Another report has revealed how poorly the duopoly supermarkets of Woolworths and Foodstuffs are treating their customers and suppliers to benefit themselves.
The report from the Commerce Commission criticised the supermarket duopoly sector for the way it treats its suppliers, making unrealistic demands and asking them to cover costs that the supermarkets should be covering.
The Commission also noted that this is a significant issue for any potential competitors who face an insurmountable challenge in obtaining wholesale groceries at a reasonable price.
“Kiwi consumers deserve so much better than this. We are still paying some of the highest prices on the planet to put food on the table, and we have known this for more than three years,” said Grocery Action Group chair Sue Chetwin.
“The report reveals the supermarket suppliers are being subsidised by around NZD five billion in rebates, discounts and promotional payments. Competitors just cannot compete with that power imbalance.”
Chetwin added that it doesn’t work for consumers either, because prices bounce around so much that they no longer know what a fair price might be.
The report shows once again that despite the Commission and the Government calling out this appalling behaviour, the incumbents continue to treat consumers and suppliers as if they own them.
“In many respects, they do. Foodstuffs and Woolworths hold more than 80 percent of the market. This lack of competition means consumers have no to little choice about where they shop.”
Grocery Action also noted that the large suppliers are complicit in this play because the lack of competition also helps keep their prices high.
GAG is concerned that the proposed improvements to the supply and wholesale codes by the Commission, including the prohibition of retaliation against suppliers who assert their rights, may not be sufficient.
“The Commission is asking the duopoly to ‘voluntarily’ change the wholesale code over the next 12 months – that’s like politely asking the greedy to stop being greedy. It won’t work.
Chetwin said that we have already seen the duopoly play by its own rules.
The industry has been on notice since the Commission released its Supermarket Study in 2022, which stated that supermarkets were making excessive profits and that a lack of competition meant we were paying some of the highest prices in the world for food. However, nothing has changed.
She hoped this latest report would assist the Grocery Minister, Nicola Willis, in concluding that the forced divestment of supermarkets to allow more competition needs to happen now, not in some distant future.
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