Buying groups formation: what effects on competition in the retail industry?

Formation des groupements d'achat: quels effets sur la concurrence dans le commerce de détail ?

Marie-Laure Allain, Rémi Avignon (), Claire Chambolle and Hugo Molina
Additional contact information
Rémi Avignon: CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - IP Paris - Institut Polytechnique de Paris - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique
Claire Chambolle: UMR PSAE - Paris-Saclay Applied Economics - AgroParisTech - Université Paris-Saclay - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

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Abstract: Each year, commercial negotiations highlight the tensions between retailers and their suppliers, and public authorities are regularly called upon to balance the relationship. In this context, buying groups – which allow several large competing retailers to negotiate jointly with their suppliers – are likely to strengthen retailers' buyer power. France experienced two waves of buying groups formation in 2014 and in 2018 and the law was changed to allow the French Competition Authority (CA) – the Autorité de la concurrence – to control the formation of such alliances. This policy brief proposes a framework to analyse the effects of the buying groups on the sector as a whole. After a brief assessment of the economic forces at play based on a review of the literature, we discuss the results of two studies conducted by the authors of this note. The first one adopts an empirical approach to study the effects of buying groups formation in 2014 in France in the bottled water industry. It shows that the introduction of buying groups modified profit sharing at the expense of suppliers but also led to a decline in prices which benefited consumers. The second study discusses the efficiency of excluding private labels from the scope of buying groups – as advocated by the Competition Authority – to protect small suppliers and maintain product variety.

Keywords: Eau; minérale (search for similar items in EconPapers)
Date: 2022-06-10
New Economics Papers: this item is included in nep-agr, nep-com and nep-reg
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-03693440v1
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Working Paper: Buying groups formation: what effects on competition in the retail industry? (2022)
Working Paper: Buying groups formation: what effects on competition in the retail industry? (2022)
Working Paper: Buying groups formation: what effects on competition in the retail industry? (2022)
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