Banning below‐cost resale in France: the impact on pricing decisions

Abstract

Purpose – In France, the consumer prices of major industrial brands have been rising for a number of years, while the price differential between these brands and the retailers' ones has widened. These consequences were attributed to the French legislation, particularly to the Galland Act, enacted in 1996, which regulated the banning of below cost resale. The aim of this paper is to explain the effects of the legislation on price competition within the grocery sector and to analyse the effects of the Dutreil Act, enacted in 2005, which modified the Galland Act.Design/methodology/approach – The paper carried out an analysis of economic, strategic and marketing literature, as well as professional surveys, statistical data, balance sheets of the main retail groups and the authors did some interviews with retail and industry professionals.Findings – This paper highlights the fact that, although price competition has been partially restored by the Dutreil Act (2005), the latter still has had some very negative ...