What is this huge contract revealed by Lidl’s boss on BFMTV?

Michelle Biero, a guest on BFMTV-RMC, decried the vagueness of consumer manufacturers’ contracts with distributors, a result of a 2008 law that regulates commercial negotiations.

Michel Biero did not come empty-handed. A guest on BFMTV-RMC this Wednesday, Lidl’s boss had a huge block of 400 bound pages under his arm which he showed off on air. This is an annual contract of a distribution brand with one of its suppliers, in this case a multinational.

“It’s a supplier, it’s a multinational, it’s a contract, over a year, it’s 400 pages long. It’s a law of modernization of the economy, it’s a law of ambiguity and it’s a law of complexity. It takes 15 lawyers to write it,” says Michel Biero. Such an agreement (…) we do not understand anything (…) it is useless, it serves the obscurity of the industrialized world.”

Lidl’s boss cites the 2008 Legislation to Modernize the Economy (LME) which changed the legal framework for mass distribution by restoring freedom in price negotiations between distributors and suppliers. A law that sets a general price (manufacturer’s suggested selling price) from which a distributor sells services (promotions, catalogs, gondola heads, etc.) to reduce this price.

A law which Lidl’s bosses consider too restrictive and complex and which cannot guarantee farmers a minimum price due to its complexity and ambiguity.

However, this law does not regulate the relationship between distributors and their suppliers of private label products (MDD). Unlike annual commercial negotiations with national brands, private labels are negotiated throughout the year.

“I bring you another contract, it’s a tripartite contract between a group of breeders, distribution – so we – and the businessman, it’s four pages long”, shows Michel Biero.

“The whole world is in this pattern, in Spain, Germany and Italy there is no law to modernize the economy, he recalls. The law may have been good in 2008 but here we are in 2024.” Accusing politicians of multiplying contradictory laws, Michel Biero points above all to the responsibility of industrialists in the sector who hide behind the complexity of laws for poorly remunerated farmers.

“We don’t know who the farmer is behind it (when we negotiate with a big group), recalls the Lidl boss. It is completely ambiguous, we arrive at the purchase price which does not consider the agricultural raw material at any time. , production costs, processing costs or distribution costs.”

For the distributor, the government should therefore abolish the LME Act, set a minimum agricultural price and allow distributors and producers to negotiate once these prerequisites are established.

“The government is putting 400 million euros on the table, that’s good but we’re not talking about remuneration, we’re talking about support. Farmers want to make a living from their business and for that we need a guaranteed minimum price”, the Lidl boss said. finishes.

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