We are told that food prices must go up because of Russian’s brutal war against Ukraine. But do not be fooled by these headlines because it is time to take a critical view of food prices here and the political links between retail giants and politicians – a system that has created high food prices for customers because competition is restricted by cartel-like systems.
FinnishNews has written stories going back years that food prices here in Finland are being held up by informal cartels managed by Kesko and S-Group together with a few large food manufacturing and processing companies.
And now there is a way to show that the cartel has been operating quite nicely to maintain artificially high prices, thank you very much…
The information on food prices and on retail-shop zoning and market practices is reported regularly in the Finnish press – itself an oligopolistic sector “managed” by two huge media companies!
There are three clear matters that the media has reported:
- More recent reports have stated that one of the two has received zoning advantages throughout most of the country by making sure that local decision-making politicians are nominated to the boards and supervisory boards of the various retail bodies. The other large retail group also appears to have received equally interesting planning decisions to have their large supermarkets and smaller retail stores located in equally good positions. They appear to be able to better hide the way they sway decision makers…
- The media has reported regularly that these two groups have more than an 80% market share – a clear sign of market power, market power that will maintain high prices for consumers if unchecked.
- Finally, the same media have reported regularly on the total price of a basket of food that Finns typically buy each month. The reports, without going into detail, that Kesko and Group are always more expensive than the newcomer LIDL, the German giant, without any significant difference in quality. Depending on the shop or supermarket LIDL always ranks as the cheapest place to buy this basket. The Kesko shops charge some 10% to 55% more than LIDL and S-Group shops charge between 10% to 37% more than LIDL in the center of Helsinki!
LIDL is an interesting retail shop because they operate throughout Europe where they have prices that are well below (more than half and 22% lower) than Helsinki!
Do not be fooled by the excuse of higher transportation costs as the explanation for higher prices here. Full lorries carry food as cheaply as IKEA products to Helsinki, an EU member state, for a tiny fraction of the cost of the value of the cargo.
Bread is half price:
… and eggs and apples (see above) are also around half the typical price paid in Helsinki!