Government to “Urgently Pursue” Supermarket Shake-Up

The big operators will need to open up their wholesale arms to competitors or face regulation, according to the Government, announcing it will "urgently pursue" options to generate more competition in the supermarket sector.

The Government has released its response to the Commerce Commission's review of the sector, which found that the supermarket giants could be making $430 million a year in excess profits.

Minister of Commerce and Consumer Affairs David Clark said the Government was putting supermarkets on notice, and they needed to change "at pace".

“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,” expressed Clark.

The Government accepted 12 of the commission's 14 recommendations, and would take stronger action on the other two, he said.

“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.”

The Government said the Commission's recommendation to consider requests for wholesale supply in good faith was insufficient, instead it will develop a mandatory wholesale grocery access regime as a backstop to the voluntary scheme proposed by the Commission.

“We need to create an even playing field for new and emerging grocery retailers,” said Consumer NZ chief executive, Jon Duffy, noting that the wholesale regime was a good move.

“The voluntary regime recommended by the commission would have left competitors at the mercy of the very companies they’d be competing with. Putting a regulatory regime in place will ensure that new and emerging retailers must be treated fairly.”

MBIE was also undertaking further work around requiring major grocery retailers to divest some of their stores or retail banners. This was a longer-term piece of work due to its complexity.