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All three grocery groups run the risk of being slaves to debtless equity if they have to pay the crash fine to the Norwegian Competition Authority.
– This is happy madness. The three groups that receive the fine have almost no equity to pay it. Chains must raise prices dramatically to survive, so customers will end up with the bill, grocery expert Odd Gisholt tells Nettavisen.
On Tuesday morning, the Norwegian Competition Authority announced crash fines totaling NOK 21 billion for the three food giants NorgesGruppen, Coop and Rema 1000.
– We take this type of coordination very seriously and have therefore announced that we are considering imposing an infringement fee, Competition Director Lars Sørgard said in a press release. He believes that the chains in several cases have used the information in such a way that it may have raised prices.
Also read: – No, food prices are not a mystery
Extreme intrusions
Gisholt notes that the fine will make extreme strides in Norway’s big three grocery groups.
- Norgesgruppen has NOK 12.6 billion in equity, while the fine from the Norwegian Competition Authority is NOK 8.8 billion.
- Rema 1000 has 7.3 billion shares. Its fine is 7.4 billion crowns.
- Coop Norge has NOK 4.7 billion in capital, while the fine from the Norwegian Competition Authority is NOK 4.8 billion.
– The equity of the chains is lost in a short time with this fine, says Gisholt.
– The Johansson family, owner of Norgesgruppen, and the Reitan family, owner of Rema 1000, have billions in assets. Can’t pay the fine?
– The money with which they are listed they do not have in the bank, the securities they have are owned by Rema and Norgesgruppen. So Reitan and Johansson must in that case sell their stores to pay the fine. It’s not realistic, says Gisholt.
Also read: Christmas items up to four times more expensive than last year: – The chains take advantage of the situation of the crown
I think the director has to go
He believes this will end very badly, not for the networks, but for the Norwegian Competition Authority itself.
– I think this will soon end with the head of the Competition Authority having to leave. This decision is completely wrong. The chains now have a soccer team of lawyers who will fight this. But the competition director has not done it without thinking. This is going to be difficult, he says.
He notes that the practice of bounty hunters has been known and discussed for many years.
– The chains have wanted to talk to the Authority about this, the Consumer Authority has discussed the text of the agreement with the chains and the Norwegian Competition Authority has known it for years. This fine should have been zero, says the grocery expert.
Absurd
Coop’s communications director, Bjørn Takle Friis, really highlights the big bang when he describes what came from the Norwegian Competition Authority this morning.
Also read: Report from the Norwegian Competition Authority: Kiwi and Meny have a big advantage over Rema and Coop
– It’s completely absurd and doesn’t make any sense. This is a big mistake by the Norwegian Competition Authority, an annoyed communications director tells Nettavisen Økonomi.
– The Authority has known this for ten years, an industry standard that in practice has encouraged competition, not weakened it. Without the price chasers, we wouldn’t have had the crazy price wars, says Takle Friis.
Among other things, he points to gingerbread houses for NOK 2 and marzipan pig sales for NOK 1.
Also read: Norgesgruppen also confirms visits from the Norwegian Competition Authority
Available
– Without the price hunters, we would not have seen what the competitors have in terms of prices and we would not have been able to lower the prices lower. Plus, prices are available to everyone, says the communications director.
He is convinced that there is no logic in the report that they are going to go through now. Takle Friis is now wondering if Lars Sørgard is the right person to head the Norwegian Competition Authority.
– This report says something about where the Norwegian Competition Authority has been and what it does. They are under great pressure and hide the real problems. The large illegal price differences that they have revealed themselves do nothing about it.
– The Norwegian Competition Authority also has a duty to provide guidance. If they have seen something and have done nothing about it, they have not done the job. Something should consider if the competition director is in a position to continue or if new forces are needed.
No secrets
– So this collaboration has not led to an increase in food prices?
– No, that’s completely absurd. There is no collaboration, but an industry standard that was introduced ten years ago since the Norwegian Competition Authority has been continuously informed, there have never been secrets, Takle Friis rejects.
Coop “of course will reject” the one billion fee they are threatened with, but will go through the full notice
– If we don’t come up with our answer, we will take this further in the judicial system, says Takle Friis.
Grocery expert Erik Fagerlid reacts to the news from the Norwegian Competition Authority on Tuesday.
Also read: More competition in the grocery market, did you say?
Surprising
– The rhetoric and communication is a bit surprising. The Norwegian Competition Authority has been aware of this for all the years. I don’t think the latter was said in this case, he tells Nettavisen. It’s not clear what happens to consumers if chains have to pay high fees, but Fagerlid has an idea of what might happen.
– In general, when an industry is charged more costs, it ultimately goes beyond you and me, and there are higher prices, he says.
Magnus Gabrielsen of the Norwegian Competition Authority believes that the price collaboration that has taken place between the chains may have led Norwegian grocery customers to pay higher prices. This is not necessarily the case, believes Fagerlid.
More price pressure
– It may have hit both ways. The fact that they have control over prices may have led to them stabilizing as well, but it may also have led to more pressure on prices, he says.
Fagerlid also refers to gas stations, where prices change minute by minute, and are the same at all gas stations in the immediate area.
– This has been the case all these years, and the Norwegian Competition Authority does not attach much importance to it, says the expert.
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