French supermarkets may seek price cuts of 2% to 5% from consumer goods firms -executive

(Reuters) – Supermarket groups in France could demand price cuts of 2% to 5% from food manufacturers in upcoming annual negotiations, the head of retailer Les Mousquetaires told lawmakers on Wednesday in a roundtable with executives.

French retailers have criticised consumer goods giants like Unilever (LON:) and Nestle for price hikes they say are unjustified. The government has also put pressure on the consumer goods makers to cut prices.

Lower raw material and energy costs mean producing food and other consumer goods is less expensive, Les Mousquetaires President Thierry Cotillard said, and prices agreed in negotiations should reflect that.

“We should probably be able to demand that the big (consumer goods) groups cut prices by between 2% and 5%,” he said.

Cotillard said the group’s business in Portugal had managed to negotiate lower prices with consumer goods firms, because price talks there are not restricted to an annual window. Les Mousquetaires operates in Portugal under the Os Mosqueteiros banner.

“Our request, to be able to negotiate throughout the year like our friends in Portugal and Spain, strikes us as perfectly legitimate,” said Cotillard.

France, which has regulations dictating an annual window for price negotiations – from December 1 to March 1 – is considering a law that would bring forward the negotiations, aiming for talks to begin soon and wrap up by Jan. 15.

“We are asking you, in the relationship we have with consumer goods groups, to trust us and to let us negotiate,” Carrefour (EPA:) CEO Alexandre Bompard told lawmakers.

Systeme U CEO Dominique Schelcher and E Leclerc co-president Philippe Michaud were also questioned by lawmakers, in a parliamentary committee on economic affairs.

Several lawmakers questioned the executives about buying alliances in Europe – which some supermarkets use to jointly negotiate with consumer goods firms – asking whether they enable retailers to evade French regulations on pricing. France’s Senate has previously said in a report that such alliances allow retailers to circumvent French law.

Michaud denied that the buying alliances allow retailers to avoid French law.

“We buy as a group, not to evade any law but in order to have sufficient clout against manufacturers,” he said.