EXCEPTIONAL PERMISSIONS TO THE FIXED PRICING SYSTEM OF THE CITYMARKET AND K-SUPERMARKET CHAINS

The Office of Free Competition has granted to Kesko Corporation exceptional permissions by which Kesko is allowed, on certain conditions, to fix the highest retail prices for part of the products sold by the Citymarket and K-supermarket chains. These three-year permissions have the same contents as the permission given earlier to the fixed pricing system of the K-superstore chain, so they are more limited and for a shorter period than applied by Kesko.

The exceptional permissions received by Kesko contain the following conditions:

1. The highest sale prices can be fixed for products included in the Citymarket and K-supermarket chains’ basic selections, and those products cannot account for more than 35% of the average annual sales of each chain’s stores in each size class. They also include Kesko’s own label and exclusive sale products.

2. Retailers can always use prices that are lower than the highest sale prices fixed by Kesko, and they can advertise products independently.

3. The highest sale prices for foodstuffs can be valid for a maximum of 3 months at a time, except for industrial groceries, the maximum pricing period of which 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 Citymarket and K-supermarket chain’s chain selections cannot account for more than 60% of the average annual sales of each chain’s stores in each size class. Also the smallest stores of the chains, calculated by net sales, shall have an opportunity to purchase products not included in the chain selections 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 permissions are valid for 1 January 2001 – 31 December 2003. Kesko applied for permissions for five years at least.

According to Kesko, the exceptional permissions granted by the Office of Free Competition give 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 permissions concerning the following chains: 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.

For further information, please contact President Kalervo Haapaniemi, Kesko Food, tel. +358 10 5311.

KESKO CORPORATION
Corporate Communications

Atte Kaksonen
Manager

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