The BI Business History Seminar

Carin Sjölin (PhD Student, Stockholm School of Economics): “A moderately cutthroat competition, please!”

The focus of my dissertation project is the Swedish food retail market during the latter part of the 20th Century, from after the end of WWII until the entry of Sweden into the European Union. It will cover the well-known areas of restriction of competition, sector concentration and non-market activities.

That companies engage in non-market activities and that concentrations of markets are problematic is not news. In the special issue on European retailing by Business History (vol 60, issue 7, Oct 2018), Dewitte et al. pointed to the French state’s concern and effort to limit the ongoing concentration in the food retail sector with legislation. Due to the ingenuity of the actors, however, this legislation only accelerated it. Today Leclerc and Carrefour have 40 % of the market, a concentration that is viewed as problematic (ibid.).

In Sweden, three actors, ICA, Coop and Axfood, control 90% of the market, and the non-market activities of these have led to a particular case of regulatory capture. That the actors have managed to control 90% of the market is interesting in itself, given that one, in theory, does not have a high entry cost to food retailing. The three actors were in business throughout my study. They all have archives to which I have access. This gives me a unique opportunity to study the actions and change systematically.

For the period and the sector, the non-market activities should not be regarded as non-market activities because they were a criteria for remaining in the market. Following the Swedish law regarding city planning, the municipals’ planning and building committee decided who got to build and where. It made sense for these three private actors, albeit one being a cooperative with strong linkages to the Social Democrats, to engage themselves politically.

This particular institutional setting led to a path dependency, actor complicity, and institutional inertia that did not break, all though challenged, until Sweden entered into the EU. At this point, the three food retailers were so large, so they served in their own right as points of referral to state and EU inquiries.

I intend to show that the “non-market activities” contributed to shaping the market and allowed the actors to influence the change. I will thereby show that political action in a market is at least as necessary as having an offering that is well-adapted to your customer. I will seek to prove that the concentration of the Swedish food retail sector during this time, which the debate labelled as problematic, was accepted and supported by the Swedish state and the large food retailers.