Tukaki says the little guys took on the Oligarch supermarkets and knocked them off
Government Rejects Commission three-year review timeframe
Urgently pursuing options to generate more competition in the supermarket sector
Will introduce o An industry regulator o A mandatory code of conduct o Compulsory unit pricing on groceries
More transparent loyalty schemes
One of the leading proponents of the push for supermarket reforms and a breaking of the duopoly of the large supermarket chains, Matthew Tukaki, Chair of the National Maori Authority has welcomed the Governments announcement today to go further when it comes to reform and the establishment of a code conduct. The announcement comes off the back of the Government introducing legislation dealing with leasing, land banking and covenants:
“The changes announced today have been a long time coming and to be frank about it we needed to break the backbone of the supermarket industry that has profited for a long time now and the detriment to suppliers, producers and consumers. Food prices were 7.6 percent higher in March 2022 compared with March 2021 according to Stats NZ and according to Consumer New Zealand the supermarkets are making in excess of $1 million in profits per day – in the year ended to March that is more than $360 million. No one can tell me the fat in those profits has had an adverse impact on suppliers, producers and consumers.” Tukaki said
“I acknowledge that food prices are going up for a variety of reasons but those reasons still do not justify the amount of profit coming into the sector and tempered with the fact that the behaviour in terms of land banking has been an absolute disgrace. Good on the Government for rejecting the Commerce Commissions delayed timeframe and that feeds into the changes that are coming sooner rather than later when it comes to opening up the market for more competition – the industry regulator is great news as is the mandatory code of conduct and compulsory unit pricing on groceries – this is a lot of what we have ben calling for and I am pleased to see the announcement out there” Tukaki said
“There is of course more work to be done – but I am very pleased that these steps have been taken – I have been ardent in my view that the duopoly be busted and this is a the clearest signal yet! Tukaki said
The Government has put supermarkets on notice, and the message is clear: change at pace to increase competition and be prepared for regulation, Minister of Commerce and Consumer Affairs, David Clark announced today.
“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,”
David Clark said. It comes as part of the Government’s formal response to the Commerce Commission’s market study into New Zealand supermarkets. The report found supermarkets earn $1 million a day in excess profits, straight from the pockets of Kiwi consumers. The Commission made 14 recommendations including introducing a mandatory code of conduct to establishing an industry regulator and ensuring loyalty programmes are easy to understand and transparent.
The Government has accepted 12 of the recommendations and is taking stronger action on the other two. “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.
“I spoke with both supermarket companies this afternoon to make this very clear. They know what is expected from them and the length of time we are prepared to give them to change before regulation kicks in. “Given the pressure New Zealanders are under due to global inflation and cost of living increases, we can't afford to wait three years. Budget 2022 delivered a cost of living payment for about 2.1 million Kiwis to help with the impact of rising prices and fixing our supermarket sector is another action the Government can take. “Our supermarkets know they’re in the spotlight, and we’ve recently seen some posturing around price rollbacks. However, it doesn’t fix the systemic problem at large – which is a lack of genuine competition in the sector
“Alongside the retail stores, supermarkets have wholesale arms. We are calling on the duopoly to open these up to would-be competitors, at a fair price. Do this knowing the Government is determined to get a regulatory backstop finalised by the end of the year. “If supermarkets do not strike good-faith wholesale deals with their competitors – our regulatory measures will make it happen for them. We are not afraid to unlock the stockroom door to ensure a competitive market. “We are taking these actions because if competitors don’t have proper access to wholesale goods, there’s no real incentive to enter the market. You can’t run supermarket with empty shelves. And the New Zealand market clearly needs more competition.
“We are also looking at how to implement compulsory unit pricing on grocery products which will give shoppers the ability to better compare products. Plus, we’re getting ready to launch consultation on the code of conduct that retailers will have to adhere to.
“Whilst we work to establish an industry regulator the Commerce Commission will take on these responsibilities temporarily. Once established the ‘watchdog’ will help keep pressure on the grocery sector, by providing annual state-of-competition reviews to keep supermarkets honest, as opposed to the check-in after three years recommended by the Commission. It will also facilitate a resolution scheme to mediate disputes between suppliers and retailers.
“This work will sit alongside my Budget night legislation to ban supermarkets from using restrictive covenants on land, and leases to block competition from setting up shop in certain suburbs and shopping centres. This Bill is currently with select committee. “It is important to get this right and I look forward to continuing to engage with the grocery industry as we move forward with this suite of changes through the Grocery Industry Competition Bill which I intend to introduce to the House later this year,” David Clark said.
MBIE is also undertaking further work around requiring major grocery retailers to divest some of their stores or retail banners. Obviously this is a longer term piece of work due to its complexity, David Clark said.