NZ Govt taking on the supermarket duopoly

New Zealand’s retail grocery duopoly has been put on notice by the government, with measures now being outlined that would see competition in the country’s supermarket sector increase. There is the possibility of industry regulation being introduced to make this happen.

A market study was released by the Commerce Commission in March that called for NZ’s supermarket industry to address issues of competition. The report found that the country’s two main supermarket chains, Woolworths NZ and Foodstuffs, have a duopoly that earns $1 million a day in excess profits.

“The government and New Zealanders have been very clear that the supermarket industry doesn’t work. It’s not competitive and shoppers aren’t getting a fair deal. The duopoly needs to change, and we are preparing the necessary legislation to do that,” said NZ Minister of Commerce and Consumer Affairs David Clark.

A total of 14 recommendations were laid out in the study and New Zealand Government has responded by pledging to adopt 12 of them, most of which it aims to roll out next year.

The recommendations that will be adopted include improving the availability of sites for grocery stores in planning laws, reviewing legislative barriers to competition in areas of overseas investment and alcohol supply, and the establishment of a grocery regulatory to provide oversight for the sector.

The two recommendations disagreed with by the government are for reviews of the competition to occur every three years — this will now be done annually instead — and the requirement that retailers consider requests for access to wholesale supply of goods by competing retailers, which the government found insufficient.

“Alongside the retail stores, supermarkets have wholesale arms. We are calling on the duopoly to open these up to would-be competitors, at a fair price. Do this knowing the government is determined to get a regulatory backstop finalised by the end of the year.

“If supermarkets do not strike good-faith wholesale deals with their competitors, our regulatory measures will make it happen for them. We are not afraid to unlock the stockroom door to ensure a competitive market.

“We are taking these actions because if competitors don’t have proper access to wholesale goods, there’s no real incentive to enter the market. You can’t run supermarkets with empty shelves. And the New Zealand market clearly needs more competition.”

The government’s full response, including the recommendations that it aims to deliver in the next year, can be read online.

Image credit: ©stock.adobe.com/au/gui yong nian