Taxation favouring consumer cooperatives has led to two companies dominating the Finnish grocery market

One consumer cooperative and one limited liability company control 84 percent of Finland's grocery trade market. In his dissertation in business law, Veijo Hukari examined how this competitive situation that is very rare in Europe has come to exist.

– The concentration of the grocery market stems from taxation that favours consumer cooperatives. This has given the cooperative tax-funded investment capacity that has also benefited one competitor, says Hukari, who will defend his dissertation on 12 December at the University of Vaasa.

The consumer cooperative pays its co-op members bonuses that are deductible in corporate taxation according to Hukari. Thanks to lighter tax treatment, the cooperative has been able to invest significantly more and capture a large market share in the grocery sector.

– Although the competing limited liability company does not have the same tax advantage, it has been able to retain its market position. This has led to the dominance of two companies in the grocery market, which not only means higher prices, but also power in contract negotiations as well as broader economic power in society.

Finland's tax and competition law in conflict

Finland's accession to the European Union in 1995 introduced new competition law that, for example, limits the tax benefits given to consumer cooperatives. According to Hukari, companies still often refer to the Finnish Tax Administration’s guidelines on corporate taxation, which conflict with EU law. In his dissertation, Hukari highlights the need to harmonise Finland's tax and competition laws.

The Finnish government is currently drafting a law to restrict the use of bonuses. The law would eliminate the possibility of using bonuses to dominate another market. In other words, bonuses would need to be used for the same service from which they were obtained.

– However, this law does not address the tax treatment of bonuses. The Tax Administration should clearly establish that Finnish companies need to comply with EU law in corporate taxation. This would level the playing field in the grocery market over a longer period, which would also mitigate the effects of exercising contractual power, Hukari states.

In his research, Hukari has utilised publicly available information about the grocery sector economy and compared his findings to the content of EU competition law.

Doctoral dissertation

Hukari, Veijo (2024) Kahden kauppa – vähittäiskaupan keskittynyt kilpailutilanne Suomessa. Acta Wasaensia 548. Doctoral dissertation. University of Vaasa.

Publication pdf

Public defence

The public examination of M.Sc. Veijo Hukari’s doctoral dissertation ”Kahden kauppa – vähittäiskaupan keskittynyt kilpailutilanne Suomessa” will be held on Thursday, 12 December at 12 noon in the Wolff Auditorium at the University of Vaasa.

It is possible to participate in the defence also online: https://uwasa.zoom.us/j/69773088548?pwd=LMWqj3vs0ylQOhiQzEh1pyE3cNzuRA.1. The password is 365026

Professor Juha Karhu (University of Lapland) will act as opponent and Professor Vesa Annola as custos.

Further information

Veijo Hukari, tel. +358 40 547 3950, veijo.hukari@gmail.com

Veijo Hukari was born in 1944 in Toholampi. He graduated from Kokkolan yhteislyseon lukio and earned a Master’s degree in Economics from the University of Vaasa in 1993. Hukari was the CEO of Keski-Pohjanmaan Yrittäjät ry in 1976–90 and worked as an entrepreneur trainer at Keski-Pohjanmaan aikuisopisto in 1993–2012.