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Saturday, July 20, 2024

Coop to buy rival ICA grocery chain

Norway’s grocery store choices are set to contract again after the large Coop chain announced Monday that it was buying up the Norwegian operations of Sweden’s ICA chain. ICA Norge has struggled in the Norwegian market, which is dominated by one major retailer and wholesaler, NorgesGruppen.

ICA stores look set to disappear from the Norwegian market. PHOTO: ICA
ICA stores look set to disappear from the Norwegian market. PHOTO: ICA

ICA had reluctantly tried to team up with NorgesGruppen, which controls such chains as Meny, Kiwi, Centra, Joker and Spar, on the purchasing side of the business, where NorgesGruppen also is a major player. Competition authorities resisted the move, however, and even though the former left-center government granted the deal a reprieve, the authorities later ruled that the deal between ICA and NorgesGruppen was illegal.

ICA then seemed likely to either close many stores or withdraw altogether from the Norwegian market but now Coop will take over ICA’s stores instead. ICA officials claimed the deal will be good for its nearly 9,000 employees in Norway and for consumers because more of its 553 ICA, Rimi and Matkroken stores will remain open. Both ICA and Coop officials also catered to the importance of “district politics” in Norway, arguing that more outlying areas in Norway will retain local stores. Around 40 percent of ICA’s stores are run through franchises, which Coop called “new and interesting for us.”

“The agreement means that more stores and jobs will be preserved than if ICA had continued to operate on its own,” ICA officials wrote in a press release Monday morning. “The sale is therefore the best possible solution for our operation.”

Deal subject to approval
Coop, owned by 133 Norwegian coops around the country, has agreed to pay ICA NOK 2.5 billion (around USD 400 million) for its operation. The deal remains subject to approval by the state competition authority (Konkurransetilsynet), though, which long has faced the problem of high prices and consolidation in the Norwegian grocery market. Norwegian consumers pay among the highest prices in the world for most food and consumer goods, a result of high costs, taxes, protectionist agriculture policies and dominant retailers and wholesalers who often are accused of controlling the market.

Consumer advocates have also complained that Norwegians are  resigned to paying high prices, and that both wholesalers and retailers take advantage of that. They’ve urged Norwegians to become less passive consumers, and many have responded in recent years, not least by driving over the border and shopping in Sweden where prices are much less although still higher than many other countries in Europe.

‘Important boost’
Coop’s chief executive Svein Fanebust called the pending ICA takeover “a major and important boost” for Coop and also contended it was “the best solution” for employees, consumers and supplier given the alternative of ICA simply shutting down in Norway. He claimed Coop can now expand its presence in central portions of Østlandet (eastern and southeastern Norway, the most populated region of the country) and around Bergen, and that the deal was “good news” for outlying districts because it will secure local shopping options.

Norwegian consumers will be left with four grocery store operators: NorgesGruppen with 39 percent of the market, REMA 1000 with 23 percent and Coop, which also has had around 23 percent of the market but will ICA’s 11 percent will now claim 34 percent. The remainder is held by Bunnprise, at around 4 percent. Berglund



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