Some of the wealthiest people in Norway are those who run the country's grocery store chains. A study of purchasing systems by the chains indicates that's no coincidence.
Newspaper Dagens Næringsliv reported Saturday that suppliers of everything from toothpaste to dairy products have long been pressured into paying large, undisclosed sums to the grocery chains, to ensure attractive placement on store shelves or even to be able to sell their products in the stores at all.
The sums are creatively disguised as anything from "development support" to an "exposure bonus," but some suppliers who finally are challenging the system call them little more than bribes.
Among them is Rune Forsberg, who runs a small candy company in Sandefjord. "I have stopped paying a contribution to corruption," Forsberg told Dagens Næringsliv. "Enough's enough."
Forsberg has experienced his candy being dropped by stores because another candy maker paid much more to have their marsipan featured in a prominent place.
"What's the difference if Statoil pays an Arab sheik... to gain entrance to the market, and if I pay have to pay to gain entrance to the stores?" asks Forsberg, director of Hval Sjokoladefabrikk. "This is all about raw power, and those who can pay to get rid of troublesome rivals."
Up to now, Norway's heavily subsidized farmers have often been blamed for high food prices. Researchers claim the secretive purchasing systems allegedly used by such chains as Rema 1000, Rimi, ICA, Coop Norge (Prix, Mega, Obs) and NorgesGruppen (Meny, Kiwi, Spar, Joker) also hinder competition, make products more expensive and limit product choice in the stores.
That's because the suppliers naturally seek to recover the amounts they pay to gain shelf space, by charging higher prices for their goods. All told, estimates of the questionable sums paid run as high as NOK 1 billion.
Diaper dilemma
In one case, Procter & Gamble reportedly refused to pay NorgesGruppen for the privilege of selling its disposable diapers in the chain's stores. A confidential memo from NorgesGruppen dictated that none of its chains should enter into any "joint marketing" agreements with Procter & Gamble, because the company "wasn't interested in investing" in cooperation.
By 2004, Procter & Gamble had made amends and was back in the stores, but no one will say how much the product giant had to pay to come in from the cold.
Dairy cooperative Tine, meanwhile, reportedly had to pay around NOK 30 million to literally butter up Coop, Rimi and NorgesGruppen after they found out that Tine gave Rema 1000 a better deal on the sale of its yellow cheese. "We had to clean up," admitted Jan Ove Holmen of Tine.
Government minister Morten Andreas Meyer is now calling for an investigation of the large grocery chains, and researchers think it's about time. "We think it's amazing that the competition authorities haven't looked at this," said Arne Dulsrud, who's studying the grocery business for the state consumer agency Sifo.
