Sale at a loss of fuel: the deafening silence of distributors, trapped by Elisabeth Borne

For the past few days, distributors have been explaining urbi et orbi, as if with regret, that they could not do more to lower fuel prices. "!" the government replied this weekend. A bill tabled in early October should allow them to sell it at a loss from December, for a period of six months.

All distributors are invited this Tuesday morning to Bercy to be specified the scope of this unexpected measure. "We learned the news just a few hours before its publication in Le Parisien. She left us speechless," says a distributor.

"Anything at all"

In other words, retailers are not redoubling their enthusiasm at the possibility of losing money by selling fuel. As of Monday, none had yet officially reacted to the government's announcement. Unofficially, one of them speaks of a "trap", and another deplores "a policy of scribbling, of the great anything". "We are not philanthropists: if we sell fuel at a loss, we will have to catch up elsewhere and sell consumer products at a higher price," explains this distributor.

Retailers have played the game very well with the anti-inflation basket.

A source in Bercy

Will retailers use this new right? The government assures that it has no intention of twisting their arms. "This is only a new tool made available to them to lower prices, says Bercy. Distributors have played the game very well with the anti-inflation basket, this time it is a question of giving them the opportunity to keep the price of fuel below 2 euros per litre. For them, fuel is a premium product."

The signs are less positive. "If this ban on selling at a loss has existed for so long without any distributor ever wanting to challenge it, it is because we need it to make a living," says a distributor. TotalEnergies, for its part, has committed to capping unleaded and diesel at 1.99 euros per litre, but it can draw on its production margins.

Distribution as a "public service mission"

A distributor anticipates: "There is only one who will really play the game, it is Leclerc. The others will be content to make the display by offering a weekend at a reduced price here or there. " Not all brands will be equally well equipped to deal with this extremely costly measure. E. Leclerc centres should strive to remain cheaper than their food distributor competitors.

Last week, Michel-Édouard Leclerc boasted, on his blog, to sell fuel cheaper than the 1.99 euros per liter promised by TotalEnergies. But other brands will not have the means to sell their fuel sustainably at a loss. If their price becomes attractive, they risk seeing their fuel sales soar... just like their losses.

Distributors are, in fact, caught in their own trap. The Covid epidemic and food inflation have helped to erect them into "welfare companies" responsible for protecting the French and "exercising a public service mission", says a note written by Jérôme Fourquet and Raphaël Llorca and published last year by the Jean-Jaurès Foundation.

Suppliers vs. distributors

In recent months, retailers have multiplied operations to protect the purchasing power of the French, competing with promotions and other operations at cost price. All of them have sold, at one time or another in the last two years, the fuel without margin; all have offered anti-inflation baskets, consisting of items at tight prices, or even at cost price at Système U. At the same time, distributors accuse their suppliers of fueling price increases to preserve their margins. But distributors also need to make a living, even if they prefer not to have to call it back.

Selling fuel at a loss could at least have one virtue, one distributor hopes: helping to obtain a moratorium on the Descrozaille law voted last year. Bête noire of distributors, the latter provides for a ceiling of 34% of promotions on hygiene and beauty products.

"This cap will once again hit the French most in difficulty, by increasing the margins of the giants of the sector," said Alexandre Bompard, CEO of Carrefour and president of the Federation of Commerce and Distribution (FCD) in a letter sent on September 7 to Bruno Le Maire and Olivia Grégoire, the Minister of Trade. In view of the government's desire to authorize the sale of fuel at a loss, this limitation of promotions seems completely inconsistent, says a distributor.