Norwegian watchdog fines top supermarkets US$466MN after “serious violation” of competition rules
21 Aug 2024 --- The Norwegian Competition Authority (NCA) has fined three top grocery chains a total of 4.9 billion NOK (US$466 million) after they illegally shared extensive price information, restricting fair competition.
Under Norwegian law, competitors are prohibited from sharing information, which limits competition. Coop, Norgesgruppen and Rema — which account for 95% of turnover in the Norwegian groceries market— received the fine after they shared “large quantities” of “price surveillance” from their respective stores with each other.
The NCA says this has increased price transparency between the chains without consumers becoming better informed about prices, and as a result, the Norwegian grocery industry has been harmed.
“This is a serious violation, which is reflected in the size of the fines. This illegal cooperation has weakened competition between the grocery chains for years. Poor competition normally means higher prices for consumers. When the groceries market is affected, we are all affected,” says Tina Søreide, NCA director general.
“Illegal cooperation”
The information sharing lasted from January 2011 until the authority’s unannounced inspections in April 2018. The authority says that during this time, “price hunting” activities increased, so chains eventually received updates on competitor prices several times a day.
Due to this cooperation, each chain expected its competitors to follow price changes quickly, making it more attractive for the chains to increase their prices and less appealing to reduce them.
Magnus Friis Reitan, deputy director of the Department for Food, Retail and Health, says: ”When it is only a matter of hours or minutes before competitors follow a price cut, it weakens important incentives to compete by lowering prices. The result is harmful to competition.”
Tina Søreide, NCA director general, says the chains have “weakened competition.” (Image credit: the NCA).
The authority conducted unannounced inspections at the three chains’ premises in April 2018 and seized documents showing that they had used price information to test whether competitors would participate in price increases. The rapid exchange of information allowed the companies to initiate price hikes with limited risk.
Price gouging
Coop and Rema were fined 1.3 billion NOK (US$123 million) each, while Norgesgruppen was charged 2.3 billion NOK (US$218 million). The chains are also required to cease illegal cooperation and any cooperation with similar effects. The companies were first notified about the NCA’s investigation at the end of 2020.
Price gouging and unfair competition continue to be hot topics across the industry. US Vice President Kamala Harris recently revealed plans to impose the first federal ban on “price gouging” and penalties for “opportunistic companies” that break the rules regarding price increases.
Meanwhile, the coalition opposition party in Australia unveiled plans earlier this year to sell off the dominant supermarkets in the country to stop them abusing their powers.
By Sade Laja
