New survey of purchase prices confirms significant differences

The Norwegian Competition Authority has examined the differences in purchase prices that Norwegian grocery chains faced in 2018 and 2019. The results confirm last years’ findings, based on data from 2017, that there are large differences in purchasing conditions in certain cases. The Authority will gather further information from suppliers to get a better understanding of why these differences occur.

The survey of purchase prices for 2018 and 2019 is a continuation of the Authority’s analysis of purchase prices for 2017, published last year. This years’ survey has covered the same 16 suppliers as last years’ analysis. In addition, this years’ survey shows large differences between grocery chains.  As observed in the previous analysis, there is considerable variation between suppliers as regards the extent to which they offer different conditions to grocery chains.

– The survey concerns purchase prices for 2018 and 2019, and relates, therefore, to the situation prior to the publication of the results from the Authority’s analysis of purchase prices for 2017. Our survey shows that the results presented last November was not specific to 2017. The differences in purchase prices are still significant for some suppliers. We also observe that the conditions of individual suppliers vary noticeably from year to year. For some suppliers, the changes from 2017 to 2019 are large, says Sigurd Birkeland, leader of the Competition Authority’s Groceries Task Force.

The Competition Authority’s methodology for calculating differences in purchase prices has been subject to a thorough consultation with stakeholders and the Authority has had a good dialogue with both suppliers and grocery chains. One comment received during the consultation was that a survey limited to only one year would not necessarily give a complete picture of the situation.

The results of the survey show that the differences in purchase prices for individual suppliers vary to some extent from year to year. At the same time, the survey shows that the overall differences in prices were comparable each year. The findings presented last year for 2017 are thus representative also for later years.

One of the measures proposed in the 2020 parliamentary report on the condition of competition in the grocery market was to continue the survey of purchase prices. The Authority has already updated its survey of purchase prices where data has been available, and intends to carry out further enquiries into the reasons for the observed prices differences.

– The Competition Authority will now gather further information to obtain a better understanding of why these differences occur. In that regard, it will be useful to contact all suppliers covered by the survey, both those with small differences and those with larger differences. We will continue surveying purchase prices in the coming years. It will be interesting to see how the differences in prices will develop over time and whether we will observe the same differences if we extend the survey to other suppliers, says Sigurd Birkeland.

The Competition Authority has strengthened its enforcement of the Competition Act in the grocery market, and the issue of price discrimination is given high priority.

– Differences in purchase prices is not necessarily in violation of the Competition Act, as the Act does not contain a general prohibition against price discrimination. Every case must be assessed individually. However, price discrimination that restricts competition and harms consumers may be in breach of the Competition Act, says Sigurd Birkeland.

The purpose of the Authority’s enforcement as well as of its survey of price differences is to strengthen competition in the grocery market, resulting in better services and lower prices for Norwegian consumers.

Report: Purchase prices in grocery chains in 2018 and 2019 >> (pdf in Norwegian)

Report: Purchase prices in grocery chains in 2017 >> (pdf in Norwegian)

Survey of the Norwegian grocery chains’ purchase prices

  • In November last year, The Norwegian Competition Authority presented results of a survey of purchase prices for 2017.
  • The 2017 numbers in part revealed significant differences in purchase prices faced by the grocery chains, where Norgesgruppen faced better conditions than the other two chains, Coop and Rema.
  • The same 16 suppliers are included in the 2018 and 2019 survey, as in the 2017 survey.
  • In total, the new survey reveals little changes in the purchase price differences from 2017 to 2019.
  • There are, however, noticeable changes in supplier specific differences over the years.
  • The purchase price differences are reduced for about half of the sample of suppliers, while increased for the other half.
  • Both list prices, rebates, the product sample, and purchased volumes have changed over the years 2017 to 2019. Changes in all of these variables may contribute to the explanation of how purchase price differences between the grocery chains develop.
Dame som ser på ulike brød i butikken.
Sigurd Birkeland, leader of the Competition Authority's Groceries Task Force.
The figure shows the number of suppliers in intervals based on the size of the changes in purchase price differences between chain X (Coop or Rema) and Norgesgruppen, measured by net prices. The intervals are determined by changes in percentage points, measured as yearly average changes in the period 2017 to 2019.

Contact information

Press phone +47 47 66 77 77

Sigurd Birkeland,
sibi@kt.no
Leader of the Competition Authority’s Groceries Task Force.

Press photo >>

Figure: Price difference 2017-2019