Wholesale access key to supermarket competition - Consumer NZ

Source: 1News

Opening up wholesale access to rivals of Countdown and Foodstuffs could be key in making the supermarket sector work better for New Zealanders, Consumer NZ's Gemma Rasmussen says.

Generic photo of a supermarket

On Monday, the Government announced a suite of changes to crack down on the duopoly in the hope people will eventually pay less at the checkout.

It came on the back of a Commerce Commission inquiry which found competition wasn't working well for consumers.

One of the changes is that supermarkets will be forced to allow rival retailers access to groceries at reasonable conditions and be monitored annually to check there’s enough competition.

Commerce Minister David Clark said on Monday,“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.”

Rasmussen says “the message to the supermarkets is very clear that they need to play ball, and if wholesale access can be done right it means that we’ll have a basis for a very strong healthy competitive market."

Introducing another player into the market comes with its own issues and would take some time, competition lawyer Andy Glenie says.

READ MORE: Govt confirms supermarket duopoly crackdown plans

“It wouldn’t even happen in six months to 12 months, you know this is something that would take years to play out.”

He added another problem for new retailers getting into the market is access to land.

“They need to see some better access to land and then they need to feel sufficiently confident in the economy to take on a new market."

But Rasmussen says she's hopeful the government is taking the duopoly seriously and Kiwis will see change.

READ MORE: Shopper finds ordering groceries from Aus cheaper than NZ supermarket

“When you think about Australia and the introduction of Aldi, they enjoy a much healthier supermarket sector now and hopefully that’s on the cards for New Zealand as well because the cost of living is so tough right now,” she said.

Acting Prime Minister Grant Robertson also weighed in on the issue, saying "if there's two things that have been holding back competitors from getting in against the duopoly is the availability of land for their supermarkets."

He added, "you can't run a supermarket if you don't have goods to put on the shelf and so opening up that wholesale mark means either the supermarkets do that themselves or we'll regulate them to do that by the end of the year."

"The duopoly has held us a bit to ransom over the last few years, we've now got the ability through this to get more competitors in which will drive prices down," Robertson said.

A bill will be introduced to Parliament later this year to introduce the changes.