Is Cash & Carry Wholesale a Separate Market? Results from an Empirical Study

Hendrik Schröder

Applied Economics Quarterly (formerly: Konjunkturpolitik), 2012, vol. 58, issue 1, 71-89

Abstract: This article investigates the structure and behavior of the participants in the food wholesale market in Germany. The question to be answered is: Do Cash&Carry (C&C) stores form a separate, relevant market? The Federal Antitrust Authority’s (FAA) views on the demarcation of relevant markets illustrate the necessity to bring forward this issue. The FAA seems to insufficiently consider and model the actual structure and behavior of the market participants. To answer the question if suppliers are substitutable one has to use the demand-oriented perspective of wholesale format determination and empirical research. The respondents in our survey were the purchasing managers of hotels, restaurants and caterers, as well as the purchasing managers of traders: full-range food retailers, specialty food retailers, specialty outlets for large-scale consumers, kiosks, white pumpers and peddling. The results reveal that the null hypothesis has to be rejected. Every criterion used in this study to characterize the use and importance of individual procurement sources shows that the C&C wholesale trade is far removed from holding a position that would justify being described as a separate, relevant market. C&C stores belong to a larger number of procurement sources where hotels, restaurants and caterers, as well as traders cover their regular demand. In addition to the so-called delivery wholesale trade the other suppliers also fulfill the delivery function, including C&C wholesaling and the single line or specialty wholesale trade. Hence, anyone making decisions relating to merger control or to control of abuse of dominant position, such as the FAA Authority, needs empirical information on which market the players actually belong to.

Keywords: relevant product market; demarcation of relevant markets; food wholesale market; Federal Antitrust Authority; main procurement source; substitution between procurement sources; readiness to change supplier (search for similar items in EconPapers)
JEL-codes: K21 L44 L81 (search for similar items in EconPapers)
Date: 2012
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