EDITORS NOTE | The Duopoly Challenge


Numerous industry commentators, many of whom possess firsthand experience dismantling industry strangleholds, have offered their perspectives on the path forward to breaking up the duopoly.

The Telecom split up here in New Zealand and other overseas markets that have tackled similar situations in various industry categories offer valuable insights into the complexity of the task ahead. The experiences of others underscore that it takes more than a surface-level intervention to dismantle entrenched industry giants. Looking back at New Zealand's history and the breakup of Telecom serves as a solid reminder of what it takes to initiate meaningful change.

While the appointment of a grocery commissioner is a step in the right direction, it is but a sweetener and more robust strategies are required to drive progress. This growing consensus among experts is that the status quo, while comfortable for some, has resulted in a lack of competition, limited supplier options, and higher grocery prices for consumers.
Amid this discussion, the Grocery Commissioner shared his vision for the future after his first 100 days in office. He acknowledges the need for substantial change in the grocery sector and is actively exploring strategies to promote competition, ensure transparency, and enhance the affordability of the weekly shop. His office will conduct in-depth investigations into industry practices and consumer concerns, focusing on pricing, supplier relations, and market dominance. However, this work is a drop in the bucket and goes, in part, over the ground covered by the Commerce Commission.

The government, driven by a desire to break the duopoly, must consider a range of strategies. Separation of the wholesale and retail aspects of the supermarket giants and how that will work forms part of the work needed.

When a supermarket chain has vertical integration from paddock to plate, it doesn't take a rocket scientist to realise where the control is.
These strategies may cause disruption and job losses and require careful regulation to ensure fairness.
Still, the goal is to create an environment where smaller retailers, local suppliers, and consumers benefit from increased competition and lower prices. In lay terms, what is being asked for is a fair and even playing field - to facilitate competition.

While breaking the grocery duopoly will pose a formidable challenge, consumers' call for change is growing. The consensus in the industry is that a call for bold action has become increasingly urgent. The cost-of-living crisis is going to bite in the coming year. When mortgage holders come off lower interest rates, cries for cheaper groceries are just going to grow louder.
It is, however, crucial to acknowledge that any breakup of the duopoly would require a willingness to navigate short-term pain for the long-term benefit of consumers.

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