Two Waiheke grocery businesses are cautiously optimistic that government reform of the industry will help improve competition and lower prices but are concerned it may not work out the way the government hopes.
Minister of Commerce and Consumer Affairs David Clark recently announced the government was stepping in to loosen the grip Woolworths NZ and Foodstuffs hold on the country’s supermarket sector.
“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,” Clark says.
A Commerce Commission report on the supermarket duopoly found Countdown and Foodstuffs were making $430 million a year, over $1m a day, in excess profit by dominating the market.
The competition watchdog made 14 recommendations on how to make the sector more fair and reduce prices. The Government is implementing 12 as recommended and going further than the commission suggested on the final two.
These measures include:
Creating an agency to regulate the industry
A mandatory code of conduct for retailers’ dealings with suppliers and an independent dispute-resolution scheme.
Compulsory unit pricing on groceries
More transparent loyalty schemes, particularly regarding what personal data is collected and how it is used
Grocery suppliers will be allowed to collectively bargain, with an exemption from the Commerce Act provisions which currently prevent that.
Clark says the government did not accept the commission’s recommendation to set up a voluntary wholesale access programme, or to review the levels of competition in three years.
Instead, reviews will be held annually and Clark has spoken to both major supermarket companies to make it clear they have until the end of the year to open their wholesale arms to would-be competitors at a fair price.
“These issues can’t be kicked down the road. We need to address the underlying drivers of the lack of competition now… Given the pressure New Zealanders are under due to global inflation and cost-of-living increases, we can’t afford to wait three years.” • Paul Mitchell
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