Recently, there have been misleading interpretations in the media about what it means when retailers sell food below the price they paid to the suppliers.<\/p>\n
The Croatian Competition Agency (CCA) wants to clarify this issue because it affects all of us \u2013 from small food producers to end consumers, including pensioners and families with children.<\/p>\n
It must be noted that CCA supports the use of discounts in retail as a common business practice. However, it’s important that combining discounts with additional promotion practices does not lead to violations of legal provisions, especially regarding the ban on selling products below their purchase price.<\/p>\n
What does it mean when a retailer sells a product below its purchase price<\/em>?<\/strong><\/p>\n This means that a retailer \u2013 for example, a large supermarket chain \u2013 buys a product (like milk or eggs) from a producer at a certain price, but then sells it to the consumers at a lower price, essentially at a loss. Why is this a problem?<\/strong><\/p>\n At first glance, it may seem like a good deal for the consumers \u2013 the food is cheaper. But when such pricing becomes a standard practice, it has serious repercussions:<\/p>\n Large retailers may eventually demand that producers (especially small family farms) lower their prices to make up for these losses. Producers often have no choice if they want to stay on the retailer’s shelves. Smaller shops cannot afford to sell at a loss. They lack the financial backing to offer such deep discounts, which drives the consumers to the larger chains. Eventually, small shops are forced to close.<\/p>\n Once big retailers squeeze out smaller competitors, nothing stops them from raising prices or eliminating discounts. This kind of unfair trading practice gradually destroys local food production. Many producers give up entirely because they cannot sustain losses. A real-world example:<\/strong><\/p>\n Imagine a large supermarket chain decides to sell milk at \u20ac0.60 per Liter, even though they bought it from the producer for \u20ac0.70. Meanwhile, small shops cannot match these prices. They cannot sell milk below the price they paid for it, they lose their customers to bigger stores and eventually shut down. Who does this harm?<\/strong><\/p>\n This is why the Act on the prohibition of unfair trading practices in the business-to-business food supply chain and the EU regulations aim to prevent such practices \u2013 to preserve fair competition, protect small producers, and ensure long-term fair pricing for the consumers.<\/p>\n","protected":false},"excerpt":{"rendered":" Recently, there have been misleading interpretations in the media about what it means when retailers sell food below the price they paid to the suppliers. The Croatian Competition Agency (CCA) wants to clarify this issue because it affects all of us \u2013 from small food producers to end consumers, including pensioners and families with children. […]<\/p>\n","protected":false},"author":11,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[2],"tags":[],"class_list":["post-30593","post","type-post","status-publish","format-standard","hentry","category-news"],"acf":[],"yoast_head":"\n
\nIn practice, this often happens when the retailer combines multiple discounts and incentives on already discounted products, thus lowering the retail price below the purchase price it paid to the supplier. This is usually done to attract more customers into its store.<\/p>\n\n
\nTo meet these lower prices, they may have to cut corners \u2013 using cheaper packaging, lower-quality ingredients, or even laying off workers.<\/p>\n\n
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\nWith fewer retailers on the market, consumers lose choice and are left with no alternatives.<\/p>\n\n
\nAs a result, we all lose access to domestically produced food.<\/p>\n
\nWhile it appears the retailer is “covering for the difference,” the reality is that in the next procurement cycle, they ask the producer to reduce their price.
\nIf the producer refuses, it is removed from the supply chain.
\nIf they agree, they\u2019re forced to cut costs \u2013 likely affecting the quality of the product, the packaging, or their staff.<\/p>\n
\nIn the long run, only a few major chains remain \u2013 with the power to control both prices and market conditions.<\/p>\n\n