“Acquitted” grocery store for margin robbery – NRK Norway – Overview of news from different parts of the country

In January last year, the Norwegian Competition Authority received marching orders from the government. The figures for 2022 showed the worst price jump for food in 35 years.

The inspectorate was to investigate whether chains, wholesalers or suppliers in the grocery industry grabbed better margins after the sharp price increase.

Didn’t try to make extra money

Now the answer has come from the Norwegian Authority’s investigation. Margins in the years 2017 to 2022 have been under scrutiny, in a margin study that looked at three different measures of profitability.

Now the conclusion is clear. In the long run, the industry is “exonerated” of margin robbery.

– We find that there is little sign that chains or suppliers took advantage of the Ukraine war or the pandemic to set higher prices, and then make extra money, says Magnus Friis Reitan of the Competition Authority.

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

The report shows that all links in the value chain earned more during the pandemic. But it was due that the sales volume increased, while prices were stablethe study shows. There wasn’t much else to spend money on when “everyone” was at home, so the sales volume increased.

– It is simply because they sold more goods, says Friis Reitan.

– Is this some sort of thing? “acquittal” of the industry, as the supervisory authority sees it?

– In any case, we find no signs in our investigation that the pandemic was used to set much higher prices, or that grocery chains or suppliers used the price increases in connection with the Ukraine war to make extra money, he says.

Weak competition and barriers to establishment

– But at the same time, we find that there is high profitability in both the supplier link and in large parts of the grocery chain link. And it is then consistent with bad competition. That you are simply not disciplined by fierce competition in these areas, he says.

Industry Minister Cecilie Myrseth (Ap) believes that the margin study shows that the competition is too bad.

– This supports what we have said over time, that the competition in the industry is not good enough. And that in turn can lead to us paying more for the food than we have to. And that worries me. So it is important to continue working with what we have been working on for a long time, with improving competition in the industry, she says.

Customs walls mean more expensive food

The Norwegian Competition Authority believes that profitability in large parts of the grocery industry is higher than would be the case in a situation of fierce competition.

But this is also because it is difficult for newcomers to establish themselves in the food industry, partly as a result of import protection.

NRK has previously written about the research of NIBIO researcher Ivar Pettersen, who says that import protection in Norway is the most important reason why the price difference with Sweden and Denmark increased beyond the 2000s. A study from Statistics Norway in 2019 also showed that import protection increases the price difference with our neighboring countries.

– It is more difficult for newly established suppliers and grocery chains to enter the market when they cannot take with them agreements they have with suppliers abroad due to import protection. So it probably contributes to the barriers to establishment, says Friis Reitan.