Rejecting the proposed merger of Foodstuffs North Island with Foodstuffs South Island offers a glimmer of hope for consumers and suppliers, who may yet see increased competition and a reduction in food and grocery prices in the future, said Sue Chetwin, chair of the Grocery Action Group (GAG).
"The Commerce Commission's decision was the only reasonable one if we want to preserve even the slightest chance of greater supermarket competition and the possibility of lower prices," she said.
Had the merger been approved, it would have solidified the duopoly’s grip on our food and grocery budgets, creating a stranglehold that would be virtually impossible to break. Suppliers, too, would have faced even more limited access to consumers, making it increasingly difficult for smaller brands to compete in the market.
"While this ‘line in the sand’ decision is very welcome, it won't bring immediate relief for consumers," said Chetwin.
"To see meaningful change, we need at least another supermarket chain to be established within the next year. Unfortunately, there's no sign of that happening anytime soon. Therefore, we urge the government to grant the Commerce Commission more regulatory tools to limit supermarkets’ unchecked power over consumers. This includes the ability to force Woolworths and Foodstuffs to divest brands, such as by splitting New World and Pak’nSave."
Currently, market competition is clearly not effective, with food and grocery prices in New Zealand among the highest in the world. The existing duopoly has led to a lack of choice for consumers and higher prices at the checkout.
"We urge the Commerce Commission to continue with this kind of courageous decision-making that prioritises consumers and suppliers," Chetwin added.
"However, the government must step up and strengthen the Commission’s powers to ensure it can be even more effective in reducing the cost of food for all New Zealanders."
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