Axfood allowed to acquire City Gross
The Swedish Competition Authority leaves Axfood's acquisition of sole control over City Gross without action, enabling the deal to be completed. The decision has been taken after an in-depth investigation indicating that the acquisition is unlikely to significantly impede competition in the Swedish grocery market, either nationally or locally. While Axfood will gain a stronger position in certain locations, there will still be competitors making it possible for consumers to choose between various retail chains.
The retail chain City Gross was previously solely owned and controlled by Bergendahl. In 2021, the Swedish Competition Authority approved a transaction granting grocery operators Axfood and Bergendahl joint control over City Gross. In June 2024, Axfood filed a notification to the Competition Authority regarding the acquisition of sole control over City Gross, meaning it would solely own and control the chain.
Axfood operates several retail chains, including Willys and Hemköp, as well as wholesale operations through Dagab AB. City Gross, which has stores mainly in southern and central Sweden, accounts for approximately 3.7 percent of the total grocery sales at the retail level in Sweden. Axfood's sales represent about 20.5 percent.
According to the Swedish Competition Act, a merger should be prohibited if it would significantly impede competition in Sweden or a substantial part of the country. After investigating the potential effects on competition, nationally and locally, of Axfood's acquisition of sole control over City Gross, the Competition Authority has concluded there is no reason to impose a prohibition.
"In previous investigations regarding competition in the Swedish food chain, we have identified several shortcomings, noting that the Swedish grocery market has long been concentrated to a few players operating in a market with high barriers to entry. For this reason, we chose to conduct a detailed investigation of Axfood's transition to sole ownership and control over City Gross. According to our investigation, the acquisition will not result in any significant change in the functioning of the market," says Head of Unit Maria Ulfvensjö Baltatzis.
The Swedish Competition Authority's investigation shows that there are certain local areas where Axfood will gain a stronger position in terms of market share, particularly around some shopping centres outside city centers, but a closer analysis has also indicated that there will be competing options available for consumers in these areas.
According to the Swedish Competition Authority's review of the food industry, conducted in 2023 and 2024, there are shortcomings regarding competition within the food chain. These shortcomings can partly be explained by a high market concentration in the grocery market as well as several sectors within the processing industry, but also by, for example, a lack of retail locations and restrictions and imbalances arising from agreements on various levels within the food chain. The Competition Authority's merger control aims to prevent structural changes that create further deficiencies in competition. The investigation of the currently assessed acquisition has not demonstrated any consequences that warrant a prohibition.
For further information, please contact:
Maria Ulfvensjö Baltatzis, Head of Unit, + 46 8-700 16 54, maria.ulfvensjo.baltatzis@kkv.se
Marie Strömberg Lindvall, Press Officer, +46 76 542 15 92, marie.stromberglindvall@kkv.se
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Last updated: 2024-11-11
Press release15 october 2024