– The chains knew where the border was going, but still chose to cross it – E24

– It’s not the case that Rema calls Coop and says “now I put the price like this, what do you do?”, Says Sørgard.

In this E24 interview, the Chief Competition Officer delves into the evidence underlying the fact that his audit has now announced the highest fee for competition law violations in Norway.

And Sørgard responds to criticism that they are reacting so strongly only now, ten years after the chains began the price-finding collaboration that is at the core of the Norwegian Competition Authority’s investigation.

Believe that record amount follows practice

Sørgard describes a “very comprehensive” research material. Tuesday’s rate notice to Coop, Norgesgruppen and Rema is only nearly 300 pages, he says.

But for now, the public will not have access to it.

– How did you end up with 21 billion?

– We have a rate measurement procedure that we have followed. What is striking here is the upper limit of 10 percent of annual turnover. And this is what chains have, says Sørgard.

– Never before have I paid such a high fee for violating competition law. Why are you taking it so hard?

– The special thing here is that this is a huge market, with a turnover of around 180 billion a year. It helps determine the amount of the fee, says Sørgard.

– But before we have given 10 percent of the billing in rates, although the amount has been less. Therefore, it is not a violation of prior practice.

Also Read (Your Money): Here’s How The Billion Fee Can Affect You

Colonial bosses: – Total scandal

At the heart of the matter are the price hunters that the chains have dispatched to each other’s stores to verify prices. This has been a common arrangement that the chains agreed to, through an industry standard that arrived in 2010.

The Norwegian Competition Authority is now facing criticism that they are only reacting to the networks now, ten years later, given that the scheme was never a secret.

– There has always been full transparency related to industry standards and the use of price hunters, says CEO Geir Inge Stokke at Coop is very much in line with the Norwegian Competition Authority.

The Labor Party is also puzzled “why the Norwegian Competition Authority has done nothing before.” Colonial chief Karl Munthe-Kaas goes even further:

– It is a total scandal that the Authority is familiar with this contract [om prisjeger-samarbeid, red.anm.] so long, without acting, says Munthe-Kaas to E24.

Sørgard: – I got new information

– The price hunting plan was established as early as 2010 and was public knowledge. Why do you react only a decade later, Sørgard?

– Price hunters themselves are not illegal. But the point here is that we obtained new information through our investigation, which led us to conclude that it was illegal.

– What?

– Three examples, says the contest director:

– We believe the chains established a common understanding in 2011 that price hunters should be used in a different way, which was completely new to us. Second, chains have gained access to more prices and more information on competitors than the scheme initially allowed.

– And thirdly, we believe that over time the chains have developed a pricing practice that allows them to have raised the prices of various groups of products.

– How could they have done that?

– I can’t go into details about that. But when you know each other a lot, it is clear that it will be easier to follow each other, even when setting prices.

Here’s how the billion fee can affect you

Seized emails

– We have gone through a very extensive seizure, including email accounts, where we have seen what the chains have thought about prices.

– And what have they thought?

– I can’t go into details about that.

– Have you found evidence in the seizure that the chains have conspired to abuse the scheme so that they do not compete on price?

– It is not the case that Rema calls Coop and says “now I put the price like this, what do you do?” But we think the evidence documents a common understanding of price coordination in violation of competition law, Sørgard says.

He claims that the chains, in the opinion of the Authority, began their illegal price cooperation as early as 2011.

– Shouldn’t you have led the chains before they were against the law?

– Of has early orientation. Coop, Norgesgruppen and Rema were well acquainted with the Nielsen decision we made in 2007. It determined where the limits were for sharing detailed information. The chains knew where the border was going, but still chose to cross it, while we evaluated the case.

Sørgard: – The signal should have been clear

– NHH professor Øystein Foros points out that in 2018 you appeared in a column and warned banks not to give signals on how to set interest rates. Couldn’t it have given a similar warning that the price search collaboration was getting too close?

– As I said, we believe that the chains had already received good guidance on where the limits were going, as early as 2007. The signal should have been clear. The warning has been there for many years, in our opinion. And chains have an independent responsibility to stay on the correct side of the law.

Although the Norwegian Competition Authority carried out a raid on supermarket chains in 2018, the authority claims that the decision to map out the price search scheme was made two years earlier, in 2016.

But this is still roughly six years after the scheme was established.

– What had changed at this time?

– Then we received information that the price hunting business had become more extensive, and that was the reason why we wanted to analyze it more closely, without later having an idea if it was illegal, says Sørgard.

He emphasizes that the evidence they obtained during the raid in 2018 provided “much more information” which is also the basis for the rate warnings.