France has proposed a retail price cut of up to 5 per cent on common brand name products in a move that could relax the French pricing system and help boost consumer spending.
Finance Minister Mr Nicolas Sarkozy is meeting retailers, suppliers and consumer organisations at a round table to thrash out a an industry-wide deal that could cut prices on well-known brands such as Coca-Cola or Danone.
Should the sector fail to agree, Mr Sarkozy said he could take legislative steps to force down prices.
But France's so-called Galland law that bans retailers from selling goods at a loss will remain in place, according to the text of a speech he is giving at the meeting.
French retailers, particularly the ones that run hypermarkets, are able to negotiate below-invoice prices from suppliers thanks to volume rebates or fees for using shelf space.
But apart from loyalty cards or discount coupons, customers do not see prices drop accordingly because retailers cannot sell these goods below the invoice price.
Mr Sarkozy proposes allowing retailers to pass along such rebates in the form of lower prices to consumers.
Last month Mr Sarkozy said a more flexible pricing policy would help boost sluggish consumer spending while protecting smaller butchers, bakers and grocers.