The Competition Authority publishes a report today. No. 1/2015, (Online version) Guidance on competition in the grocery market – State of Competition 2015. The report states the following, among other things:
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However, Haga's market share has been declining since 2009. At the same time, new entrants have managed to increase their share. Thus, there are indications that concentration is gradually decreasing, at least for the time being. However, there is still significant concentration in the grocery market. No indications have emerged that Haga's position as a dominant undertaking in the market has changed (Chapter 3).
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Recent price increases in groceries are not solely explained by external factors. For instance, the price of imported goods has not fallen in line with the currency's appreciation and international price trends over the past few quarters. At the same time, the profitability of the main retail chains has generally been good. It is important that consumers benefit from the currency appreciation and improved profitability through lower prices (Chapter 4).
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Suppliers have failed to demonstrate that the price differences in their contracts with larger retail chains on the one hand, and smaller shops on the other, are based on objective grounds, e.g. well-reasoned cost calculations, but the Competition Authority shed light on this price difference with Report No. 1/2012, Price development and competition in the grocery market. However, there are indications that the competition-reducing price differential has generally decreased since 2012 (Chapter 5).
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Current agreements on the right of return for goods by grocery stores to suppliers can contribute to food waste and thus higher product prices (chapter 5).
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In many cases, the authorities have failed to take into account the guidance and recommendations of competition authorities to create conditions for competition and utilise the incentives of competition in agriculture (chapter 2).
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Companies in the grocery market have in many cases failed to follow the guidance that the Competition Authority has issued to them in recent years. As a result, the Competition Authority has repeatedly had to intervene in the activities of companies, interventions that could easily have been avoided had they followed the authority's guidance (Chapter 2).
In light of the foregoing, the Competition Authority calls on market participants and the government to take the following measures:
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The government must promote increased competition, including by opening markets and reviewing the anti-competitive provisions of agricultural and tariff laws (chapter 2).
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Suppliers and the grocery retail sector must review their commercial agreements and follow the guidance of the Competition Authority (chapters 2 and 5).
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Organisations in the retail sector must promote an improved culture of competition within their ranks, which includes ensuring compliance with competition law and the rules of the game derived from its application (chapter 2).
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It is important that consumers and organisations that champion their interests exercise pressure on companies in the grocery market by all available means. Consumer pressure can be crucial in ensuring that improved external conditions translate into lower prices and that recent changes to public charges do not lead to higher product prices than is unavoidable (chapter 4).
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The current returns arrangement for grocery stores to supply companies needs to be reviewed, with the aim of increasing retailers' incentive for efficient stock management, which, all else being equal, should lead to lower prices and reduce food waste (Chapter 5).
Background information:
The report now presented contains the following specific information:
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A comprehensive overview is provided of the guidance on the scope of competition law and conduct in the retail market, which the competition authorities have issued to companies, their associations and the government over the past years and quarters. In this respect, the report is part of the Competition Authority's guidance work, which is one of its key priorities.
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New information is presented on the market share of grocery stores nationwide, broken down by individual regions. The development of market share since 1999 is also discussed.
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Discussion of price developments since the publication of the Competition Authority's report no. 1/2012, Price development and competition in the grocery market, and whether the price development is explained by external factors, as was suggested in Report No. 1/2012.
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An account is given of the Competition Authority's investigations into the commercial agreements between suppliers and grocery retailers since the publication of the aforementioned report no. 1/2012. The Competition Authority's position on how to reduce so-called food waste in the retail sector is also set out.
