The Swedish competition authority, which is set to publish a report on high food prices in the country, expresses concerns about retailer margins in the food and beverage industry.
The report commissioned by Sweden’s finance ministry is scheduled to be released tomorrow (27 June) and will address possible profiteering in the food chain, including food production and wholesale margins.
In an interview with Reuters, Martin Mandorff, head of market abuse at the competition authority, stated, “When we look at the margins on the retail and wholesale side, we see some cause for concern in terms of how they’re developing. The way the margins are developing, it had better be connected to increasing costs; otherwise, we might be quite worried.”
The grocery retail sector in Sweden is dominated by three major players – ICA, Axfood, and Coop, a situation described by Mandorff as “oligopolistic.”
The competition authority’s report is expected to examine whether this market dominance has contributed to Sweden having the largest food price increases in the Nordics this year.
According to figures from the Sveriges Riksbank, the food inflation rate in Sweden reached 14.16% in May, compared to a general inflation rate of 6.7%.
Rising prices at the supermarket checkout are currently a prominent issue in many markets, with food manufacturers justifying price increases based on supply chain inflation. However, grocers in certain markets, such as the UK, France, and Germany, have been reluctant at times to accept price increases, fearing it could drive customers to lower-cost competitors and resulting in disputes with branded food manufacturers.
In response to high prices, Sweden’s Finance Minister Elisabeth Svantesson held discussions with the major supermarket chains earlier this year, leading to temporary price cuts on some products.
Leif Nordqvist, overseeing the pricing review for the competition authority, explained, “From the end of 2021, Swedish food prices have increased by just over 20% on average. Concerns have been raised that the price increases would be at least partly due to a lack of competition in the food chain. At present, there are unfortunately too few facts about this to draw any clear conclusions. Therefore, we are closely examining various competition-related issues in the food chain to determine if they are linked to the price increases.”
The competition authority is focusing on analyzing selected products to evaluate the extent to which price increases are attributed to shortages or a lack of competition.
Nordqvist added, “We want to identify potential competition problems that contribute to price increases in the grocery trade and propose solutions to alleviate these issues. Additionally, we are examining the competitive landscape in food-producing companies and primary production to determine if a lack of competition has led to higher food prices and recommend measures to increase competition.”
In a separate development, French food manufacturers, including Nestlé and Unilever, have agreed to reduce prices on basic items starting from next month. This decision was announced by France’s finance minister Bruno Le Maire, and it entails a price reduction implemented by 75 companies responsible for 80% of French food production.
