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December 21, 2012
Brattle Economists Authors Opinion Piece on the Spanish Draft Bill on Measures to Improve the Operation of the Food Supply Chain

A recent opinion piece authored by Brattle principal José Antonio García and academic advisor Juan Delgado argues that the draft bill approved by the Spanish Government on October 19, 2012 may help to foster efficiency and competitiveness of the agri-food Spanish sector, and reduce the existing imbalances in trade relations between manufacturers and retailers. The Draft Bill provides for a mixed model of regulation and self-regulation of trade relations between the different agents in the Spanish food supply chain. Among other measures it establishes the obligation to formalise food contracts in writing; prohibits certain trade practices, such as unforeseen commercial payments, and privileged information exchanges between manufactures and retailers; establishes administrative control and proposes the creation of a Code of Good Commercial Practices in food contracts.

Based on a recent study prepared for PROMARCA (the National Brands Spanish Manufacturers’ Association), the authors conclude 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. The opinion piece advices regulators in Spain to impose regulatory measures to limit discriminatory management practices of manufacturer and retailer brands adopted by dominant retailers that have exclusionary effects for the manufacturer brands and may ultimately reduce the consumer welfare, and propose the imposition of FRAND (Fair, Reasonable and Non-Discriminatory) conditions on the commercial relations between manufacturers and retailers.

The opinion piece, “Cambios Legales en la Cadena Alimentaria?” was featured in El Economista, an economic newspaper based in Madrid, Spain. To reach the full article, please visit here.