Differences in purchase prices

The Norwegian Competition Authority has the last year made a thorough inquiry into the purchasing conditions in the Norwegian grocery market. The inquiry shows significant differences in the grocery chains’ purchase prices.

The inquiry demonstrates that several suppliers offer the grocery chains Rema 1000, Coop and Norgesgruppen different purchasing conditions. In some cases, some suppliers operate with price differences of more than 15 percent on products they sell to the grocery chains. This means that one of the chains pays 15 percent less than other chains for the same product.

The Competition Authority’s inquiry shows large variations between suppliers. The price differences of some suppliers are small, whereas the price differences of other suppliers are high. In most cases, the largest retail chain is offered the best conditions.

– We are surprised that the price differences are so pronounced. Price differences are not in themselves illegal, but if the price differences have resulted in higher prices for consumers, the Competition Act may have been violated. Several factors, amongst others the results from the Authority’s inquiry, recently led the Authority to carry out dawn raids at two suppliers and one grocery chain. We have now started an investigation in order to assess whether or not the Competition Act has been infringed, says Director General Lars Sørgard.

The Competition Authority has collected price information from 16 suppliers in total. The Authority has examined prices of about 2900 products. This amounts to about 25 percent of the total turnover of the three leading grocery chains in Norway in 2017.

– The results provide new information about an important aspect of competition in the grocery market, the supply level. The substantial amount of data gives a good picture of the differences between the various suppliers in 2017. We will now extend our inquiry with data for 2018 and 2019 in order to monitor if any changes are taking place over time, says Sigurd Birkeland, leader of the Competition Authority’s Project Grocery.

The Competition Authority has for several years monitored the competition situation in the Norwegian grocery market, and has, for example, intervened under the Competition Act in case of mergers and purchasing cooperation in this sector. With input from the Competition Authority, the  Ministry of Trade, Industry and Fisheries, commissioned an expert report about entry barriers in the Norwegian grocery sector. The report, made by Oslo Economics, concluded in the autumn of 2017 that purchasing conditions were the most important reason for entry barriers in the Norwegian grocery sector. In light of the findings of the expert report, the Authority initiated its inquiry into purchasing conditions in the spring of 2018. The inquiry, which is unique also in an international context, gives new insights into the competition situation in the Norwegian grocery market.

The Authority does not have a mandate to introduce a general prohibition against price differences and such a ban has not been considered by the Authority in the context of its inquiry. The Ministry of Trade, Industry and Fisheries has set up an expert group that will look into this question. The group will, according to plan, submit its recommendations to the Ministry in January 2020.

Public report on the survey of purchasing conditions in the Norwegian grocery sector will be available on our website kt.no after the press conference.

 

Lars Sørgard, konkurransedirektør.
Director general Lars Sørgard.
Sigurd Birkeland, leader of the Competition Authority's Project Grocery.

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