France proposed an overhaul of retail price rules on Thursday that would cut the cost of common brand-name goods by up to five percent, aiming to boost consumer spending in the eurozone's second-biggest economy.
Finance Minister Nicolas Sarkozy told a meeting of retailers, suppliers and consumer organisations he wanted to shake up pricing practices that cost the French five to 13 percent more for brand-name goods than what the Germans, Italians and Spanish pay.
"My objective is a quick and lasting reduction in the cost of brand-name products, as that is what the French people want," Sarkozy said in the text of his speech to the meeting.
Higher prices for brand-name products undermined French consumers' purchasing power and made inflation seem higher than it really was, he said.
Sarkozy met retailers to thrash out an industry-wide deal that could cut prices on well-known brands such as Coca-Cola and Danone.
Should the sector fail to agree, he said he could take legislative steps to force down prices.
French retailers, particularly those that run hyper-markets, are able to get lower prices from suppliers than those shown on their invoices, by negotiating rebates on volumes or fees for shelf space.
But apart from loyalty cards or discount coupons, these benefits are not passed on to customers because existing pricing practices prevent retailers from selling these goods below the cost shown on the invoice.
Sarkozy proposed that a portion of the so-called "back margins" - rebates that suppliers pay to retailers to promote their products - be shown on the invoice, so they can be passed along to consumers.