The National Assembly had rejected, in January 2022, a bill brought by Jean-Luc Mélenchon (La France insoumise), which aimed to block the prices of energy and five seasonal fruits and vegetables. The Macronist majority then judged that it was "a bad answer to a good question".
A year later, the Minister Delegate for Trade, Olivia Grégoire, proposed a rather similar idea: an anti-inflation device so that "the French can have attractive prices on a daily basket". While food prices rose 13% over one year in January, according to the National Institute of Statistics and Economic Studies (Insee), large retailers are increasing operations, and some major brands have anticipated wishes. of the government. But is it possible to block administratively, for all of France, the prices of certain everyday consumer products? With what gains for consumers? And what side effects?
The project is to offer, from March until June, "about fifty everyday products that would meet the needs of a family with children," Ms. Grégoire announced at the end of January. These products should be divided into five categories (hygiene, cleanliness, groceries, frozen and fresh). They would include five fruits and vegetables, including three organic, two starchy foods, red or white meat, including at least one labeled, fish, hygiene products... but no alcohol or confectionery, according to Le Parisien.
Each brand would be free to participate or withdraw when it wishes and would define for each "unit of need" the article of its choice, including with its own private labels. It undertakes, specifies Le Parisien, to respect "a national maximum price" (subject to change, however), to communicate to customers a list of the elements of the "basket" and to identify them with a logo on the shelves.
According to the Commercial Code, only "a crisis situation, exceptional circumstances, a public calamity or a manifestly abnormal market situation in a specific sector" authorizes state intervention, as was the case with masks and hydroalcoholic gel during the Covid-19 crisis.
There are a few additional exceptions. Overseas, the Lurel law introduced, after the riots against the high cost of living in 2012, a "quality price shield" (BQP), negotiated each year under the aegis of the overseas prefectures, which blocks the amount of a basic necessities basket. It is not the prices of each product that are capped, but that of the basket: the price of a packet of rice fluctuates from one store to another, but the total list of BQP, supposed to be available at all traders , will not cost more than a defined sum (variable according to the departments).
Price freezes also exist throughout France for certain regulated sectors, whether to tax them or to protect them: tobacco, medicines, taxis, books, etc. For all other sectors, free prices have governed the market since 1986.
Since that date, the law has put an end to half a century of administered prices and to a "post-war economy, closed vis-à-vis the outside world, marked by scarcity and the need to organize the reconstruction," describes Laurent Warlouzet, professor of history at Paris-Sorbonne University. It is part of the free movement of goods in the European Union, which guarantees competition between Member States and would prohibit, in this case, setting prices that are too low, which would limit intra-European imports.
If the system is to come into force in March, it is no coincidence: this is the moment when the negotiations of the brands with the industrialists are completed, who are asking for significant revaluations due to the soaring prices of raw materials. and energy this year. The objective, according to Olivia Grégoire's ministerial cabinet, is to anticipate a "red march" with a "refuge basket".
Is such blocking effective? For the energy shield (freezing of regulated gas and electricity prices, fuel discount, etc.), INSEE calculated that it had halved the effect of soaring energy prices on inflation between the second quarters of 2021 and 2022. But to prevent suppliers from selling at a loss (which is prohibited), the State finances the difference between what the supplier pays on the wholesale markets and the price at which he resells.
As it is easier to give households a boost than to withdraw them, the device could continue, despite its cost – 46 billion euros for 2023, according to the latest counts from Bercy, after 30 billion in 2022. The executive, which hoped to be able to target its aid to the most modest, gave it up for 2023. And the tax component of the shield could be kept until 2027, according to the report by Senator Les Républicains Jean-François Husson.
Supposed to help the most modest, hard hit by inflation, the price freeze is not necessarily well targeted. It risks favoring the richest, who would nevertheless have the means to assume price increases, and who then benefit from a windfall effect. The Astérès Institute has thus calculated, assuming a freeze on January 1, 2022 of energy prices and a basket of everyday consumer goods, that the gain in annual purchasing power was twice higher for the richest than for the poorest (821 euros for the wealthiest 10%, and 328 euros for the poorest 10%).
"Either we take general measures, and then everyone benefits, or we really want to take people's living conditions into account, and then the right instrument is not price freezes, but taxes", summed up Sandra Hoibian, general manager of Crédoc, in Le Monde, in May 2022.
Moreover, any price control requires arbitration to avoid the risk of shortages. On the one hand, too little supply and the shelves remain empty: in 2020, the government had to raise the maximum prices of hydroalcoholic gels prepared in pharmacies. Originally set to avoid soaring prices, they were considered too low by pharmacists who denounced the excessive costs of supplying raw materials. On the other hand, too much demand and stocks are running out: in November 2022, one in five stations ran out of fuel just before the drop in rebates at the pump.
Rather than stop producing, a supplier may be tempted to lower quality to maintain its margins. What about controls? “In the immediate post-war period, the choice of products was limited and the control obvious. From the development of the mass consumer society in the 1960s, the State had to hire armies of inspectors to control the prices of ever more numerous products,” explains Laurent Warlouzet. However, for the past twenty years, the trend has been towards a significant reduction in the staff of the Directorate General for Competition, Consumer Affairs and Fraud Prevention (DGCCRF).
With the anti-inflation basket, large retailers will have to find a way between (maximum) prices blocked on certain products and mandatory (minimum) margins of 10% on food, result of the Egalim law, intended to better share profits between distributors and producers, in the first place farmers - it is for this reason that the government speaks of products at "near cost" prices.
A challenge for Michel-Edouard Leclerc, president of the strategic committee of the E. Leclerc centers: “We are not against freezing prices. (…) But for us to be able to do it legally, we have to help us negotiate with manufacturers. Innuendo number one: withdraw this provision of Egalim which does not allow free negotiation; implication number two: it will not be very difficult to negotiate with farmers, artisans, SMEs.
"Entrusting food aid policy to supermarkets is anything but a good idea," reacted the National Federation of Farmers' Unions (FNSEA) and Young Farmers. Admittedly, the agreement should mention that the fall in profit margins should not be passed on upstream, but without any guarantee other than the good faith of the distributors.
Smaller suppliers risk finding themselves under pressure from large-scale buyers, especially if their products are replaceable. For a must-have brand or a non-substitutable product (Nutella, Coca-Cola, etc.), a retailer is willing to cut its margins to a minimum in order to attract customers. For fruits, vegetables or pasta sold under private label, it is less certain.
