Supermarkets' competitiveness questioned

Little or no competition on food prices between discount supermarket chains may be a sign of overcharging Prices on a wide range of food items vary all too little at discount supermarkets, according to the Consumer Council. Prices on basic...

Prices on a wide range of food items vary all too little at discount supermarkets, according to the Consumer Council.

Prices on basic products, such as grain-based foods and dairy produce, are being investigated by the Competition Authority, which will determine this week whether supermarkets have been overcharging on raw ingredients despite a global drop in prices.

The council believes the similarity in pricing means that there is either too much competition or none at all.

‘When prices are generally higher here than in the rest of the EU, and consumer prices don’t follow the drop in raw material costs, it creates doubt about how intense the competition is,’ said the council’s Martin Salamon.

While the report released by the Competition Authority today found that ‘competition in Denmark is weaker than in most EU9 countries’.

The price similarities were highlighted in Politiken newspaper’s consumer division, which conducted price checks at all five of the nation’s largest discount chains: Netto, Fakta, Lidl, Aldi and Rema 1000. The checks revealed that total savings calculated by shopping at Rema 1000, the cheapest of the five, compared to Fakta, the most expensive, was only 9 kroner, compared to last year’s difference of 38 kroner.

And prices on most basic food items rarely differed by more than 25 øre at the five chains, while one-third of the 36 products checked had exactly the same price at all five.

However, Henning Otte Hansen, senior advisor at the University of Copenhagen’s Institute of Food and Resource Economics, said he did not believe the chains were guilty of price fixing.

‘They are, after all, competitors. But the situation does indicate that they are watching each others’ moves very closely, and they will go a long way not to be the most expensive,’ he said.

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The Copenhagen Post

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