Consumer, Grocery | Giant fines for Kiwi, Rima and Extra: – It is clear that they are urgent

Consumer, Grocery |  Giant fines for Kiwi, Rima and Extra: – It is clear that they are urgent

(The newspaper online): It’s been more than five years since the raids on Coop, Rema 1000 and Kiwi owner Norgesgruppen in 2018.

In 2020, the Norwegian Competition Authority notified the chains of fines amounting to a historically high NOK 21 billion for illegal price collusion.

Now, nearly three years after the notification, it is unknown what the outcome of the case will be.

– It’s urgent

The billion-dollar fines came because the grocery chains cooperated . Price finders are chain employees who scan prices in stores. In this way, chains ensure that they have almost 100 percent control over their competitors’ prices.

The Norwegian Competition Authority believes the chains used price information to raise prices in stores.

In other words: Norwegian grocery customers may have paid too much for the goods. Even after the billion-dollar fines were announced, bounty hunters continued to operate.

This is the situation

In 2011, grocery chains Coop, Rema 1000 and Norgesgruppen entered into a cooperation on bounty hunters.

The intent was for price finders at chains to be able to check prices at other chain stores.

This way, all chains can determine each other’s prices.

In April 2018, the Norwegian Competition Authority carried out a raid on the three players, confiscating, among other things, emails containing communications between the three chains.

In December 2020, the Norwegian Competition Authority notified the three series of fines totaling NOK 21 billion for illegal price collusion.

The inspectorate believed that the chains used price information to raise prices. The chains themselves claimed just the opposite.

This issue is still being dealt with by the Norwegian Competition Authority. The authority said it aims to complete it in 2023.

Sifo researcher Arne Dulsrud is surprised that the Norwegian Competition Authority has not yet reached a conclusion.

– When it reported the large charges to the Competition Authority, it believed the grocery chains had raised prices illegally. It is clearly urgent to clarify whether this happened or not, Dulsrud says.

-Waiting in anticipation

In the time since the fines were announced in December 2020, food prices have risen sharply.

Arne Dulsrud wonders why the Norwegian Competition Authority is taking so long.

– Expectations have been created, and we are eagerly awaiting the result, to say the least. “I have to say it’s surprising that it has taken so long to address this issue,” Dulsrud says.

Nettavisen gave a longer interview to the Norwegian Competition Authority on this matter, in which they said, among other things:

We are working hard on this matter, as it is a top priority. There are a number of reasons why it should not take too long, but it should also take a long time for us to be sure we will reach the right result, says Magnus Friis Reitan of the Competition Authority.

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See the full interview below

– To raise prices

When the fines were issued in 2020, they made headlines:

Our investigation shows that the practice of scanning prices in each other’s stores may have led to the chains jointly raising prices, said department director Magnus Gabrielsen. He continued:

“Our initial assessment is that cooperation has made it easier for chains to follow each other on pricing, and given increased incentives for chains to raise prices and weakened incentives to lower prices,” he said.

– High prices in stores

There is no doubt that the chains track each other in terms of price. When I checked Nettavisen 60 pieces in stores now in September 55 prices were identical. When we checked the prices The prices for June 56 out of 59 were identical.

In 2020, the Norwegian Competition Authority said:

– Department director Magnus Gabrielsen said the cooperation may have resulted in Norwegian grocery customers having to pay higher prices in the chain’s stores.

Sifo researcher Arne Dulsrud wonders why the Norwegian Competition Authority is silent on the issue now.

The question of whether grocery chains have cooperated illegally is important to society and to all consumers. It is strange that the competition authority is not saying more about what is happening, says Dulsrud.

Still used by bounty hunters

Grocery chains have been very clear in their belief that the Norwegian Competition Authority is wrong.

They claim that price hunting activity intensifies competition and drives prices down.

Norgesgruppen, Coop and Rema 1000 all confirm to Nettavisen that they still use bounty hunters.

– In order to be price competitive, Coop works in several different ways to catch up with competitors’ prices, including by purchasing goods as regular customers do, says Harald Christiansen, head of communications at Coop.

– He says: – It is not forbidden to check prices with competitors, which is something we still do.

Norgesgruppen’s communications manager Stein Romrod says they check prices on the market to be the cheapest.

– If a low-priced player aims to be a customer’s first choice, you have to keep an eye on prices in the market, he says.

– This is completely normal in all trade, including the grocery industry. Romerod says this benefits customers in the form of tougher competition between players and lower prices.

Strong counterparties

Several grocery chains have previously threatened to take the case to court if the Norwegian Competition Authority upholds the $1 billion fines.

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– The Competition Authority has strong forces as counterparties. Dulsrud says it’s possible that the Norwegian Competition Authority is concerned that there will be legal consequences.

Each chain risks such large fines

Grocery chains have been notified of fines of varying sizes.

  • Norwegian Group: NOK 8.6 billion
  • Rima 1000: NOK 7.4 billion
  • Cooperative NOK 4.8 billion

The size of the fines is determined, among other things, on the basis of the turnover of the chains. Norgesgruppen has the largest sales volume ever.

As the chains’ turnover has increased since 2020, this means that fines are likely to be adjusted upwards, if the Competition Authority concludes that the chains should be fined.

Dulsrud draws a parallel with Facebook and Meta.

– We recently saw how Meta filed a lawsuit against the Norwegian Data Protection Authority after being fined. Grocery chains are strong players and have skilled lawyers on the team, Dulsrud says.

– They use significant resources

Magnus Reitan answers on behalf of the Norwegian Competition Authority. He should in no way be confused with Chief Retan Ole’s brother Robert Retan.

Reitan at the Norwegian Competition Authority is Deputy Head of the Food, Trade and Health Department. He says that the parties submitted large amounts of case papers.

– How do the parties try to influence the outcome?

– This is important and the large fees were notified. So, of course they spend a lot of resources defending themselves, and they have every right to defend their point of view on this issue, whether in terms of the facts or the finances or the law, Reitan says.

– Full-time work

– Why does it take so long?

– Parties provided extensive responses, in addition, further comments were subsequently made and expert reports were prepared. We have to conduct a comprehensive assessment before we can reach a conclusion on this matter. That’s why it takes time.

– When do you expect to finish?

We said previously that we aim to conclude in 2023, and we have nothing new to say in this regard now.

– With this wording, it could come later as well. Can you guarantee that there will be a result anyway in 2024, or could it be even after that as well?

-We have nothing new to report in this regard.

– It can go both ways

– What remains in the case?

-It’s a big job. We sent notice and accordingly received a comprehensive response. We must study it carefully before arriving at a final conclusion. We must emphasize that the outcome here can either be postponed or a decision sent.

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– It could be in two ways?

– Yes, of course. It is important to emphasize.

He denies that they have a weak case

– Why does it take three years to reach a decision?

-We are working hard on this issue, but it is a very broad issue. This means that it takes time, although many may be impatient for a conclusion to be reached. But it is also common for this type of material to take time.

– Do you think it is urgent to reach a conclusion?

– Yes, we do not want to spend more time than necessary, but the most important thing is to reach a correct result.

-The fact that it takes so long: Is this an indication that you feel your case is weak?

– No, it means that it is a comprehensive issue. It is important that we get it right. It says nothing about the matter to or from this way.

He could end up in court

-But are you sure that there is no longer any illegal cooperation?

– Then you intervene in the matter in which we have not reached a conclusion. It will be a little early. The important point is that we have provided some notice of our assessment of the impact of this agreement on bounty hunters. We will hear back from the parties on what they think of the effects and the law, and I cannot provide now what our final conclusion will be.

– Several chains have announced that they will look into this issue across the entire legal system. Do you allow yourselves to be under pressure?

– No, we do not take that into account. We make our assessments and care about arriving at the right result.

– Customers do not have to pay

– If there is a fine. We are talking about very large sums. How do you think Norwegian customers will foot the bill for all this?

-If companies had a way to collect more money from consumers, they would believe they would do so regardless of whether they had to pay a fee or not. They want to make money after all. If they could make more money by setting different prices, they would have done so already.

– They have to cover the costs somehow?

– Then you assume that they have a way to make extra money that they are not using today. Businesses and owners pay the fees, not customers.

Dalila Awolowo

Dalila Awolowo

"Explorer. Unapologetic entrepreneur. Alcohol fanatic. Certified writer. Wannabe tv evangelist. Twitter fanatic. Student. Web scholar. Travel buff."

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