The Norwegian Competition Authority imposes fines totaling 4.9 billion NOK (420 million euros) on Coop, Norgesgruppen and Rema for violations of the Norwegian Competition Act. The grocery chains’ cooperation in providing access to extensive price surveillance in each other’s stores, has been illegal.
It is illegal for competitors to share information that restricts competition. The cooperation between Coop, Norgesgruppen and Rema essentially entails the chains sharing large quantities of price information with each other. This has increased price transparency between the chains, without the consumers becoming better informed about prices. As a result, competition in the Norwegian groceries market has been harmed.
This is a serious violation, which is reflected in the size of the fines. This illegal cooperation has weakened competition between the grocery chains for years. Poor competition normally means higher prices for consumers. When the groceries market is affected, we are all affected, says Director General Tina Søreide.
The illegal cooperation lasted from January 2011, and at least until the Authority’s unannounced inspections in April 2018. During this time, price hunting activities increased, so that the chains eventually received updates on competitor prices several times a day.
Because of this cooperation, each chain has expected that their competitors would follow price changes quickly, making it more attractive for the chains to increase their prices, and less attractive to reduce prices.
When it is only a matter of hours or minutes before competitors follow a price cut, it weakens important incentives to compete by lowering prices. The result is harm to competition, says Magnus Friis Reitan, deputy director of the Department for Food, Retail and Health.
In April 2018 the Competition Authority conducted unannounced inspections at the three grocery chains’ premises. The seized documents show that the chains used the price information to test whether competitors would participate in price increases. The rapid flow of information has made it possible for chains to initiate price hikes with limited risk.
Documents in the case show that the parties expanded access to price surveillance despite understanding, or having been made aware of, that the cooperation could harm price competition in the groceries market, says project manager Astrid Pleym Løseth.
The Competition Authority imposes fines of 1.3 billion NOK on Coop, 2.3 billion NOK on Norgesgruppen and 1.3 billion NOK on Rema. The chains are also required to cease the illegal cooperation as well as any cooperation with similar effects.
About the case:
- Coop, Norgesgruppen and Rema account for 95% of turnover in the Norwegian groceries market.
- In 2007, ACNielsen Norge AS discontinued weekly price reporting to Norgesgruppen, Rema, Coop and Ica, after the Norwegian Competition Authority (NCA) pointed out that this kind of sharing of price information could harm competition and be illegal.
- In 2010, the grocery chains entered into the “Industry Standard for Comparative Advertising”, which was intended to provide guidelines for the chains’ use of advertising based on price comparisons. The standard established that price comparisons should be documented, and it contained a provision stipulating that the chains could visit each other’s stores to collect prices in order to document claims made in price comparisons.
- In 2011, the chains agreed that the standard’s provision concerning access to each other’s stores should be practiced in such a way that the parties had access to collect large quantities of price information with the use of hand scanners.
- In 2012, the chains agreed on a further expansion of price hunters’ access to the parties’ grocery stores.
- In 2016, the NCA initiated a preliminary project to investigate information sharing between Norwegian grocery store chains.
- The NCA conducted unannounced inspections at the grocery chains’ premises in April 2018, and has reviewed an extensive collection of seized documents.
- The Authority has also taken statements from representatives from the chains.
- The case concerns violations of Section 10 of the Norwegian Competition Act, and the corresponding provision in Article 53 of the EEA Agreement, which prohibits cooperation between independent undertakings that has the purpose or effect of restricting competition.
- On 15 December 2020, The Competition Authority notified the chains, in a Statement of Objections, of the NCA’s preliminary assessment that the parties’ cooperation providing access for each other’s “price hunters” violated the competition act, by having an anticompetitive ‘effect’ as well as by having an anticompetitive ‘object.’
- In January 2024, the chains were informed that the NCA discontinued its investigation of an anti-competitive object, and that the NCA would continue its investigation into a possible anti-competitive effect.
- A supplementary Statement of Objections concerning adjusted fines was sent to the parties on 10 April 2024.
- The grocery chains were fined a total of 4.9 billion NOK on 21 August 2024.
- The chains were also ordered to cease the cooperation in question as well as any cooperation with similar effects on21 August 2024.
- With this decision, the NCA has concluded its work on the case.
- The grocery chains can appeal the case to the Competition Appeals Tribunal within 6 months.