The effects of Retail Regulations on Prices : Evidence from the Loi Galland

Using a unique dataset merging micro data at product and store level with data on competition within local grocery markets, this paper provides an empirical analysis of a legislation that had the same effect as allowing industry-wide price floors. It shows that, after the introduction of the legislation, the link between retail prices and market concentration has significantly been weakened, especially for branded products. Price dispersion has dropped for branded products more than for store brands and price convergence appears to have taken place across stores. These results are consistent with recent theories on the anticompetitive effects of resale price maintenance in markets with interlocking relationships.