Supermarkets will be forced to allow rival retailers access to groceries at reasonable conditions and be monitored annually to check there’s enough competition, as part of the Government’s plan to crackdown on the supermarket duopoly.
Commerce Minister David Clark has released the Government’s response to the Commerce Commission’s study into the supermarket duopoly of Foodstuffs and Countdown.
It’s accepted 12 of the 14 recommendations and gone further on the other two.
Foodstuffs and Woolworths have a combined 90% share of the market for Kiwis' main food shop.
A watchdog will monitor supermarket competition annually, rather than three yearly, as recommended.
The commission had suggested supermarkets voluntarily consider all requests for wholesale supply of goods. Instead, the Government wants that to be made mandatory.
“These issues can’t be kicked down the road. We need to address the underlying drivers of the lack of competition now," Clark said.
“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.
“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.”
The Government had already vowed in the Budget to stop supermarkets land banking or buying up land with covenants on it, in order to stop competitors setting up shop next door.
Among the other promises are a mandatory code of conduct, unit pricing on groceries and more transparent loyalty schemes.
As well as monitoring competition, the new watchdog will also provide a dispute resolution service between retailers and suppliers.