterers and top restaurant chefs. Annual turnover of goods is around 7.4 million tonnes with a total value of roughly 9.8 billion euros. Germany’s wholesale markets thus ensure the availability of good, nutritious food for around 100 million consumers in Germany and neighbouring European countries. For further information please contact: Andreas Foidl, GFI Deutsche Großmärkte, c/o Berliner Großmarkt GmbH, Beusselstraße 44 N-Q, 10553 Berlin, Tel. +49 (0) 30 39896112, Fax +49 (0) 30 39896124, e-mail andreas.foidl@grossmaerkte.org, Website www.grossmaerkte.org