Are Big Supermarket Chains Good for the Economy? The Regulation of Concentration in the French Retail Sector

In the past 60 years, the response of the French state to concentration in the retail sector has been unstable. Applying anti-trust rules to the mass retail sector has proved problematic. Since the 1950s, the size of supermarket chains has kept growing, with less and less players in the market. Nowadays, 7 supermarket chains interact with hundreds of suppliers, which gives the former a high bargaining power. The principles underlying antitrust policies provide no clear answer to this problem: the high levels of concentration in the retail sector create an oligopsony. However, such concentration forces suppliers to cut their prices, which benefits the consumer. At times, the French state took sides with retailers, in order to curb inflation. At other times, it took sides with suppliers, in order to protect French agribusiness. The actual policies implemented by the French state have been contingent upon the economic and political pressure exercised on politicians and bureaucrats. Each side eventually found an ally at the bureaucratic level. Suppliers’ views were supported by DGCCRF, the Ministry of Economics department responsible for economic competition and consumer protection. Retailers’ views on concentration were promoted by Autorité de la concurrence, the French antitrust watchdog, which became more and more powerful during the time period.