Slovenian Competition Protection Agency (SCPA) conducted a study on the prevalence of selling agricultural and food products (AFP) below purchase price in 2025. As of this year, the Food Act (ZHra) replaced the previously applicable Agriculture Act (ZKme-1); the new legislation added a further prohibited practice - selling AFP below purchase price - to the existing list of 27 prohibited practices within the AFP supply chain (defined as the price at which the product was acquired within the supply chain, plus VAT and minus all discounts).
The study revealed that eight retailers in Slovenia incurred a combined loss of approximately 14.5 million euros from selling AFP below purchase prices. For one retailer, the financial loss amounted to one percent of its annual turnover, while for others, the figure was lower, ranging down to a negligible 0.01 percent.
Beer, chicken, and milk chocolate stood out
The greatest losses occurred in the fruit, meat, vegetable, and alcoholic beverage categories, with beer, chicken, and milk chocolate standing out at the sub-category level. The financial impact of selling below cost is greater for highly perishable products. Often, the significant sales volume of such products - rather than the magnitude of the retailer's negative margin - was the primary driver of the substantial financial loss associated with these sales. Some retailers sold a smaller number of product categories below cost over a shorter period, whereas others sold a wider range of such products for the better part of the previous year. It appears that retailers employ below-cost selling in various ways and within the framework of diverse pricing and promotional strategies.
The study also found that private-label products generated a larger total loss than other products, as they were sold in higher volumes, although the loss per unit was generally higher for other products. The majority of recorded losses occurred in the first quarter, even though the number of different products sold below cost did not decrease significantly over the course of the year.
The study serves as an important starting point for future market monitoring
And how did retailers justify selling consumer goods below cost? They have regular and weekly promotions, the need to match competitors, commercial decisions, and the clearance of excess stock. However, retailers do not view sales below cost driven by approaching expiration dates as business decisions, but rather as a necessity.
The study documents instances of sales below cost but does not examine the consequences for suppliers or competition. As the data did not cover the retailers' total sales, SCPA could not determine what proportion of their sales took place below cost. Assessing potential effects on suppliers would require an analysis of purchasing terms, rebates, credit notes, promotional contributions, and changes in contractual terms over time.
The sole purpose of the study was to determine the prevalence of sales below cost. It does not address the potential consequences of such sales for suppliers, as this is a highly complex issue. Answering this question would require linking data on sales below cost with data on the overall purchasing terms for specific products - including retrospective rebates, credit notes, promotional contributions, and other payments made by suppliers. A more comprehensive assessment of the impact on suppliers would also require analyzing trends in their selling prices, margins, and sales volumes, as well as changes in contractual terms over time. In any case, the results for 2025 will serve as a baseline for monitoring the situation following the implementation of the new legal framework in 2026.
The non-confidential version of the study is available at the following link.