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Reverse auctions – still not a fair trade

The hidden costs of ‘lowest price at any price’ are still a concern to many materials suppliers. This is acknowledged by the European Commission, which has set up an Expert Group to identify possibilities for improving the reliability and value of e-business.

As early as November, 2000, the European Aluminium Foil Association called for a clear set of good trading practice rules which covered transparency, clear and consistent product specifications, and acceptance criteria, as well as security checks and third party audits. It published a set of guidelines which was quickly endorsed by other associations representing materials manufacturers, particularly in the packaging sector.

This set of good trading practices is now supported by 11 trade bodies that represent over 6,000 European companies. Five of these bodies have joined the initiative recently. According to the EAFA’s Stefan Glimm, this unprecedented consensus “is symptomatic of the great damage and disruption being caused by the anonymous electronic reverse auction buying process.

“Already, the imbalance between buyer and supplier had been widely acknowledged,” he says. “Reverse auctions have only added to the viability problems of the members of the supplier associations who maintain high product standards at competitive prices. The rapid agreement among the packaging materials associations should clearly demonstrate to the EC expert group the urgency and importance of setting fair trading practices which are acceptable to all concerned.”

Having taken the lead in publishing the guideline document endorsed by other trade bodies, EAFA has been invited to participate in the expert group. “In the packaging materials sector at least,” observes Stefan Glimm, “some 6,000 suppliers are now hoping that further developments will be forthcoming during the coming months.”

More information from Stefan Glimm, EAFA – TEL: +49 211 4796 150. EMAIL: eafa@aluinfo.de