The Norwegian Competition Authority has finally cracked down on the highly profitable companies that control 95 percent of Norway’s notoriously high-priced grocery stores. Rema, Coop and NorgesGruppen were slapped with fines totalling NOK 4.9 billion on Wednesday, after being found guilty of violating competition law for years.
At issue is the grocery giants’ use of so-called prisjegere, literally “price hunters” in the form of people hired in to electronically scan prices on a wide range of items on other chains’ grocery shelves. They’ve often been seen inside stores like KIWI, NorgesGruppen’s allegedly low-price chain of grocery stores, using hand-held electronic devices that can instantly send price information to those who’d hired them.
On one occasion, a price hunter spotted at a KIWI store in Oslo candidly told NewsinEnglish.no that he worked for REMA. That could explain why the price of a package of sliced cheese cost exactly the same at both KIWI and REMA, and usually still does.
Now the leader of the competition authority (Konkurransetilsynet), Tina Søreide, is calling such practice “a serious violation of law.” She added how that’s reflected in the size of the fines issued: NOK 2.3 billion (USD 230 million) to NorgesGruppen (which also owns the nationwide grocery store chains Meny, Spar and Joker in addition to KIWI), NOK 1.3 billion to REMA and NOK 1.3 billion to Coop. The chains have also been ordered to immediately halt all price cooperation.
“This illegal cooperation has weakened competition among the grocery store chains for many years,” Søreide said. “Poor competition normally means higher prices for consumers. When that involves grocery store items, it affects us all.”
The regulators claim the illegal price-sharing practice lasted from January 2011 to at least April 2018, when the price hunters’ activity increased to a point that grocery chain owners could be updated on competitors’ pricing several times a day. Individual grocery chains could then expect that other chains would follow and change prices quickly, according to the regulators, and that it would be “more attractive” for chains to increase prices instead of lowering them.
The profitable and powerful firms that dominate the Norwegian grocery market quickly denied any violations and announced that they will appeal their fines. NorgesGruppen, which also controls major Norwegian wholesaler Asko, even claimed that it had no plans to stop using price hunters, especially at KIWI, which claims to have Norway’s lowest grocery prices.
“It’s impossible to be the cheapest if you don’t check what prices are in the market,” NorgesGruppen’s communications director Stein Rømmerud told state broadcaster NRK. “That applies to all trade.” At the same time, requests by media outlets including NRK to follow a price hunter on the job have been rejected by all three grocery giants, claiming that would be competitively sensitive. There’s clearly a reason, however, that the price of a packet of sliced Greddost cheese from Arla in Denmark currently costs exactly the same at both KIWI and REMA (NOK 28.90) and rose in sync at both chains by fully 16 percent, from NOK 24.90 or even less just a year ago.
NorgesGruppen chief Runar Hollevik claims the price-hunting has always been public and that the regulators were kept informed. “We simply can’t understand the competition authority’s conclusion,” Hollevik stated on Wednesday. “We think the branch agreement we have and the price hunters have strengthened competition, not weakend it.”
REMA and Coop also claim that the price-hunting practice has been positive for competition in Norway, not detrimental. Coop’s managing director Philipp Engedal flatly denied that Coop is guilty of illegal cooperation.
Now the authority’s many years of investigation are likely to be followed by a lengthy court battle. NorgesGruppen announced that it will appeal first to the competition authority’s own complaints board and then, if unsuccessful, in the courts. The retailers have six months to file their initial complaint.
Norwegian consumers, meanwhile, are likely to keep facing grocery store prices that are much higher than in most other countries, also neighbouring Sweden, where thousands of Norwegians already go to load up on items that can cost half what they cost in Norway.
“We have paid too much for food items for years,” claimed NRK commentator Cecilie Langum Becker after the competition authority announced its fines Wednesday morning, “but no one knows how much.”
NewsinEnglish.no/Nina Berglund
