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November 07, 2012
Brattle Consultants Author Competitive Assessment of the Spanish Food Supply Chain

On behalf of PROMARCA (the National Brands Spanish Manufacturers’ Association), Brattle principal José Antonio García and Academic Advisor Juan Delgado have released a study that evaluates the impact of private labels on the competitiveness of the Spanish food supply chain. More specifically, the study analyzes the impact of market concentration and the expansion of private levels on final prices, quality, and innovation. The study provides empirical evidence that suggests the existence of dominant positions at the retail level of Mercadona in the regions of Comunidad Valenciana and Andalucía, and Eroski in the Basque Country. It concludes that the increased concentration of retailers, the tendency toward vertical integration, and the rise in the market share of private labels are already having a negative effect on price (and quality) competition and on the incentives of manufacturers to invest in new products and innovate. It further highlights that the discriminatory management of manufacturer and retailer brands adopted by dominant retailers may have exclusionary effects for the manufacturer brands that may ultimately reduce the consumer welfare. The authors propose a list of guidelines to promote competition in the Spanish food supply market, including prohibitions to privileged information exchanges between manufactures and retailers related to strategic variables (such as prices, costs structures, promotions and sales) and the imposition of FRAND (Fair, Reasonable and Non-Discriminatory) conditions on the commercial relations between manufacturers and retailers. Drs. García and Delgado recently discussed the findings of their study during a presentation before the Spanish Ministry. Their report and meeting were featured in Expansión, an economic newspaper based in Madrid, Spain. The Brattle study, as well as a summary presentation of the report, can be downloaded using the links below.