Retailers fear price war, oppose below-cost sales

Retailers’ representatives are worried about a European Commission directive proposal that would allow sales at below cost. Recently, after protracted talks with producers and merchants, the Greek government passed a law forbidding sales at below cost. This was a long-standing demand of smaller retailers and industrialists who feared undercutting by powerful rivals. The law takes effect on January 1, 2002. French supermarket chain Carrefour, which entered the Greek market a year ago, is said to have sustained considerable losses in undercutting its competitors, in order to gain a foothold in the market and expand its market share. What the smaller retailers fear, however, is exactly what the commission wants to facilitate. It believes that such limitations on pricing are an obstacle to free trade because they prevent companies in reaching markets other than their national ones. To this end, the directive would allow selling at below cost, provided the producer agrees and that the fact that the price is lower than the item’s cost is clearly indicated to consumers. The commission also wants to give a boost to the retail sector, which has been stagnant recently. Greek retailers are in no doubt over the commission’s intentions but are waiting for a final draft to express their opinion. It is obvious that their reasoning favors a total market deregulation. It would be better if this (directive) did not pass because it could be the beginning of a big change in the market, said a retailer. It is unfortunate that stock exchange authorities have decided on the unilateral move after a cursory and hasty consultation with stock brokerages and share order transmission agents, it said in a statement yesterday.

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