The Government has announced that the supermarket duopoly must reach a price agreement with external wholesale customers within a year, or the Grocery Commissioner will intervene further.
"We have decided to take stronger action than the Commerce Commission suggested. They said any wholesale regime should be voluntary. We're not confident that will deliver the results consumers deserve," said David Clark, Minister of Commerce and Consumer Affairs.
"The existing duopoly will be required to negotiate wholesale offerings to their competitors on commercial terms. However, if those prices are not what we would expect in a competitive wholesale market, the new Grocery Commissioner will be able to impose additional regulations to force fairer prices. Ultimately if these interventions don't deliver a fair deal, new regulations can be utilised to require the major retailers to provide wholesale supply at certain terms, including price and range."
The Government hopes that addressing access to wholesale goods, in addition to the Grocery Code of Conduct and the new Grocery Commissioner, will provide a greater incentive for competition to enter the market.
The New Zealand Food and Grocery Council have said this is necessary if Kiwis want to see better product choices and lower prices.
"It's great the Government has accepted the wholesale market is broken," said Katherine Rich, Chief Executive.
"Shoppers can see that every day when they see small retailers lining up at supermarkets to get groceries for their store. They do that because they have nowhere else to buy wholesale goods at reasonable prices. That's the very reason dairies and retailers such as Night' n Day and Supie are not competitive on pricing because what they're paying for their goods is the same as shoppers at supermarkets pay."
"In a well-functioning and competitive wholesale market, these steps by the Government wouldn’t be needed, and it’s just further proof of how broken, and uncompetitive the grocery market is right now. But what we do need in the long term is an independent wholesaler and other independent retailers to enter the market.”
