Bold steps by Government to address competition issues in the supermarket sector

“It is beyond debate that competition is not working well for consumers in the grocery sector,” said Consumer NZ chief executive Jon Duffy.

“The Government’s response demonstrates a commitment to fixing the underlying issues that are producing lacklustre competition and high profits and contributing to high prices at the checkout.

“We are pleased the Minister has recognised the importance of this issue to New Zealanders and rejected two of the commission’s key recommendations, which would have seen New Zealand shoppers putting up with the status quo for at least the next three years.”

The Government has rejected a recommendation that the duopoly be left to consider requests for wholesale supply from other retailers in good faith.

Instead, the Government has announced it will be progressing a mandatory wholesale access regime.

“We need to create an even playing field for new and emerging grocery retailers,” Duffy said.

“The voluntary regime recommended by the commission would have left competitors at the mercy of the very companies they’d be competing with. Putting a regulatory regime in place will ensure that new and emerging retailers must be treated fairly.”

The Government has also rejected the recommendation to wait three years before reviewing the state of competition in the grocery sector following the implementation of the commission’s recommendations. The state of competition will instead be reviewed annually by a grocery sector regulator.

“This is a practical and necessary step for the Government to take. Three years is just too long for New Zealanders to have to tolerate the status quo,” Duffy said.

The Government has also committed to further analysis to promote effective competition. This could include retail divestment, which could involve supermarkets being forced to sell stores to make way for competitors.

Earlier this month, Consumer NZ launched a petition calling for Minister Clark to go further than the Commerce Commission’s recommendations and look into regulating access to wholesale supply or setting up a state-owned wholesaler. More than 78,000 New Zealanders signed.

“We want to thank every New Zealander who signed the petition,” Duffy said.

“There is power in numbers, and this shows, that when consumers let their voices be heard, change can happen. Our research has indicated there has been a marked decline in trust towards the supermarkets. With the cost-of-living sky rocketing, New Zealanders deserve to get a fair price at the checkout.”