Monopoly Watch Offers Concrete Suggestions To Help Minister Of Finance Address Problem Of Supermarket Cartel

Monopoly Watch NZ is encouraged to hear the Minister of Finance is open to listening to proposals for creating competition in supermarkets.

Says Research Director, Tex Edwards: “While MonopolyWatch appreciates the Minister’s enthusiasm, her initial suggestions – looking at the Overseas Investment Act, Resource Management Act, local government regulations and any other red tape or regulatory hurdles -- fall far short of what is required.

“New Zealand is over-supplied with supermarkets. We have more per capita than other OECD nations. You can’t mount a business case to build a new chain.

“Yet despite that concentration, prices here remain high: New Zealand shoppers pay more for kitchen staples than their counterparts in the United Kingdom, Ireland and Australia.”

The previous government promised action. It prohibited restrictive land covenants: established a Grocery Commissioner, implemented a Grocery Supply Code of Conduct, mandated unit pricing: and committed to support new market entrants with financial assistance, ensuring land availability, regulatory changes, and fostering innovation to enhance competition.

It did not require divestment. Competition has not improved.

Nonetheless, encouraged by the minister’s openness, MonopolyWatch NZ has shaken the dust of its 2021 business case analysis, which set down what it would take to create price competition in the food distribution business:

1. Mandatory disclosure – including disclosure of Pak N Save franchisees accounts in full, including rebates and related party property transactions
2. Forced divestment and re-leasing of approximately 140 locations to a new operator
3. Divestment of distribution centres
4. Mandate portability of customer loyalty data
5. Prohibit geographically selective pricing
6. Ban flanker brands for 5 years

Without making a single concrete commitment, the Minister has again ignited a healthy debate on what competition looks like and what it will take to break up the NZ supermarket cartel. Monopoly Watch will participate in that debate. publishing research on what it will take and what the competitive reaction will be to the break-up. We urge the Minister to deliver a concrete policy solution to this broken market structure, one that could enable a business case to be made that would attract the large investment required .

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