11 October 2016
The Finnish Competition and Consumer Authority (FCCA) has investigated the customer loyalty scheme of Suomen Osuuskauppojen Keskuskunta (SOK). The investigation did not produce any proof of restriction of competition that would have required further investigation.
The FCCA launched an unprompted investigation into the matter after the special provision of the Competition Act concerning consumer goods trade (Section 4a) entered into force in 2014. According to the special provision, an undertaking with a minimum of 30 per cent market share in Finnish daily consumer goods retail trade is deemed to occupy a dominant position in the Finnish daily consumer goods market. As a result of the provision, enterprises with a market share exceeding the limit have to comply with the prohibition of the abuse of a dominant position laid down in the Competition Act. SOK’s market share in Finnish daily consumer goods retail trade exceeds 30 per cent, so pursuant to Section 4a of the Competition Act, it occupies a dominant position.
SOK has had a national discount scheme since 1994, which gives customers bonus points for loyalty. The bonus points are accumulated on the basis of S Group customers’ monthly purchases according to the bonus table of each cooperative.
Discounts given by a business in a dominant position may benefit consumers, but can also distort competition. Based on the FCCA’s overall assessment, SOK’s discount scheme does not, in its current form, have considerable anti-competition impacts on consumer goods trade in Finland. The FCCA based its assessment on its report on the effect of customer loyalty schemes on consumers’ purchasing behaviour (in Finnish). The report concludes that customer loyalty schemes only have a minor impact on consumers’ choice of where they shop.
The FCCA also examined the characteristics of the discount scheme, such as the form of the discounts given and the way there are accumulated. The assessment did not reveal any factors that could create the kind of customer loyalty that would lead to SOK’s competitors being shut out of the consumer goods market.
In addition to the FCCA’s competition affairs department, the Consumer Ombudsman has also called attention to SOK’s discount scheme. The Consumer Ombudsman is currently investigating the marketing of SOK’s bonus points. The Consumer Ombudsman has asked SOK to provide an explanation as to why a monthly reference period is used for purchases and a yearly one for bonus point accumulation in its marketing.
Decision (in Finnish)
More information: Kirsi Leivo, Director, tel. +358 29 505 3351, Martina Castrén, Senior Research Officer, tel. +358 29 505 3325, and Tom Björkroth, Senior Advisor, tel. +358 29 505 3350
Read more: Rebate schemes and competition law