New guidance to promote more effective competition in the grocery retail sector

“Municipalities play a key role in creating the conditions for effective local competition in the grocery retail sector. We hope that the guidance we have developed will support municipalities in facilitating the establishment of new stores. This will ultimately benefit consumers through greater choice, lower prices and improved service,” says Marie Östman, Director General of the Swedish Competition Authority.

The Swedish grocery market is highly concentrated, with very few fully independent retailers. In addition, approximately one million people in Sweden lack access to a discount store in their municipality. This has a negative impact on competition and for the consumers, as such stores contribute to lower local price levels.

To create conditions for improved local competition, there must be greater availability of grocery store premises to enable grocery operators to expand their operations and allow new entrants to access the market. Municipalities play a key role in this regard, as they are responsible for the physical planning of land use.

The Swedish Planning and Building Act includes a provision requiring municipalities to promote effective competition in their planning. However, municipalities generally perceive this provision as unclear, and there is uncertainty regarding its practical implications.

The guidance developed by the Swedish Competition Authority includes tools for conducting an initial analysis of the current competition conditions in the local grocery market. It also provides a range of concrete recommendations on how municipalities can facilitate the establishment of grocery stores.

The conditions in each municipality, such as land availability and population base, largely determine how they approach store establishment and competition. The guidance is intended to help municipalities facilitate the establishment of grocery stores based on their specific circumstances. To further support municipalities in promoting store establishment, the Swedish Competition Authority also proposes an amendment to the Swedish Planning and Building Act, requiring municipalities to set out in their comprehensive plan how they intend to safeguard the interest of effective competition, particularly in the grocery retail sector. Under the Act, every municipality must have a comprehensive plan outlining the long-term development of the physical environment.

“Ensuring that municipalities consider future store establishment and competition issues at an early stage in the planning process will create better conditions for effective competition, to the benefit of consumers,” says Marie Östman.

The Swedish Competition Authority welcomes feedback from municipalities on their experiences of the guidance and would appreciate direct dialogue to foster a mutual understanding of the challenges involved in promoting effective competition in the grocery retail sector.

The report and guidance presented today are the result of a government assignment. The assignment also included considering measures to reduce the use of contractual barriers affecting grocery operators’ access to, transfer of and use of grocery retail sites. The Swedish Competition Authority has analysed and assessed various options but does not currently recommend any new legislation concerning contractual barriers.

Karl Lundvall, Deputy Head of Unit, +46 8 700 15 56, karl.lundvall@kkv.se
Erika Svärdh, Head of Communications, +46 76 542 16 50, erika.svardh@kkv.se

Read an English summary of the report

Read the full report (in Swedish)

Web-based guidance for municipalities (in Swedish)