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The working methods of price hunters in supermarket chains have been known for ten years. Now, the competition authorities are cracking down on price controls.
– We take this type of coordination very seriously and have therefore announced that we are considering imposing a violation fee. The networks have expressed that they have used the information to compete hard. However, the Norwegian Competition Authority’s preliminary assessment is that supermarket chains have used price information to restrict competition. In several cases, they have used the information in such a way that it may have increased prices, competition director Lars Sørgard says in the press release.
In recent years, prices in Norwegian grocery stores have been characterized by very small price differences. In the VG food exchange, only a few crowns separate the three big low-price chains.
Supermarket chains were notified of the huge fee Tuesday morning. The big three of the grocery industry have a total turnover of almost NOK 200 billion, and this forms the basis for the size of the fee.
The fee amounts to almost ten percent of the turnover of the three groups of groceries that dominate the market:
- The Norwegian group, controlled by the Johannson family, receives the highest rate of NOK 8.8 billion
- The Reitan group, owned by the Reitan family, receives a fee of more than 7.4 billion.
- Coop will receive a fee of 4.8 billion.
Grocery players react strongly to the way the Competition Authority attacks price hunters.
– This is completely absurd and a historically harsh derailment of a competition director in distress. There has always been full transparency regarding industry regulations and the use of bounty hunters. The practice has promoted competition and contributed to frequent price wars to the benefit of consumers, responds Coop CEO Geir Inge Stokke.
– With this, the Norwegian Competition Authority says they are fully certain to allow a practice, which it now claims contributes to weakened competition, to continue for a full decade without using its guidance duty or intervening, Stokke adds.
In recent weeks, it has become clear to several of the industry players what awaited them, and there has been great tension related to the size of the fee.
– Norgesgruppen categorically rejects that the industry norm and the use of price hunters is a violation of competition law. We believe the price hunting business has led to lower prices and has been good for consumers. We will thoroughly familiarize ourselves with the warning and enter into a dialogue with the Norwegian Competition Authority, Norwegian Group communications director Stein Rømmerud tells DN.
Competition Director Lars Sørgard gives his top three tips to the business leader who doesn’t want the competition authority at the door. Competition Director Lars Sørgard gives his top three tips to the business leader who doesn’t want the Norwegian Competition Authority to be at the door. 01:25 Published:
Investigation
In spring 2018, the Norwegian Competition Authority raided the big three groups that control Norwegian groceries.
– Our research shows that the practice of scanning prices at each other’s stores may have led the chains together to push prices higher. Our preliminary assessment is that the collaboration has made it easier for chains to follow each other in pricing, and given chains greater incentives to raise prices and weakened incentives to lower prices. The collaboration may have led Norwegian grocery customers to pay higher prices at chain stores, says department director Magnus Gabrielsen.
The goal of the raid in 2018 was to map the use of bounty hunters entering competitor stores to monitor prices. The Norwegian Competition Authority suspects that players have violated the legal section on illegal price collusion.
In 2010, an industry standard was introduced regulating the price hunting business. Big chains have reacted to the Norwegian Competition Authority’s decision to crack down on price hunters. The chains have noted that the scheme has been well known and that the industry standard was introduced in dialogue with the Norwegian Consumer Agency.
Legal action alert
Supermarket giant Norgesgruppen, which is behind chains like Kiwi, Meny and Spar, is warning of legal action if the rate is upheld.
– Norgesgruppen will thoroughly review the notification when it arrives and send a response refuting the allegations from the Norwegian Competition Authority. If, however, the Norwegian Competition Authority chooses to impose a fine on Norgesgruppen, Norgesgruppen will take the case further in the administrative and judicial system.
During the year, Norgesgruppen has tried in vain to resolve the matter through dialogue with the Norwegian Competition Authority.
In a letter to its partners, Norgesgruppen has defended the scheme:
– Norgesgruppen does not understand that the observation of prices by competitors is contrary to the Competition Law. On the contrary, Norgesgruppen believes that the price hunting business has created more competition and given Norwegian consumers lower prices.
In recent weeks, players have intercepted a warning and rescinded the formal agreement before the Norwegian Competition Authority managed to send out its warning. However, no one can prevent price hunters from checking prices like other customers. Therefore, price monitoring has continued despite the resolution of the agreement.
Odd Gisholt, who has followed Norwegian groceries closely for several decades, is very surprised that the Norwegian Competition Authority is cracking down on price hunters.
– Yes, to the highest degree. If a fee were to be paid, it should have been long ago. This has been a known phenomenon for many years and it has not been a secret. So it’s surprising that they are cracking down on this now, says Gisholt.
– In case they have to pay this, it will be the clients who will have to pay at the end. The chains don’t have the capital for such a fine, Gisholt says.
Storting politicians are now working on a grocery report that could lead to stricter regulation of the chain’s power. Coop believes that the authorities should clarify the Norwegian Competition Authority.
– They try to hide both that they have not done their job and what are the real problems for competition in the Norwegian food industry: the large illegal differences in purchase prices. Now the authorities must step in and clear the ranks of the Competition Authority, Stokke notes.
Rema’s manager, Trond Bentestuen, has also been instrumental:
– This is an agreement that has been known for ten years, and the audit has been informed about the use of bounty hunters several times in recent years, Bentestuen told DN.(Terms)Copyright Dagens Næringsliv AS and / or our suppliers. We would like you to share our cases via a link, which leads directly to our pages. Copying or other use of all or part of the content can only be done with written permission or as permitted by law. For more terms, see here.
