Competition essentially functioning well in the Swedish food market

10 August 2011

David Nilsson


The Swedish Competition Authority (“SCA”) recently presented two reports on the functioning of the food supply chain in Sweden. The reports were prepared on the basis of an assignment from the Swedish Government to examine competition and other market conditions in the food supply chain in Sweden. The full reports are available on the web site of the SCA (in Swedish). [1] This article sets out the main conclusions from the report addressing the food supply chain (the other report being focused on public procurement in the food market). 

Features of the Swedish food market

High market concentration

Within the food industry and the retail trade for daily consumer goods, there are a small number of companies that account for a large proportion of sales. The three largest retail chains (ICA, Coop and Axfood) account for 90 per cent of sales and the three largest food manufacturers, account for an average 75 per cent of sales within each product category. The markets with respect to retail sales of food are more concentrated in Sweden than in other European countries. [2] 

From a comparative perspective, however, this high concentration does not appear to have a significant negative effect on prices. According to a survey conducted by the SCA, margins in the Swedish food supply chain are no higher than in other countries, nor have these margins increased over the past decade.

Regarding price transmission in the food supply chain, Swedish people pay no more for their food than consumers in comparable EU countries, regardless of whether prices are compared directly or prices are compared in relation to income. In relation to consumers in other Nordic countries, Swedes pay less and the prices have not increased in Sweden more rapidly over the past decade than in comparable countries.

Local pricing in Swedish daily consumer goods outlets

Unlike other countries, Sweden has a tradition of local pricing which means that prices are not the same throughout all the shops belonging to a particular chain. The SCA notes that local pricing provides the advantage of tough local competition which can lead to lower prices. On the other hand, it is more difficult for consumers to compare prices when pricing is local because they cannot find out what the different goods cost in a chain’s shops using that particular shop as a reference, or the web site of the chain.
Location of daily consumer goods outlets affects competition

The localisation of outlets affects competition, i.e. how shops are located in relation to each other is affecting the functioning of competition between the shops. This aspect is all the more essential to take into consideration when pricing is local. Therefore, the SCA submits that it is important that the municipal authorities do not impede the establishment of daily goods outlets in light of the high concentration in this market.

EU Common Agricultural Policy

Due to EU:s border protection in relation to third countries, agricultural goods are more expensive for European customers and reduces the efficiency of international trade. The SCA notes that certain specific Swedish rules and taxes make agricultural production more expensive in Sweden in comparison to other countries. 

Measures to improve competition in the food supply chain

Even though the overall assessment from the SCA in the report is that competition in the food supply chain is essentially functioning well and no extensive Swedish regulatory reforms are deemed necessary, the SCA suggests that it may be appropriate to undertake certain measures, inter alia, aimed at facilitating entry into local markets.

The municipal authorities’ way of dealing with planning laws concerning the location of daily consumer goods outlets should be improved. In order to establish new daily consumer goods outlets, the SCA recommends that the municipal authorities should provide guidelines in the form of e.g. a checklist, as a tool for officials making assessments. The checklist should have the purpose to promote the establishment of new daily consumer goods outlets.

A checklist could pursuant to the SCA, inter alia, comprise the following;

  • Municipal authorities ought to have a pronounced objective to use their role of giving permissions in order to facilitate for new stakeholders entering the market for daily consumer goods.

  • It is recommended to use a procedure resembling procurement in respect of situations where several stakeholders want to establish a shop in a municipality where the supply of shop sites is scarce.

Moreover, the SCA considers that border protection for agricultural goods from countries outside the EU is increasing consumer prices. Therefore, Sweden should work to promote trade liberalisation by reducing or removing border protection.

The SCA also points out that the EU common Agricultural Policy does not sufficiently favour the consumers by making EU citizens pay for the common Agricultural Policy through higher taxes and prices. Therefore, the Swedish Government should work to promote the formulation of agricultural policy measures that do not impede competition in the markets for agricultural goods.

In respect of agricultural cooperation, the SCA proposes an investigation, inter alia, focusing on whether the exemption of agriculture from the prohibition of anti-competitive cooperation between undertakings under the Competition Act is warranted. Similarly, an investigation should be conducted into whether only cooperative undertakings that follow traditional cooperative principles should be able to make payments to members that are tax deductible.



[2] Metro Group, 2010, Metro Retail Compendium 2010/2011, see also table in the report Food and Market-from farmer to table (2011:3), p. 137