Since 2013, the Belgian Competition Authority (the "BCA") has been mandated with additional jurisdiction over competition and price trends.
Book V of the Code of Economic Law provides for a system in which:
- the Price Observatory analyses prices and margins, either on its own initiative or at the request of the Minister, and identifies any structural problems in the market; and
- in the event of structural market problems, problems with prices or margins, or abnormal price trends, the Collège de la Concurrence (Competition Board) may, at the request of the Price Observatory, issue decisions on provisional measures.
On 25 January 2024, the BCA published a comparative study on recent trends in consumer goods prices in Belgium, in comparison with the Netherlands, France and Germany.
The study highlights passport data from Euromonitor International in the form of descriptive statistics. It should be stressed that these statistics on price differences between manufacturers and retailers do not take into account compositional effects. The observed differences in average prices could therefore be due to different pricing practices of manufacturers and retailers in different countries, variations in consumer behaviour or institutional disparities.
These statistics cover sales by value and volume by manufacturers and retail distributors, including supermarket chains, between 2013 and 2022 in Belgium, the Netherlands, France and Germany for the following eight industries: (i) alcoholic beverages, (ii) soft drinks, (iii) hot drinks, (iv) basic foodstuffs (e.g. pasta, rice and preserves), (v) dairy products and substitutes, (vi) snacks, (vii) cooking ingredients and prepared meals and (viii) personal care products.
On the basis of this information, the BCA was able to determine price ratios between countries at different levels of the value chain for each industry, and to track their evolution over time.
The following conclusions have been drawn from this data:
- In most industries, the average retail price rose more slowly in Belgium than in all neighbouring countries between 2018 and 2022.
- For beverages, both alcoholic and non-alcoholic, the differences between manufacturers' selling prices are greater than the differences between retailers' selling prices, to the detriment of Belgium compared with its neighbouring countries.
The study shows that the recent evolution of price differentials for both alcoholic and non-alcoholic beverages between retail distributors in different countries to the benefit of Belgian consumers is the result of a relative reduction in retailers' gross margins and not, or only marginally, the result of relative variations in manufacturers' average selling prices.
The same is true of most other industries, in comparison with the Netherlands. However, the correlation between retail and manufacturer price levels and trends in Belgium, compared with France and Germany, is less obvious.
Overall, this recent evolution of price differentials between retail distributors in different countries to the benefit of Belgian consumers can be explained by the intensification of competition between retail distributors in Belgium.
One concern persists in Belgium, and more widely in Europe. For certain industries, notably the alcoholic and non-alcoholic beverages sector, manufacturers’ selling price differentials to the detriment of Belgium are still relevant, due to territorial supply constraints whereby international suppliers offer identical or very similar goods and products at different prices from retailers in other countries, generally to the detriment of medium-sized countries like Belgium. This is therefore an important issue to keep on the political agenda.
The conclusions of the BCA study are similar to those of the report recently published by the Observatoire des prix. It also found that, over the past few years, petrol prices in Belgium have risen by less than food and non-alcoholic beverage prices compared with neighbouring countries.
In 2024, the BCA and the Price Observatory will study in greater detail the factors underlying the differences between the price levels and patterns of fast-moving consumer goods (FMCG) sold in Belgian supermarkets compared with those in neighbouring countries.
In conclusion, recent trends in average retail prices have been favourable to Belgian consumers compared with consumers in the Netherlands, France and Germany. Monitoring recent trends is essential in view of the current period of high and often unpredictable inflationary shocks, which could affect FMCG supply chains differently from one country to another.
Annabelle Lepièce
