The government once again called on fuel distributors on Wednesday, September 20th, to « participate » in the « collective effort, » following the announcement of several retailers refusing to sell their fuel at a loss, a practice that is currently prohibited but that the government intends to temporarily legalize in order to address the surge in pump prices. « Everyone must and can make an effort, » defended government spokesperson Oliver Véran after the cabinet meeting, despite the clearly expressed reluctance.
The measure aims to compensate for the losses of independent gas stations, and the government has suggested that it is counting on a decrease of around 47 euro cents per liter, an estimate that quickly appeared to be highly exaggerated, especially according to the distributors.
Selling at a loss, which has been prohibited for several decades to prevent undercutting prices from threatening the most vulnerable players in a sector, also does not convince the consumer association UFC-Que choisir. In an interview with Le Monde, Antoine Autier, the head of their research department, explains why he believes this « false good idea » will have limited effects on purchasing power.
The government has decided to maintain its proposal to allow the sale of fuel at a loss. If the measure is adopted and distributors ultimately decide to do so, what effects could this have on consumers’ purchasing power?
It is possible that this is a zero-sum calculation for the consumer. The government does not pay attention to what is happening on the shelves. If distributors eventually agree to sell fuel at a discounted price, it can be anticipated that they will make up for the losses by increasing the price of other products sold, as they naturally aim for profit. Fuel is already a loss leader [a marketing strategy to make the price of a particular product particularly attractive in order to attract customers and sell them other products] for supermarkets.
However, this can enable large retail chains to make profits on their own products by promoting « inflation baskets » with store brand goods.
Est-ce que cela ne bénéficierait donc à aucun consommateur ?
There can be winners and losers. An individual who drives a lot and only has a small weekly shopping basket may benefit from it, while a large family that doesn’t drive much but fills at least one shopping cart every week will suffer from the price increase.
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