MADRID – An interesting question in CadenaSER: Why are French supermarkets succeeding in lowering prices for basic foodstuffs and Spanish ones are not?
Emmanuel Macron’s government and major French supermarkets have agreed to limit basic food prices, which means an attack on their profit margins. It is a decision that clears the way to intervene in the market, without the EU being able to object. The French decision, however, leads to a conflict in the Spanish coalition government
PSOE welcomes the initiative
Yolanda Díaz, Minister of Labour and second vice-president of the government, welcomes the decision of the French government and assures that Spain, like France, can also make the shopping basket cheaper. The minister is sure that it is not only possible but also “legal” to offer several basic products at a limited price.
Agriculture minister favours “free competition”
However, the Minister of Agriculture, Luis Planas, thinks very differently. In the context of “free competition”, he strives for similar actions to be organised from the distribution chain and “always with respect for the Law of the Supply Chain”. Therefore, the sector is “mature and competitive” enough to “carry out similar initiatives,” the socialist minister said on Monday. Inflation in Spain is still high, months after the reduction of VAT on basic products came into effect.
Related post: Which Spanish supermarkets do not comply with the VAT reduction?
The French idea is that each supermarket company autonomously defines its list of products and sets its prices for them. All these goods then receive a common label with the colours of the French flag and the text: “anti-inflation quarter”.
Why not Spain?
Journalist Javier Ruiz analysed on Monday in the program Hora 25 de Los Negocios (Cadena SER) three major differences between the two countries in this respect.
The profit margins are known
In France, companies’ profit margins are well known. The French government publishes monthly the difference between what companies pay farmers and what they charge consumers. This way you can see who makes the most profit. In Spain, on the other hand, this data is only known to the tax authorities and is not published every quarter. Furthermore, this is only done at the sector level by the Bank of Spain, without specific names.
The entire chain
The French government has taken measures throughout the food chain. For example, carriers are obliged to reduce their costs. Although fuel prices have fallen in Spain, prices in supermarkets continue to rise and this problem has not been addressed.
Moreover, the French government applies the binding price reductions for three months. According to Minister Planas, in Spain, it is expected that the sector itself will reduce what and where it can. “We are doing everything we can to ensure that inflation does not lead to a deterioration in the quality of food,” Alexandre Bompard, president of the Carrefour group, said in an interview with the newspaper ‘Le Journal du Dimanche’. The Intermarché chain will do the same with nearly 500 items, including fresh products, dairy products, fish, fruit and vegetables.
Price agreements at the expense of quality products
In this regard, Spanish supermarkets, after learning of the French measure, recalled that in France under the Sarkozy government, a similar action showed that these “price freezes” were at the expense of the quality of the products.
Therefore, sources from the distribution sector in Spain reiterate that they consider this measure to be “discriminatory”. They don’t think it will reach all distributors or all consumers. Consider, for example, households in a rural environment that do not live close to one of the big supermarket chains.