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The new regulation was illustrated on 29 June in Milan during the seminar organized by ECR in cooperation with HoganLovells law offices, entitled: “The new antitrust laws in vertical relationships between manufacturing and retail: understanding them to minimize risk”. The seminar was a prelude to the specific training session on this issue that Indicod-Ecr has planned for 27 October 2010, also in Milan.

“An in-depth understanding of the new antitrust law,” remarked attorney Gianluca Belotti of HoganLovells, “is essential for top management, which includes CEOs, general managers and plant managers, sales managers, CFOs, marketing directors and legal experts within the company. It is even more important for undertakings that hold a market share of 30% or more which are not subject to the automatic exemptions allowed under the Regulation. Undertakings which, by their actions, could restrict the free competition that the legislature is attempting to guarantee, in order to provide consumers with superior quality products at competitive prices. Furthermore, the new regulation must be clear to the top management at undertakings with a market share of between 15% and 30% which, by implementing vertical agreements, could inadvertently have a prejudicial effect on competition and be subject to substantial fines.”

Only undertakings with a market share of less than 15% are exempted from complying with the provisions of the antitrust regulation, with exceptions made for “severe restrictions”, such as minimum and fixed resale-prices.

“Undertakings that fall under the scope of the regulation and are in violation run a very serious risk,” warned Belotti. “Infringement of the antitrust regulation implies fines of up to 10% of total turnover. In some EU countries, there may also be criminal penalties.

The top managers who authorized the actions in violation of the antitrust regulation also risk having their employer demand compensation for monetary losses and reputation damage suffered by the undertaking penalized by the Authority. Not to mention that the contractual provisions prohibited by the antitrust agreement have no validity.”

Precisely because of the economic relevance that the penalties imposed by the antitrust can have today, Belotti recommended companies shift the burden of payment of any fines imposed by the Authority to the legal experts engaged to verify conformity of commercial practices with the regulation. This is already common practice in other countries.  Also, he recommended that companies evaluate the opportunities and risks of spontaneously reporting antitrust violations, in hopes that the Authority will grant immunity from penalties, or work to cooperate in the investigation launched by the Authority, which could reduce fines payable due by half. However, neither of these decisions protects the undertaking from class action suits brought by third parties claiming damages due to the actions of undertakings that have influenced competition.

Coming to a discussion of the new items introduced by EU Commission Regulation 330/2010, it should be said that basic restrictions of competition can be legally included in vertical agreements only if the undertaking can demonstrate that:

• such restrictions are essential to generating efficiencies;
• both of the contracting parties of the vertical agreements, manufacturer and retailer, must have a market share of less than 30% respectively of sales and purchases of the assets to automatically fall under the scope of exemption from application of the regulation (this threshold previously only referred to the manufacturer) ;
• in future, it will become more and more difficult to set restrictions on online sales.

Manufacturer-retailer vertical agreements containing minimum and fixed resale-prices, as well as certain types of territorial protection are still prohibited. The new regulation bans limits on the autonomy of undertakings to impose their own commercial policy as this could foster an alignment of the prices on the market. Article 4 letter a) of the regulation reiterates  “…the possibility of the supplier to impose a maximum sale price or recommend a sale price…” The new regulation does not limit the autonomy of the retailer in choosing when, where and to whom to sell the goods purchased. At the same time, the regulation still prohibits provisions that impose non-compete obligations, the duration of which are indefinite or exceed five years (and therefore, its applicability cannot be contested) and selective distribution systems not to sell the brands of particular competing supplier. Less severe restrictions may be agreed upon more or less spontaneously according to the market position of the parties that establish them. Discount policies (such as loyalty discounts or target discounts) and special agreements such as only selling one brand, exclusive or selective retailing, category management, and listing fees may be agreed upon between parties that together control up to 15% of the market and may agreed upon within certain limits between undertakings that hold 15-30% of the market.  Extreme prudence must be taken in implementing these policies by undertakings with market shares of more than 30%. Undertakings holding more than 40% of the market which implement these policies run this risk of violation of the Treaty.

In conclusion, it is worth noting that the antitrust regulation pays special attention to category management practices, especially in concentrated markets and by operators holding market shares of more than 30%. “The legislature is encouraging retailers to assign the role of category captain to a number of manufacturing partners,” continued Belotti.

In light of the attention given to this issue by the legislature, ECR has begun to review the category management model, with the assistance of legal experts and with a view to subsequently involving member companies. The goal is to clarify the areas of attention and possible critical aspects of the regulation with reference to vertical agreements.

Based on the new antitrust regulation, category management agreements between significant commercial partners must not become the instrument that allows the category captain to reposition the prices of its offer, after it has become aware of the sell-in policies of competitors. Furthermore, each category captain must also carefully assess whether the category management programs it is involved in can suggest that such programs have been imposed to exclude the products of competing suppliers from the shelves.

These initiatives gather over 1’800 leading companies as well as SMEs operating at national level, thus representing a critical mass within the consumer goods industry. These ECR initiatives are the voice of local business needs at international level.

To date, these ECR initiatives/organisations have issued more than 250 Best Practices blue books covering the different areas of the ECR strategy (demand, supply chain, enabling technologies, integrators) and optimizing other interface topics between manufacturers and retailers (OSA, traceability, sustainability, category management, POS data … The National ECR have procured topics and speakers for the ECR Europe Conferences and Forums for years.

The national ECR initiatives are a loosely-knit network of organisations which meet together with the objective of sharing information about ECR best practices amongst themselves for the benefit of their organisations and their national company members. There is no top-down or bottom-up approaches between national initiatives/organisations. In 2001, they created a “national ECR initiatives group” that is currently sponsored by ECR Europe. This group works closely with ECR Europe by participating to or initiating working groups.

In their desire to improve efficiency, the members of this group and its two co-chairs, Nikolaus Hartig (Austria) and Olivier Labasse (France) with the help of the group facilitator, Bernard Karli, began in July in 2008, to work on a “code of practice”, also called “terms of reference” of a coordination platform between them.

This document has been approved on the 18^th of November 2009 by the managers of the different national ECR organisation and signed by 18 countries as of June 2010.

Beginning of 2010, they elected, as members of the new ECR Europe, 6 representatives to the Operating board and 6 representatives to the Board of Directors of the European association.

Download NATIONAL INITIATIVES COMMUNITY OF PRACTICE

The successful applicant will

• be a leader with broad management and public capabilities, as well as outstanding interpersonal and communication skills;
• have a passion for our Consumer Goods Industry and its future opportunities;
• be a person with vision, capable of leading the Association in a dynamic industry during on-going evolution and change;
• have demonstrated strategic planning ability and skill at delivering results in an entrepreneurial environment;
• have a track record of successfully leading and building consensus in complex environments;
• possess excellent spoken and written English; a good command of other languages is important.

Qualified candidates can request the full job profile from the ECR Europe Secretariat (ecr@ecreurope.com). The deadline for applications is 15 August.

“Meeting the future together” – this will be the theme of the next ECR Europe  annual conference & marketplace in Brussels on 5-6 April 2011. ECR Europe is inviting poposals for content from the ECR Community by 24 September.

After the toughest economic conditions in living memory, the question for Europe’s consumer goods industry is simple: where do we go from here?

As manufacturers and retailers fight for market share and try to stay one step ahead in the battle for the consumer’s affections, the ECR Europe Conference & Marketplace returns next spring to examine the burning issues.

How is our industry adapting to change? What trends are emerging? What lessons can we learn from the rest of the world? What are the key issues that ECR Europe is addressing to help manufacturers and retailers deliver the products and services the consumer/shopper wants? How are we responding to evolving drivers of consumer/shopper value?

The conference is not only for the ECR community, it is also by the ECR community.  We are looking for case studies, best practice, innovative developments from within our industry and beyond.  If we are successful the Conference will not be just a succession of good speakers on interesting subjects but will surprise, challenge, inspire and we hope enthuse the audience.

Brussels 2011 – Submission form

One of the causes of shrinkage (theft, damage, spoilage, tampering) is inadequate packaging design and related features, such as labelling, barcoding, anti-theft devices, etc. The report describes how the various requirements for packaging from different parts of the business and for different purposes have an impact on the shrink rate for the product concerned and  what  good packaging to prevent shrink can look like, taking into account sustainability and marketing needs. The publication suggests “do’s and dont’s” and contains a practical checklist for companies summarising the guidelines.

Find & Download this Report in ECRoPEDIA!

Click here to download

The 2003 ECR Europe publication Shrinkage – A Collaborative Approach to Reducing Stock Loss in the Supply Chain stated that: ‘There is an increasing recognition of the scale and extent of the problem of shrinkage in the FMCG sector. In addition, some of the consequences of shrinkage, such as out of stocks and restricted product availability, impact directly upon shopper satisfaction. Reducing shrinkage can also increase sales’.

That report promoted the adoption of the ‘Shrinkage Road Map’ – a simple but effective methodology designed to deliver real benefits to the companies who use it to tackle their shrinkage problems. The report also set out the importance of incorporating this approach into a shrinkage reduction strategy that is itself fully integrated into the overall corporate policy of the company; thus giving shrinkage management the same weight and importance as other functions within the business such as sales, distribution and marketing.

In many people’s minds shrinkage is synonymous with theft and one of the most visible manifestations of anti-shrinkage strategies is the use of security systems on and around packaging. There are, however, many other sources of shrinkage, such as damage, wastage, and administrative errors that can be directly attributable to the way in which products are packaged.

This Report and Guidelines offers a packaging strategy built around the Shrinkage Road Map. It sets out the areas in which packaging can be used to attack the broad range of causes of shrinkage with real examples of how packaging developments can be used to develop and deploy tried and tested solutions.

Because packaging design does not take place in a vacuum it sets out collaborative approaches to getting benefits across the total supply chain. It outlines the complex challenges and tensions inherent in designing modern retail packaging, and offer a series of practical guidelines the industry should consider when thinking about how to minimise the impact of packaging-related shrinkage.

As with previous ECR publications this Report and Guidelines shows how the application of a systematic coordinated approach to managing shrinkage can bring companies a real opportunity to increase profits and customer satisfaction – a win-win outcome that should make this essential reading for the FMCG sector!

Click to Download