Anticompetitive practices may have led to higher grocery prices

The Norwegian Competition Authority warns in a Statement of Objections that it is considering imposing fines totalling 21 billion NOK on Norgesgruppen, Coop and Rema 1000. The Authority’s preliminary assessment is that the three grocery chains have cooperated in a way that may have led to higher grocery prices. The cooperation concerns the chains’ so-called price hunting practices.

The grocery chains have agreed to allow their employees to access each other’s grocery stores with a view to scan shelf prices. These employees, referred to as “price hunters”, have collected a substantial amount of price information. The Authority’s preliminary assessment is that the grocery chains have used the price information collected to coordinate prices. This may have resulted in higher grocery prices to the detriment of consumers. These practices have been ongoing since 2011.

– We are very concerned about this kind of coordination. We have therefore informed the companies involved that we are considering imposing fines in this case. The grocery chains have maintained that they have used the price information they have collected to compete vigorously. The Authority’s preliminary assessment is, however, that the grocery chains have used the collected information to limit competition. They have in a number of cases, used the information in question in a manner, which may have lifted prices, says the Director General Lars Sørgard.

The Authority has been aware that there was an agreement between the grocery chains, which allowed the grocery chains to access each other’s stores, with a view to collect information about shelf prices for use in comparative advertising. The Authority has also been aware that each chain has built up an organisation of “price hunters”, who collect prices from competing grocery stores. Following a period of increased activity of this kind, the Authority decided, in 2016, to examine the grocery chains’ pricing and information flows in more detail, including the practice of collecting price information from competing grocery stores.

That examination led the Authority to conduct unannounced inspections at Norgesgruppen, Coop and Rema 1000 in 2018. During the inspections, the Authority seized a substantial amount of internal data from these grocery chains. The inspections were carried out due to a suspicion that the grocery chains might be acting in violation of the Competition Act by giving each other access to strategic market information.

The information seized during the inspections provided the Authority with new insights into, among other things, the communication between the grocery chains and their behaviour in relation to price changes.

– Our investigation shows that the practice of scanning shelf prices in competing grocery stores may have caused the grocery chains collectively to increase their prices. Our preliminary assessment is that the collected price information has made it easier for the grocery chains to follow each other’s prices, and given the grocery chains increased incentives to raise their prices and weakened incentives to lower their prices. This practice may therefore have resulted in higher prices at grocery stores and harm to consumers, says Director Magnus Gabrielsen.

The Competition Authority’s preliminary view is that the practices in question have restricted competition by object, and that fines should be imposed. The Authority has informed the grocery chains in a Statement of Objections that it is considering imposing a fine of 8.8 billion NOK on Norgesgruppen ASA, a fine of 4.8 billion on Coop Norge AS and a fine of 7.4 billion NOK on Rema 1000 AS.

The Authority emphasises that the issuing of a Statement of Objections does not prejudge the outcome of the investigation. The findings of the Authority at this stage are preliminary and the grocery chains have been invited to submit their comments on the Authority’s objections by 15 April 2020.

Director general Lars Sørgard.
Director Magnus Gabrielsen.

Contact information:

Press phone + 47 476 67 777

Lars Sørgard
Director general
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Magnus Gabrielsen
Director
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