Three’s a crowd

By Rosie Duff

The saying goes, three’s a crowd, but in the case of New Zealand’s supermarket duopoly… this couldn’t be further than the truth.

The Government has put supermarkets on notice and the message is clear-cut - change at pace to increase competition and be prepared for regulation, Minister of Commerce and Consumer Affairs, David Clark, announced in May. “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,” David Clark said. It comes as part of the Government’s formal response to the Commerce Commission’s market study into New Zealand supermarkets. The report found supermarkets earn $1 million a day in profits, straight from the pockets of Kiwi consumers. The Commission made 14 recommendations including introducing a mandatory code of conduct to establishing an industry regulator and ensuring loyalty programmes are easy to understand and transparent. The Government has accepted 12 of the recommendations and is taking stronger action on the other two. “The two recommendations not accepted relate to implementing a voluntary wholesale access regime and to a review of competition in three years. “These issues can’t be kicked down the road. We need to address the underlying drivers of the lack of competition now. “I spoke with both supermarket companies this afternoon to make this very clear. They know what is expected from them and the length of time we are prepared to give them to change before regulation kicks in,” David said. “Given the pressure New Zealanders are under due to global inflation and cost of living increases, we can’t afford to wait three years. “Budget 2022 delivered a cost-of-living payment for about 2.1 million Kiwis to help with the impact of rising prices and fixing our supermarket sector is another action the Government can take. “Our supermarkets know they’re in the spotlight, and we’ve recently seen some posturing around price rollbacks. “However, it doesn’t fix the systemic problem at large – which is a lack of genuine competition in the sector. “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.

These issues can’t be kicked down the road. We need to address the underlying drivers of the lack of competition now. ”

- Minister of Commerce and Consumer Affairs, David Clark

“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. “We are also looking at how to implement compulsory unit pricing on grocery products which will give shoppers the ability to better compare products. “Plus, we’re getting ready to launch consultation on the code of conduct that retailers will have to adhere to. “Whilst we work to establish an industry regulator the Commerce Commission will take on these responsibilities temporarily. “Once established the ‘watchdog’ will help keep pressure on the grocery sector, by providing annual state-of-competition reviews to keep supermarkets honest, as opposed to the check-in after three years recommended by the Commission. “It will also facilitate a resolution scheme to mediate disputes between suppliers and retailers. “This work will sit alongside my Budget night legislation to ban supermarkets from using restrictive covenants on land and leases to block competition from setting up shop in certain suburbs and shopping centres. This Bill is currently with select committee. “It is important to get this right and I look forward to continuing to engage with the grocery industry as we move forward with this suite of changes through the Grocery Industry Competition Bill which I intend to introduce to the House later this year,” David Clark said. In May Consumer NZ announced it launched a petition asking Minister David Clark to put consumers first and go beyond the Commerce Commission’s grocery market study recommendations. Consumer NZ chief executive Jon Duffy said “We need more competition to drive down prices and give New Zealanders a fairer price at the checkout. “No-one is going to start up a competing supermarket without reliable access to wholesale groceries, but currently the duopoly dominates access to wholesale supply. “The Commerce Commission has recommended the supermarkets consider supplying other retailers. We think this is unrealistic to expect from an entrenched duopoly used to calling the shots. That is why we’re launching a petition.” Consumer’s Sentiment Tracker has found that people are increasingly worried about the cost of living. Last year, 63 percent of respondents picked food and grocery costs as their biggest costof-living concern. In a recent poll, 98 percent of respondents said they were worried about the price of groceries CT www.canterburytoday.co.nz | 11