The Swedish Competition Authority can see a risk for inadequate competition and unjustified price increases in the food industry

The Swedish Competition Authority’s investigation of the food industry consists of a broad evaluation covering several different aspects of the competitive situation within the food supply chain. The investigation has also analysed how prices have increased in relation to costs within inter alia the grocery retail sector, in accordance with the task assigned to the Swedish Competition Authority by the Swedish Government.

“The food industry consists of many complex markets. Therefore, it is important to analyse all the parts of the food supply chain. It is too early to draw far reaching conclusions from our investigation, but we can at this stage already see indications that there is a risk for inadequate competition,” says Rikard Jermsten, Director General of the Swedish Competition Authority.

As a part of the investigation, we are examining the flow of money within the food supply chain. This is undertaken by studying the margins for specific product groups to see if they have increased in conjunction with implemented price increases in different parts of the supply chain. For the product group eggs, which is the first of the products that we will analyse, the results show that prices have increased to a larger degree than can be motivated by the purchase price for eggs at the packagers and within the grocery retail sector.

The Swedish Competition Authority has identified a shortage of suitable sites for the establishment of new grocery retail stores, or the possibility for expanding existing stores, as one of the obstacles to effective competition. Here, local municipalities have a particularly important role to play as they, in accordance with the Planning and Building Act, are responsible for the planning of new retail sites. The investigation shows that market players can see shortcomings in how municipalities handle this issue. There are also indications that specialist wholesalers and suppliers have limited opportunities to expand and enter the market.

The food industry market is a highly concentrated market. With the current concentration rules, the Swedish Competition Authority can mainly intervene when a company concentration affects the entire country, whereas the possibilities for intervention in acquisitions that only affect smaller local markets are limited. This can lead to mergers that result in consumers within a local market being unable to choose their retail store. If the Swedish Competition Authority is to be able to protect competition in all parts of the country, then a change in the current regulations is needed.

“Within the current work of examining the food industry market we are working within several parallel subprojects. We will for example, further increase our understanding of the connection between efficient competition and the establishment of new retail stores, and the possibilities for specialist wholesalers to expand in the market. We will also continue to examine the flow of money in selected product groups to enable us to identify unjustified price increases,” says Rikard Jermsten.

The Swedish Competition Authority’s work with examining potential competition problems within the food industry is conducted in some parts in conjunction with the National Institute of Economic Research. The results of the on-going investigation will be presented throughout the year.

Leif Nordqvist, Coordinating Project Manager, +46 (0)8-700 16 92, leif.nordqvist@kkv.se
Marie Strömberg Lindvall, Press Officer, +46 (0)76-542 15 92, marie.stromberglindvall@kkv.se

The results of the investigation are available on our specific page for the review in the food industry (in Swedish)