France plans retail reform to curb price pressures

By Swaha Pattanaik

PARIS, April 28 (Reuters) - The French government on Monday unveiled a draft law which aims to lower prices for consumers by increasing retail competition, offer tax breaks for very small firms, and encourage entrepreneurs.

Presented shortly before the first anniversary of President Nicolas Sarkozy's election, the measures seek to address voters' worries about how accelerating inflation is eroding incomes and and help business at a time of slowing growth.

They include proposals that would allow supermarkets to negotiate with suppliers directly on retail prices, ease rules on building new supermarkets, and strengthen the competition authorities' powers to investigate and punish abuses.

"Everyone knows that the international context is difficult... In this context, our priority is to lift the growth rate," Economy Minister Christine Lagarde told a news conference after presenting the draft law to the cabinet.

"The law to modernise the economy will lift the structural and regulatory factors weighing on our economy," Lagarde added, estimating it would boost growth by at least 0.3 percentage point a year and create some 50,000 extra jobs a year from 2009.

Parliamentary debate on the draft law is expected to begin towards the end of May and go to a vote in early July, according to a tentative schedule issued by the Economy Ministry.

KEEPING CLOSE EYE ON COSTS