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Competition Authority slams grocery retailers for unfair practices

The Finnish Competition Authority (FCA) says that the country's two big retail chains have an unhealthy grip on the grocery sector. In practical terms, the S and K groups control Finland's food retail market.

Juhannuksen ruokaostoksia voi tehdä vielä huomenna puoleen päivään asti.
Image: YLE

On Tuesday the agency said it had carried out an in-depth probe of the grocery business, which reveals that stores have many ways of passing their risks on to food manufacturers -- to the detriment of free competition.

For instance, most respondents in the bakery and pet food industries told the authority that shops require them to pay for any unsold merchandise.

Manufacturers are also obliged to pay shopkeepers to market their products. Many say they do not receive anything in return besides shelf placement. This raises prices, as producers are forced to pass these costs on to consumers.

According to the competition watchdog, gratuitous marketing allowances and repurchase requirements for unsold products block new companies' access to the market.

Legally dubious

FCA Director General Juhani Jokinen told YLE that such activities fall into a legal grey area.

"Practices are being used that are not positive from a competition standpoint," he says. "And since they are not conducive to competition, they are not really positive from the consumer's standpoint, either."

The FCA carried out its investigation through questionnaires sent to retailers and producers in the meat processing, bakery, mill and pet food sectors. It also studied other market indicators, financial figures from the parties involved and foreign trade practices, as well as European Commission and European Central Bank studies of the grocery business.

Sources: YLE