Have reforms of trade relations from 2000 to 2009 restored price competition?

Pierre Biscourp, Division Commerce, Insee

During the 1990s and 2000s trade relations between industry players and large retailers moved from a regulatory phase designed to protect the least competitive players by the prohibition of resale at a loss, to a phase of liberalisation designed to restore competition through prices in favour of the consumer. We have studied the market trends throughout this round of reforms, using data on prices collected across the French territory for many consumer products. The results of this analysis suggest that the Galland Law of 1996 had indeed led to a mitigation of price competition, while liberalisation in the second half of the 2000s restored it. This movement occurred on three levels. On the one hand the relative price of domestic brands versus private labels increased after the Galland law and until 2006, and then decreased. Yet it was these large brands that were best able to take advantage of constraints on competition created by the Galland law. A two-stage trend was also observed in the relationship between retail prices and the level of concentration of local markets: this relationship was severely hampered after the Galland law, and then recovered gradually at the end of the period. Finally, after the Galland law, the dispersion of prices for domestic brands was reduced in comparison to the dispersion of prices for private labels, due to an erosion of the advantage of the most competitive stores. This dispersion increased again at the end of the period, as these stores re-established their competitiveness.

Insee Analyses
No 16
Paru le : 13/02/2014