Maori Authority Chair tells Commerce Commission its time to break the supermarket duopoly
The National Maori Authority has today released a paper ahead of Commerce Commission talks into the Grocery Sector and the impacts of a seemingly duopoly in Aoteaora between Foodstuffs and its Australian competitor, Countdown. Chair of the Authority, Matthew Tukaki, has made it clear in the paper “He Maara Tipua He Tangata Ora” that Maori growers and producers are often at the raw end of the deal when it comes to the large supermarket chains and has called for the duopoly to be ended:
“I don’t think there are too many Maori producers or growers that would argue against breaking up the duopoly (if any at all) here in Aotearoa and to be really clear we see the potential for a new market entrant and of course that aspiration would be a Maori entrant as a third operator without a doubt. And Maori have the potential to do that when you recognise at the production end we have 50% of fishing quota, 30% in lamb production, 30% in sheep and beef, 10% in dairy and kiwifruit as an example. But in order for that to happen the duopoly needs to be broken” Tukaki said
The paper is the first of two with the second paper being released for comment on the 6th of December and dealing with the consumer side – the impacts of the ever increasing cost of living on Maori and the overall threat to small community based business. Paper one is now open for public feedback and Tukaki has covered the following points:
We do not believe that the current arrangements that have seen a duopoly essentially develop in Aoteaora is fair and equitable for Maori suppliers and producers of goods
Conversely, we would suggest that this duopoly also extends to all producers, not just Maori, when it comes to unfair leverage in favour of the two larger supermarket chains
We do not believe that either supermarket is necessarily adhering to the Principles of Te Tiriti as it is not clear what their Maori engagement strategies are. For example, we are talking specifically about Maori growers and producers as opposed to the usual narrative built around consumers alone
Therefore, the existence of two should be counter balanced by the potential new entry into the market
Deepening our concern is the land banking of property or the holding onto titles to expand their existing network of stores and supermarkets but also as leverage that would stop potentially new entrants from market entry – thereby signalling to us that should a Maori entity emerge (or any other) both chains could use their respective balance sheets and property assets as a “grey counterweight” that would prohibit market entry
Further to this is the concern that we have around fair and equitable purchasing arrangements for Maori producers and suppliers – we note that margins are not always fully disclosed in these negotiations. We also remain concerned that subtle coercion exists in the race for primary points of presence on supermarket shelves
Notwithstanding we are also concerned that both chains are importing cheaper goods from overseas thereby using that as an additional counterweight to further drive prices down on behalf of producers and growers
With that in mind we are also deeply concerned that the purchasing power of Countdown through its Australian owners also plays in the supply chains of Aotearoa through their home branded goods. The same is true, potentially on a smaller scale, with Foodstuffs and the “Pams” brands of goods
Finally, is the much needed korero on what this could mean for better competition policy and tighter monitoring of this sector from a supplier perspective. Currently the dominance of the larger players is not conducive to the ongoing sustainability of small to mid-size producers.
Further points for a korero couched as aspirations
Is the Commerce Commission achieving its obligations on behalf of the Crown to Maori when it comes to the Treaty of Waitangi to ensure fair and equitable market access for Maori suppliers, producers and growers and of not why not? Are the policies of the existing large players conducive with those commitments and obligations?
We believe that Maori would like to shift from being suppliers, producers and growers to owners and shared governors of a third entity – if not a third entity a greater say in how the current two larger players operate their respective business models. Of course we conclude this paper by stating clearly one Maori aspiration should be a third entity developed and led by Maori business and industry.
The full paper can be downloaded here: