Why Finland's grocery market deserves renewed scrutiny

The arrangements were last comprehensively assessed more than twenty years ago. At that time, S-Group accounted for about 28% of Finnish grocery sales. Its share has since risen to nearly 50%, making it clearly the largest operator in the market. This does not in itself prove a competition problem, but such a major change in market position is a strong reason to review the arrangements again with up-to-date information and legal analysis.

An exceptionally concentrated market

Finland is one of Europe’s most concentrated grocery markets. Two retail groups account for more than 80% of grocery sales, while the third-largest operator remains below 10%. In many other European countries, several national chains compete for customers and suppliers. Finland’s structure gives the two largest groups an unusually central role in determining which products reach consumers and on what commercial terms. This makes the evaluation of the competitive effects of S-Group’s internal coordination and purchasing arrangements especially important.

Market entry is difficult because nationwide competition requires major investments in procurement, logistics, distribution, information systems and store networks. Finland’s geography and relatively small population add to these costs. A new operator may therefore struggle to reach sufficient scale, even if it has competitive products or a new business model.

The issue is unclear effects for fair competition

MTK and SLC are not seeking higher food prices or protection from normal commercial competition. The question is whether competition works effectively in a market dominated by two large retail groups. Low consumer prices are important, but they are not the only measure of a healthy market. Competition should also support innovation, product choice, efficiency, investment and opportunities for new businesses to enter and grow. If market access becomes too dependent on the decisions of a very small number of buyers, competition may weaken even when short-term prices appear attractive.

Buyer power and market access

Many food manufacturers and primary producers can reach consumers only through a small number of retail channels. Losing access to one major chain can therefore have significant effects on sales, production volumes and investment decisions. Suppliers may also have limited alternatives when negotiating prices, product selection, campaign terms, private-label production or the use of sales data.

The FCCA should therefore examine how S-Group’s governance and purchasing model operate in practice. Relevant questions include whether independent decision-making exists within the group, whether joint purchasing strengthens efficiency in a proportionate way, and whether the arrangements may restrict suppliers’ access to the market or make entry more difficult for competing retailers. The assessment should consider both present effects and the market’s ability to remain open and competitive in the future.

Why an independent review is needed

An independent review is in the public interest. It matters to consumers, food manufacturers, farmers, other suppliers, innovators and potential market entrants. It can clarify whether the current arrangements produce efficiencies that benefit the market, whether those benefits could be achieved through less restrictive means, and whether the overall structure leaves enough room for genuine competition.

From the perspective of MTK and SLC, the review is necessary to ensure that farmers and food producers can operate in a genuinely competitive food chain and have fair opportunities to bring their products to market. The organizations are not asking the FCCA to reach a predetermined conclusion, but to assess whether arrangements involving a market leader whose share has risen from about 28% to nearly 50% remain appropriate under today’s market conditions. A clear and independent assessment would strengthen confidence that efficiencies do not come at the expense of market access, investment or the long-term bargaining position of primary producers.

topics: kansainvälinen toiminta