German supermarket giants deny 'unfair' practices

Germany's supermarket chains, merged to just four giants in recent years, slammed Agriculture Minister Julia Klöckner Friday over her assertions that they behaved "unfairly" when buying foodstuffs from local German producers.

Her bill, awaiting parliamentary ratification, would become Germany's enactment of the EU directive 2019/633 to "strengthen" farmers' positions in the food supply chain and prohibit "unfair trading practices" (UTP) between small and large operators, from April 2021.

Top German supermarket chain managers on Friday condemned what they called Klöckner's "tone" in remarks she made at a Berlin news briefing Wednesday, saying she had falsely depicted them as "systematically breaking contracts and law."

Read more: German chains rank worse than UK or Dutch counterparts, claims Oxfam

Their letter sent to Chancellor Angela Merkel and other cabinet members, and published by the magazine Wirtschafts Woche on Friday, said Klöcker's remarks amounted to an "unprecedented case of public defamation" by a government member.

"We are deeply shocked by this massive attack on the reputation of our companies and feel personally discredited," said the heads of the giants — Edeka, Rewe, Aldi and Schwarz Group, which runs Kaufland and Lidl.

The signatories also included the presidents of Germany's HDE trade and BVLH foodstuff retailing federations.

Perishable deliveries 'canceled'

Parallel to cabinet's adoption of her bill on Wednesday, Klöcker, a former wine sector promoter, had spoken at the news conference of "unfair trading practices," including alleged cancelations of suppliers' perishable deliveries by retail chains.

Klöckner — who like Merkel belongs to the ruling Christian Democrats (CDU), which has long associations with rural Germany — said her aim was to "strengthen David and tame Goliath."

The four retail giants now control 85% of the [German] market, whereas 15 years ago eight chains had prevailed over 70% of the market, she noted.

Farmers had become reliant on the few firms' buying practices. And, producers who complained of unfair treatment were often deleted from supplier lists, she asserted.

Maximum fine 'too low'

German DBV farmers' federation president Joachim Rukwied said the legislation would strengthen growers' positions in the food supply chain, but he criticized the maximum proposed fine at €500,000 ($593,000) as being too low. 

Klöckner's bill, modelled on the EU directive, would prohibit foodstuff purchasers from ordering perishable goods, but then cancelling them, not paying for them, or charging growers for their disposal, or one-sided changes to conditions of delivery.

And, in two German aspects beyond the directive, the retail chain which incurred storage costs would not be allowed to burden the original producer, noted the southwest German regional newspaper Badische Zeitung (BZ).

Protecting farmers better

Federal CDU parliamentarian Albert Stegemann, whose electorate lies in Germany's northern rural Emsland district, near the Dutch border, said Klockner's bill would better protect farming families from improper excesses amid market concentration.

"With the implementation of the UTP directive we will in the future ensure that the return of unsold goods without payment of the purchase price to farmers is forbidden," said Stegemann.

The BZ also quoted opposition liberal Free Democrat Carina Konrad as saying the bill would stem unfair practices but would result in extra burdens on consumers at the checkout, for example, costs for storage of goods and and returns to suppliers.

In Brussels, the EU is continues to wrangle over major reforms of its farm sector, focused on climate, soil and wildlife protection.

ipj/aw (dpa, AFP)