Hon Andrew Bayly
Minister of Commerce and Consumer Affairs

The first annual grocery report underscores the need for reforms to cut red tape and promote competition, Commerce and Consumer Affairs Minister Andrew Bayly says.

“The report paints a concerning picture of the $25 billion grocery sector and reinforces the need for stronger regulatory action, coupled with an ambitious, economy-wide programme to promote competition,” Mr Bayly says.

“The report finds that the changes heralded in by the previous government have failed to deliver, with checkout prices rising more than wholesale costs, supermarket margins increasing, and profit levels remaining higher than expected in a genuinely competitive market.

“I welcome the Commission’s decision that, based on these findings, it will unlock new regulatory powers to improve uptake of the wholesale regime, redress the balance of power between suppliers and supermarkets and bring greater transparency to pricing.

“However, many of the issues identified by the report point to broader, structural problems with our trading, planning and regulatory systems.

“We knew this coming into Government, and we have been upfront with Kiwis that to get better social outcomes, we need to reduce regulatory barriers. Already the Government has announced a review of the Overseas Investment Act and reforms to the planning system to unlock land for development.

“The report reinforces that our planning rules are a mess. The tangle of red tape has significantly reduced the availability of urban land for development, creating high barriers to entry and curtailing competition. 

“That is why we are redesigning the Resource Management Act and have directed councils to enable a greater mix of residential and commercial activities in cities. In time, this should enable metro-style supermarkets to open alongside residential developments, as is common overseas.

“We are also reviewing our competition settings more broadly and will consider the report’s findings in relation to the Fair Trading Act and Commerce Act. As part of this work I am open to the Commission’s recommendation to increase penalties in the Fair Trading Act for inaccurate or misleading prices.

“I have also recently signed off on rules for the new Grocery Industry Dispute Resolution Scheme. This will give suppliers and wholesale customers a stronger voice against the supermarket giants and greater confidence when negotiating retail deals, which, in turn, should lead to better product range and prices for consumers.

“I am looking forward to receiving a more detailed analysis from the Commission about the more than 100 sites being ‘land banked’ by supermarkets and will seek advice about whether this complies with competition law and what levers are available.

“We know that if we want the benefits of greater competition then New Zealand must become a more attractive place to do business. While the findings of the report are disappointing, the Government and Commerce Commission are committed to supporting better competition across all sectors of our economy and taking a range of actions to support this.”

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