“Hurray for Kiwi grocery shoppers. Finally, a government and Minister that has intended on doing something about the lack of competition in the New Zealand supermarket sector.”
Grocery Action Group (GAG) chair Sue Chetwin said that Grocery Minister Nicola Willis' announcement that she wants all options on the table to deliver better grocery prices, including forced divestment of the supermarket duopoly of Woolworths and Foodstuffs, has been terrific news for Kiwi shoppers.
Currently, Kiwi shoppers pay some of the world's highest prices for food. While the many recent regulatory reforms of the supermarket sector have been worthwhile, none has effectively curbed the duopoly’s market power.
GAG welcomed Willis' recognition that high grocery prices were a principal driver of the cost-of-living crisis facing many Kiwi families. It also welcomed her acceptance of the need for a new competitor to be able to scale up quickly – not just a few new supermarkets in limited regions but across the country and offering a full range of products.
Chetwin said Willis had shown a deep understanding of the problem that allowing significant market power to be held by just two hugely profitable chains had meant for ordinary New Zealanders. Foodstuffs operates the New World, Pak’nSave, and Four Square brands, and Woolworths operates its own brand plus Countdown and Fresh Choice/Super Value.
“The Request for Information she announced will probably not throw up anything new, but it will allow for potential domestic and international operators to show their hand, and to outline the commercial and regulatory barriers that are stopping them from proceeding,” said Chetwin.
“This is an NZD 25 billion industry that has managed to consolidate over 30 years, and Grocery Action has always said it would take a courageous move to disrupt that kind of market power.”
She added that this would also help protect the government against the inevitable lobbying and litigation from the incumbents.
Willis’ announcement effectively recognises that New Zealand’s competition laws are not working for ordinary New Zealanders and must be changed.
“While we see forced divestment or structural intervention as an inevitable outcome, we also accept the Government needs to take a considered approach.”
The Group also welcomed the speed with which a decision about future steps will likely be made. Willis has said she wants legislation in the House before the end of the year and passed in this parliamentary term.
The Grocery Action Group was formed 18 months ago to drive more competition in the grocery sector and lower prices for all Kiwis. Chetwin said these announcements bring that reality a considerable step closer.
