Grocery, Food prices | The Norwegian Competition Authority: Weak competition in parts of the Norwegian grocery market

– The results from the survey consistently show high profitability in the value chain for groceries, says Magnus Friis Reitan of the Norwegian Competition Authority in a press release.

He is deputy head of the Norwegian Competition Authority’s department for food, trade and health.

The grocery market is dominated by a few large players, and it is demanding for new players to establish themselves, according to the report.

In Norway, the three largest grocery chains – Rema, Coop and Norgesgruppen – have a combined market share of around 95 per cent.

In addition, Norwegian consumers face higher prices and poorer selection on shop shelves compared to consumers in other countries. Last year, food prices rose by as much as 10 percent.

Not good enough

Figures from 2022 show that the purchase of groceries made up 12 per cent of Norwegian households’ total expenditure, and the prices of food are therefore of great importance to consumers’ finances.

– The results support the assessment that competition in the industry is not good enough. It can lead to us paying more for the food than we have to, says Minister for Business Cecilie Myrseth (Ap) in a press release.

– Updated knowledge is important for us to be able to implement good and targeted measures to improve competition in the industry. Now we will go through the report and the results carefully, she promises.

The Norwegian Competition Authority was commissioned to investigate the food industry in January last year, after the figures for 2022 showed the worst price jump for food in Norway in 35 years.

“Acquits” the industry

Nevertheless, the Norwegian Competition Authority believes that the food industry has not stolen extra margins at the expense of customers in recent years. According to the report, there are few signs that grocery players have taken advantage of the corona pandemic or the war in Ukraine to push up prices.

The fact that all links in the value chain earned more during the pandemic was, on the other hand, because people spent money on food, not because margins increased. The Norwegian Competition Authority writes that the operating margins in the years they have investigated – 2017-2022 – are below 5 per cent for the stores of Norgesgruppen, Coop and Rema, which is relatively low compared to other types of businesses.

At the same time, they point out that there is not much point in comparing the operating margins with other industries, because the operating margins are not directly transferable.

The mapping is the first part of the investigations into margins and profitability in the grocery market that the Norwegian Competition Authority is carrying out on behalf of the Ministry of Trade, Industry and Fisheries.

Critical of the government

Agricultural policy spokesperson Lene Westgaard-Halle in the Conservative Party believes, however, that the government is not doing enough, especially with regard to agricultural policy.

– The government’s agricultural policy is a disadvantage for consumers, and contributes to poor competition and unnecessarily high prices, she says.

– The government has failed to deliver on strengthening competition in the grocery value chain.

Competition in the grocery sector has been a recurring theme for many years. Industry ministers in both the current government and the Solberg government have said that they want stronger competition and better selection in Norwegian grocery stores.

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