Competition Law and Private Label Products and Market Power

1. Introduction

Private label products are goods manufactured by third-party suppliers but sold under a retailer's or platform's own brand—for example, a supermarket's own-brand food, household products, cosmetics, apparel, or consumer electronics.

Private labels create an unusual competition-law situation because the retailer may simultaneously act as:

1. buyer of products from suppliers;
2. competitor of those suppliers through its own private label;
3. seller/distributor controlling access to consumers; and
4. potentially a gatekeeper possessing detailed information about competing suppliers.

Private labels are not inherently anti-competitive. They can increase competition by introducing lower-priced alternatives, encouraging innovation and increasing consumer choice. Competition concerns arise where a retailer or platform with substantial market power uses its control over distribution, data, shelf space, search rankings, or purchasing relationships to foreclose competing branded suppliers or advantage its own private label.

2. Meaning of Private Label Products

A private label product is generally sold under a brand owned or controlled by the retailer rather than by the manufacturer.

Example

Suppose a supermarket sells:

• Brand A cereal — independent manufacturer;
• Brand B cereal — independent manufacturer;
• Supermarket's own cereal — manufactured by a third party but sold under the supermarket's brand.

The supermarket therefore operates in two competitive positions:

Upstream: purchaser of cereal from manufacturers.

Downstream: seller of cereal to consumers.

This creates potential vertical and horizontal competition concerns.

3. Relationship Between Private Labels and Market Power

Market power becomes important when the retailer possesses substantial ability to influence:

• prices;
• access to consumers;
• shelf placement;
• online visibility;
• promotional opportunities;
• supplier terms;
• product information;
• customer data;
• purchasing volumes; and
• market entry.

A retailer with little market power generally cannot significantly harm competition merely by introducing a private label.

A retailer with substantial market power may, however, be able to use its position to disadvantage competing suppliers.

The principal concern can be represented as:

Retailer Market Power → Private Label → Control over Distribution/Data → Preferential Treatment → Supplier Foreclosure → Reduced Competition

But each link must be demonstrated; the existence of a private label alone is insufficient.

4. Main Competition-Law Issues

A. Self-Preferencing

A retailer may give its private-label products preferential treatment over competing brands.

Examples include:

• better shelf positions;
• higher search rankings;
• preferential recommendations;
• greater promotional exposure;
• preferential placement on the retailer's website;
• more prominent advertising;
• preferential inclusion in loyalty programmes.

The competition-law question is whether such conduct constitutes an abuse of dominance or another exclusionary practice.

B. Use of Competitor Information

Retailers frequently possess highly valuable information about suppliers, including:

• sales volumes;
• prices;
• margins;
• customer preferences;
• product performance;
• geographic sales;
• inventory;
• promotional effectiveness.

The retailer could theoretically use this information to develop or modify its own private label.

The concern becomes stronger where the information is obtained because the retailer acts as an unavoidable intermediary and is subsequently used to compete against the supplier.

5. Buyer Power and Private Labels

Private labels can increase buyer power.

A large retailer may tell suppliers:

"If you do not accept our purchasing terms, we can replace your product with our own private label."

This can strengthen the retailer's negotiating position.

Buyer power is not automatically unlawful. Competition law generally becomes concerned when buyer power results in:

• exclusion of rival suppliers;
• discriminatory treatment;
• exploitative purchasing practices;
• refusal of market access;
• coordinated purchasing;
• below-cost exclusionary strategies; or
• long-term reduction in supplier competition.

6. Shelf-Space and Online Ranking

Traditional supermarkets control physical shelf space.

Digital retailers control an analogous resource:

digital shelf space.

This includes:

• search rankings;
• default recommendations;
• "best seller" placement;
• product comparison tools;
• homepage placement;
• sponsored listings;
• algorithmic recommendations.

If a dominant retailer consistently places its private label ahead of independent brands, authorities may examine whether the conduct forecloses rivals.

7. Exclusive or Restrictive Supplier Arrangements

Private labels may also be accompanied by:

• exclusivity;
• long-term supply agreements;
• minimum-purchase requirements;
• category restrictions;
• non-compete clauses;
• restrictive distribution agreements.

A dominant retailer could potentially use such arrangements to prevent suppliers from supplying competing retailers.

The legal analysis normally considers:

1. duration;
2. market coverage;
3. retailer market power;
4. availability of alternative distribution channels;
5. foreclosure effects; and
6. efficiencies.

8. Margin Squeeze and Private Labels

A potentially important theory is margin squeeze.

Suppose a dominant retailer:

• pays independent suppliers a high wholesale price;
• sells competing branded products at a low retail price;
• simultaneously sells its own private-label product at a price that makes it difficult for suppliers to compete.

The question is whether the retailer's pricing structure unlawfully squeezes the margin available to competing suppliers.

The classic legal framework is particularly relevant where the retailer has substantial control over both upstream purchasing and downstream distribution.

9. Predatory Pricing

A retailer may also use its private label strategically.

For example:

Private-label price → very low

while competitors are unable to match the price because the retailer controls distribution and enjoys scale advantages.

Low prices benefit consumers in the short term, so competition law does not normally treat low private-label prices as unlawful merely because competitors are disadvantaged.

A predatory-pricing analysis requires consideration of:

• appropriate cost benchmarks;
• duration of below-cost pricing;
• market power;
• exclusionary strategy;
• recoupment where relevant; and
• likely effect on competition.

10. Relevant Market Definition

Private labels make market definition particularly important.

Authorities may ask whether:

Narrow market

"Breakfast cereal sold through supermarkets"

or:

Broader market

"All breakfast cereals sold through all retail channels"

is the appropriate relevant market.

They may also distinguish between:

• branded products;
• private-label products;
• premium products;
• discount products;
• online and offline sales.

The correct market depends upon substitutability, consumer behaviour, competitive constraints and other economic evidence.

11. Six Important Case Laws

1. United Brands v Commission

Case 27/76, United Brands v Commission (1978)

The European Court of Justice developed important principles concerning dominance and exclusionary conduct.

Although the case did not concern private labels specifically, it is highly relevant to private-label analysis because it demonstrates that competition law examines the economic power of an undertaking in the relevant market and the conduct through which that power may be exercised.

Relevance to private labels

A retailer with substantial market power cannot assume that its private-label activities are immune from Article 102 TFEU merely because it is also a retailer.

The relevant questions include:

• Does the retailer possess dominance?
• Does the conduct exploit or reinforce that position?
• Does it restrict effective competition?

2. Hoffmann-La Roche v Commission

Case 85/76, Hoffmann-La Roche v Commission (1979)

This is the leading EU authority on exclusionary conduct and loyalty-inducing arrangements.

The Court treated exclusivity arrangements adopted by a dominant undertaking as capable of restricting competition because they can make it more difficult for competitors to obtain access to customers.

Private-label relevance

A dominant retailer that combines its private label with restrictive purchasing or exclusivity arrangements may potentially create similar foreclosure concerns.

For example:

Dominant retailer + exclusive supplier arrangements + private label

could make it substantially harder for competing retailers or brands to obtain supplies.

The factual and economic circumstances remain critical.

3. Intel v Commission

Case C-413/14 P, Intel Corp. v Commission (2017)

The Intel litigation is important because the Court emphasised the importance of examining the actual or potential capability of exclusionary conduct rather than treating every arrangement involving a dominant undertaking identically.

The analysis may include:

• market coverage;
• duration;
• conditions;
• market position of the dominant undertaking;
• competitors' position; and
• economic evidence.

Private-label relevance

This reasoning is relevant where a retailer combines private-label products with:

• rebates;
• loyalty incentives;
• exclusivity;
• promotional requirements; or
• purchasing conditions.

The competition-law analysis should examine whether the conduct is actually capable of producing foreclosure rather than assuming that the private label itself is problematic.

12. 4. Amazon Marketplace / Amazon Buy Box Investigations

Competition authorities in several jurisdictions have examined Amazon's treatment of sellers and its use of seller data, including concerns concerning its dual role as marketplace operator and retailer.

The underlying competition issue is particularly relevant to private-label economics.

Amazon can potentially act simultaneously as:

• marketplace intermediary;
• retailer;
• competitor to marketplace sellers; and
• operator controlling marketplace information.

Private-label relevance

The important competition question is whether information obtained from third-party sellers can be used to strengthen Amazon's own competing products or whether marketplace mechanisms systematically favour Amazon's own interests.

This illustrates the broader dual-role problem:

platform operator + competing seller

which is closely analogous to:

supermarket + private-label competitor.

13. 5. Google Shopping

Case T-612/17, Google and Alphabet v Commission (2021)

The General Court considered Google's preferential treatment of its own comparison-shopping service within general search results.

The case concerned a digital platform rather than traditional supermarket private labels.

Private-label relevance

The underlying structural issue is nevertheless highly relevant:

platform controls the access mechanism → platform also operates a competing service → preferential positioning may disadvantage rivals.

The analogy to private labels is particularly strong in online retail.

For example:

Retail platform → controls search results → owns private-label products → ranks its own products preferentially.

Competition analysis may therefore examine whether the platform's conduct reduces the ability of competing products to reach consumers.

14. 6. MEO – Serviços de Comunicações e Multimédia

Case C-525/16, MEO v Autoridade da Concorrência (2018)

The Court examined discriminatory pricing under Article 102(c) TFEU and emphasised the importance of determining whether discriminatory treatment places trading partners at a competitive disadvantage.

Private-label relevance

A powerful retailer might offer different suppliers different commercial terms.

For example:

• Supplier A receives favourable shelf placement;
• Supplier B pays substantially more for equivalent placement;
• the retailer's own private label receives preferential treatment.

Different treatment alone does not necessarily constitute unlawful discrimination.

The analysis must consider whether the differential treatment distorts competition between trading partners.

15. 7. Bronner v Mediaprint

Case C-7/97, Oscar Bronner v Mediaprint (1998)

Bronner is the leading EU authority concerning refusal of access to an essential facility.

The Court adopted a stringent test for requiring a dominant undertaking to provide competitors with access to infrastructure.

Private-label relevance

The case becomes important where a retailer controls an essential distribution infrastructure, such as:

• an indispensable marketplace;
• distribution network;
• logistics infrastructure;
• digital marketplace;
• essential retail platform.

If competing private-label or branded suppliers cannot realistically reach customers without access to the retailer's infrastructure, questions concerning access and foreclosure may arise.

However, the strict requirements of the essential-facilities doctrine must be satisfied.

16. 8. Microsoft v Commission

Case T-201/04, Microsoft v Commission (2007)

Microsoft concerned interoperability and the use of control over one market to protect or reinforce market power in another.

Private-label relevance

The broader principle is important where a retailer controls an upstream or downstream bottleneck and uses that control to advantage its own competing product.

For example:

Retail platform control → restricted access → private-label advantage → weakened competing suppliers.

The precise legal theory will depend on the facts, but the case illustrates the importance of leveraging market power across connected markets.

17. Competition Concerns in Private-Label Markets

The principal concerns can therefore be organised as follows:

18. Private Labels and Merger Control

Private-label competition is also important in mergers.

Suppose two major supermarket chains merge.

The authority may consider:

• combined purchasing power;
• number of private-label products;
• supplier dependence;
• bargaining power;
• shelf-space concentration;
• retail market concentration;
• access to consumer data;
• entry barriers; and
• loss of alternative distribution channels.

A merger can therefore create competition concerns even where the parties do not manufacture most of their private-label goods themselves.

19. Supplier Dependence

A particularly important factor is supplier dependence.

A small manufacturer may depend heavily on one major retailer for sales.

If the retailer introduces a competing private label, the manufacturer may face:

Retailer dependence → loss of bargaining power → reduced investment → reduced innovation → potential exit

Competition authorities may therefore examine whether the retailer's conduct affects the competitive process rather than merely harming an individual supplier.

20. Consumer-Welfare Dimension

Private labels can have substantial pro-competitive effects.

They may:

• lower prices;
• increase product variety;
• stimulate innovation;
• increase competitive pressure on national brands;
• improve supply-chain efficiency;
• facilitate entry into new product categories.

Consequently, competition law should distinguish between:

Legitimate competition

Better private label → lower price → consumers switch → competitors innovate

and:

Potentially exclusionary conduct

Market power → discriminatory access → foreclosure → competitors cannot effectively compete → reduced competitive process

The latter requires evidence; it should not simply be inferred from the success of a private label.

21. Economic Tests

Competition authorities may consider several economic indicators.

Market share

What percentage of retail sales does the retailer control?

Supplier dependence

How dependent are manufacturers on the retailer?

Switching possibilities

Can suppliers easily move to:

• other supermarkets;
• online marketplaces;
• wholesalers;
• direct-to-consumer channels?

Private-label penetration

How significant are private labels within the relevant category?

Margin analysis

Are competing suppliers able to compete profitably?

Counterfactual analysis

What would competition look like without the alleged conduct?

Entry barriers

Can another retailer or platform realistically enter?

22. Digital Private Labels

The issue becomes more complicated in e-commerce.

A platform can possess real-time information concerning:

• searches;
• clicks;
• conversion rates;
• prices;
• returns;
• reviews;
• inventory;
• customer demographics.

If the platform develops a competing private label using information generated by independent sellers, competition authorities may investigate whether this creates an information advantage unavailable to those competitors.

The relevant concern can be represented as:

Third-party sellers generate data → platform observes data → platform identifies successful products → platform launches competing private label → platform controls consumer access.

This is one of the most important modern competition-law questions surrounding private labels.

23. Remedies

Where competition law establishes an infringement, potential remedies may include:

Behavioural remedies

• non-discrimination obligations;
• transparent ranking criteria;
• restrictions on use of competitor data;
• separation of sensitive information;
• equal access requirements.

Structural remedies

In particularly serious cases, authorities may consider:

• divestiture;
• separation of retail and marketplace functions;
• business-unit separation.

Merger remedies

Authorities may require:

• divestiture of stores;
• supply commitments;
• access commitments;
• restrictions on exclusivity.

The appropriate remedy depends upon the infringement and its competitive effects.

24. Key Legal Principles

The central principles are:

1. Private labels are not inherently anti-competitive.
2. A retailer's market power is more important than the mere existence of a private label.
3. Buyer power can coexist with seller-side market power.
4. Self-preferencing can become significant where the retailer controls an important distribution channel.
5. Use of competitively sensitive supplier data can create serious competition concerns.
6. Exclusivity and loyalty arrangements require careful foreclosure analysis.
7. Low private-label prices are not automatically predatory.
8. Digital marketplaces intensify the dual-role problem.
9. Merger control must consider both retail concentration and purchasing power.
10. Consumer benefits from private labels must be balanced against demonstrable foreclosure effects.

25. Conclusion

Private-label products occupy a distinctive position in competition law because the retailer may simultaneously be a customer of suppliers, competitor of suppliers, distributor of their products, controller of consumer access, and holder of commercially valuable data.

The competition-law problem therefore is not:

"Does the retailer have a private label?"

but rather:

"Does the retailer's market power, combined with its private-label activities and control over distribution or information, substantially restrict the competitive process?"

The most important legal areas are abuse of dominance, exclusionary conduct, discriminatory treatment, buyer power, vertical restraints, predatory pricing, self-preferencing, access to essential infrastructure, data advantages and merger control.