The government has announced that it will be pushing through a Commerce Amendment Bill to be able to investigate markets better to ensure that industries are operating competitively. The government hopes to pass the Bill in just two weeks’ time with the prime minister personally nominating the petrol industry to be the first area to be looked at. However, the supermarket industry may also be targeted by the new bill because of the country’s current duopoly, with the prime minister stating that she wouldn’t be surprised if the industry was nominated in the future.
Greg Harford, general manager of Public Affairs for Retail NZ said that he was unsure if there was a strong case for the supermarket industry to be targeted. “It’s not clear that there is a strong case for having the Commerce Commission undertake a market study into the food industry, and it could impose significant costs on everyone involved.”
“The market for food is very competitive, with strong competition between the big supermarket brands, specialist grocery players like Farro Fresh, Moore Wilson, Bin Inn, and greengrocers, butchers, bakers and delicatessens. We are also seeing new firms enter the market, like My Foodbag and UberEats, all of whom are competing vigorously for customers’ dollars.”
“Retail is a low margin business, and grocery is no exception. The statistics show us that average net margins in the grocery sector are something like 4.8 percent, while the government takes 15 percent of the price of all food in GST.”
The proposed law comes after the previous government attempted to investigate the petrol industry without success after two major companies refused to hand over all of their information. The new law will allow the Commerce Commission to undertake investigations which will force businesses to provide information proving they are behaving competitively.
At this stage, the government has no solid plans in place to investigate the supermarket industry.