EXCEPTIONAL PERMISSION GRANTED TO KESKO’S FIXED PRICING SYSTEM FOR THREE YEARS

The Office of Free Competition has granted to Kesko Corporation an exceptional permission by which Kesko is allowed, on certain conditions, to fix the highest retail prices for part of the products sold by the K-superstore chain. The permission is, however, more limited and for a shorter period than applied by Kesko.

The exceptional permission received by Kesko contains the following conditions:

1. The highest retail prices can be fixed for products included in the K-superstore chain’s basic selection, and those products cannot account for more than 35% of the average annual sales of the chain’s stores in each size class. They also include Kesko’s own label and exclusive sales products.
2. Retailers can always use prices that are lower than the highest prices fixed by Kesko, and they can advertise products independently.
3. The highest prices for foodstuffs can be valid for a maximum of 3 months, except for industrial groceries, whose maximum pricing period is 4 months. The pricing period for other products sold by the grocery stores cannot be longer than 4 months.
4. Sales of the products included in the K-superstore chain’s chain selection cannot account for more than 60% of the average annual sales of the chain’s stores in each size class. Also the smallest stores of the chain, calculated by net sales, shall have an opportunity to purchase products not included in the chain selection at an average value corresponding to 40% of the store’s total sales.
5. The stores operating in the chain can also purchase, without restrictions placed by Kesko, products included in the fixed pricing system from other suppliers than Kesko or suppliers determined by Kesko.

The exceptional permission is valid for 1 January 2001 – 31 December 2003. Kesko applied the permission for five years at least.

According to Kesko, the exceptional permission granted by the Office of Free Competition gives Kesko and the K-stores good opportunities to carry out operations in line with the new chain operation system.

Kesko has also submitted to the Office of Free Competition corresponding applications for exceptional permission concerning the following chains: Citymarket, K-supermarket, K-neighbourhood, K-extra, Rimi, Intersport, Musta Pörssi, K-kenkä, Andiamo, K-rauta, Rautia and K-agriculture. Kesko expects to receive those decisions during the spring.

Further information is available from Kesko’s Deputy Chief Executive Kalervo Haapaniemi and President Matti Halmesmäki, tel. +358 10 5311.

KESKO CORPORATION
Corporate Communications

Erkki Heikkinen
Senior Vice President

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