Norgesgruppen is changing its collaboration with Bama. Sps Geir Pollestad believes it will give them even more power in the grocery industry.
On Thursday, Norgesgruppen announced that they have agreed on a “change of cooperation” with Bama.
The change means that Asko will take over goods from Bama Dagligvare at an earlier stage in the value chain than they do today.
Asko is the country’s largest wholesale company. It is wholly owned by Norgesgruppen, which is controlled by billionaire Johan Johannson.
Asko’s truck drivers drive carrots, apples and other fruit and vegetables to Meny, Kiwi, Joker and the rest of Norgesgruppen’s stores.
In addition, Asko moves food and other groceries from factories to canteens, hotels and restaurants across the country.
The Norwegian group received far lower purchase prices over several years
Can gain greater control
In practice, the change means that Norgesgruppen will have greater control over the distribution of the fruit and vegetables from Bama.
This is done by moving the responsibility for warehousing and logistics out of Bama and over to Asko.
At the same time, 500 employees from Bama will have Asko as their new employer, Norgesgruppen states.
Bama is by far the largest player in fruit and vegetables in the country. In 2017, Norgesgruppen owned around 45 percent of Bama.
Bama delivers to Norgesgruppen’s large chains, in addition to Rema’s stores. Of large, Norwegian retail chains, only Coop receives fruit and vegetables from other places.
– A very bad idea
The change does not go down well with the Center Party’s Geir Pollestad. He chairs the Storting’s business committee.
– The way this looks, it is the crown example of something we do not want, says Pollestad.
He is critical of large players such as Norgesgruppen gaining even more power in the grocery market.
– I think this looks like a very bad idea. The largest player is eating even more into the value chain, says Pollestad.
Pollestad is concerned that all players who want to deliver goods to Norwegian consumers will receive equal distribution.
He recently stated to the newspaper Nationen that he does not rule out breaking up one of the chains to prevent the imbalance from getting bigger.
– In the extreme, you may have to split companies. But we also need to look more closely at who controls the distribution of goods, he says.
– Such a change goes right to the heart of the problem, says Pollestad.
Alerts about “very intrusive” measures against groceries
Asko: – Disagree
– We do this to become more efficient and competitive, says Tore Bekken, CEO of Asko.
He disagrees with Pollestad’s criticism. Bekken does not believe the change will give Norgesgruppen more power over the value chain.
– In practice, this is a flow of goods that is already integrated into our value chain today, says Bekken.
He explains that Bama currently rents space at Asko’s warehouses and has people working there.
– This change means that we take over the employment. This is how we will have one system to deal with. It will provide more seamless handling of the goods, says Bekken.
The audit is informed
The change is planned to be implemented in the autumn of 2021.
But before it can be implemented, the collaboration must be approved by the Norwegian Competition Authority.
– We have been informed about the case, but we have not yet received any formal notification, says Beate Berrefjord in the Norwegian Competition Authority.
The Authority has therefore not yet decided whether it should intervene in the case.
Strong focus on the grocery industry
There is currently a great willingness to do something about the competition in the grocery market.
In a recent report, the Norwegian Competition Authority concludes that Norgesgruppen has had far better purchasing conditions than competitors Rema and Coop over several years.
At the same time, the audit investigates Norgesgruppen, Lilleborg and Mondelez. The background is suspicion of a breach of competition law.
A report to the Storting on competition in the grocery market was also recently presented. It proposes several intervention measures. The report will be considered by the business committee in the Storting this autumn.