The proliferation of private labels has transformed the landscape of retail competition in developed countries. Major retailers are no longer confined to their traditional roles of purchasers and distributors of branded goods. By selling their own label products they compete with their upstream brand suppliers on sales and shelf space. The paper explores the emergence of ‘vertical competition’ between retailers and suppliers and the pro-competitive and possible anti-competitive effects that stem from the use of private labels. It reviews the enforcement of European competition laws in a private label environment and the difficulty in balancing the beneficial short-term effects of private labels and their possible, harmful, long-term effects. It subsequently questions whether these difficulties imply a lack of competitive harm or reflect a gap in regulation, as traditional analysis fails to encompass the increased market power of retailers and the competitive effects of private labels.
World Competition