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Every year, trade negotiations highlight the tensions between large retailers and their suppliers, and public authorities are regularly called upon to intervene to balance the relationship. In this context, buying groups, which allow several distributors to negotiate jointly with their suppliers while still competing for sales to consumers, are likely to strengthen the purchasing power of distributors.
Two waves of central purchasing groups have been formed in France, in 2014 and 2018, and the law has evolved to allow their control by the French Competition Authority. This note proposes an analysis of the effects of central purchasing groups on the sector as a whole. After a brief assessment of the economic forces at play based on a review of the literature, we present the results of two studies conducted by the authors of this note. The first study empirically examines the effects of the creation of water treatment plants in 2014 in France in the bottled water sector. It shows that the plants have modified the profit-sharing to the detriment of suppliers, but that they have also allowed a decrease in prices beneficial to consumers. The second study discusses the effectiveness of excluding private labels from the scope of central purchasing bodies, which is advocated by competition authorities to protect small suppliers and maintain diversity of supply.

Reference:

Allain, M.-L.; Avignon, R.; Chambolle, C.; Molina, H.
Les centrales d’achat : quels enjeux de concurrence ?
in : Note IPP 79, (2022), 7 p.

More information, in french