Romania’s agriculture minister calls for 20% cap on private-label goods in large retail chains

Romania’s minister of agriculture, Florin Barbu, has proposed capping the share of private-label products sold by large retail chains at 20% of total sales volume, as part of Romania’s input to the European Commission’s review of Directive 633 on unfair trading practices in the agricultural and food supply chain, Bursa.ro reported.

The European Commission has launched a revision of Directive 633, which aims to curb unfair commercial practices between businesses in the agri-food chain.

Minister Barbu submitted four proposals intended to address what he described as distortions in retailer-supplier relations. These include limiting the share of retailers’ own brands, standardising commercial markups within the same product range, eliminating the re-invoicing of rebates and bonuses, and regulating discount practices.

“Private brands should no longer exceed 20% of the volume achieved by retail stores at the European Union level. We cannot sell a litre of milk, private label, in Romania for EUR 1, while the producer’s brand is priced at EUR 2 on the shelf,” Barbu said.

He also argued that commercial markups should be aligned within product categories. “

This commercial markup should not be different for the same product range, because there are many products in the same category with a commercial markup of 20%, but also some products that have a commercial markup of 150%,” the minister said.

Another proposal targets the elimination of the practice by which retailers re-invoice suppliers for rebates and bonuses, a mechanism frequently criticised by producers as opaque and burdensome.

The proposals are likely to spark debate at the EU level, as private-label strategies and pricing policies are considered key competitive tools for large retailers, while producers argue they can distort market competition and squeeze margins in the agricultural sector.

(Photo source: Inquam Photos/George Calin)