National has announced it will "pursue" breaking up grocery giant Foodstuffs so New World and Four Square become one chain, and Pak'nSave another, if re-elected.
Alongside Woolworths, which would remain Australian-owned, that would give the country three major grocery chains instead of two.
The party said it wanted to move within 100 days to begin pursuing separation proposals.
Under National, finance spokesperson Nicola Willis said the Commerce Commission would have six months to test separation proposals and make a formal recommendation.
"New Zealanders are paying more than they should for groceries because supermarket competition is still too weak. Families deserve more choice, better prices and supermarkets that have to fight harder for their dollars," Willis said.
"Our initial view is that New World and Pak'nSave would compete harder on prices, specials and service if they were genuinely independent of each other.
"They currently sit within the same Foodstuffs structures.
"Separation would create three major nationwide grocery chains and put more pressure on supermarkets to win and keep customers.
“If the commission recommends separation, National will legislate to implement it."
The Grocery Industry Competition Act is giving smaller players the chance to offer cheaper goods. (Source: 1News)
Foodstuffs operates as two co-operatives, one in the North Island and South Island, whose member-owners run the New World, Pak'nSave and Four Square stores.
However, Willis did not necessarily commit to a structural separation, saying her party "will not have politicians playing supermarket executive from the Cabinet table."
The policy announced today — if carried out — would be one of the most aggressive moves by political leaders yet against New Zealand's grocery duopoly.
Both major parties are duking it out as cost of living remains a critical issue for voters.
'The copy Nats are at it again' - Winston Peters
Labour announced, minutes before National, its plan to make it illegal for big companies to "charge excessive prices for essential goods and services".
Party leader Chris Hipkins was scathing of the National proposal, saying Willis' announcement amounted to a commitment to a review.
"New Zealanders can't eat a review," he said.
"They've been talking about it for three years. They haven't done it. Now they're proposing another review. New Zealanders won't get a better deal from another review.
"It's time to take more decisive action so that New Zealanders actually get a better deal."
Meanwhile the Greens have proposed setting up a state-backed competitor, KiwiMart.
Whereas NZ First had also announced a policy to structurally separate Foodstuffs, including forcing the break-up of Pak'nSave, New World and Four Square.
Party leader Winston Peters was quick to take credit for National's announcement.
"It’s hard to be humble when the Copy Nats are at it again," he said in a tweet.
"They have just cut and pasted our policy to break up the supermarket duopoly and give the Commerce Commission more teeth."
Peters said the "Copy Nats list", citing National's "Baby Boost" KiwiSaver policy.
"It’s good to see the National Party can be guided by experience and common sense. They’re welcome," he added.
Stacks supermarket opened just a couple of weeks ago in Auckland's Sylvia Park, New Zealand's largest mall. (Source: 1News)
A re-elected govt would begin moving within 100 days
Willis said National would amend the Grocery Industry Competition Act within its first 100 days in a re-elected government to let the Commerce Commission "determine whether the separation can be delivered in a way that leaves consumers better off".
That would include consulting affected businesses, owner-operators, suppliers and consumers, developing an implementation plan and making a formal recommendation.
National has cited analysis estimating restructuring Foodstuffs could be worth around $200 to $1320 a year per household by full rollout, depending on type and income.
"That's real money back in the pockets of New Zealanders. It could also see $12.6 billion in consumer benefits over 20 years, with grocery prices projected to fall by around 3.5% lower than they otherwise would be one year after separation," Willis said.
"More competition means supermarkets have to work harder for every customer, on price, specials, range and service. That is how shoppers get a better deal.
National's figures come from a cost-benefit analysis by economics consultancy Sense Partners, commissioned by the Ministry of Business, Innovation and Employment.
The consultants wrote in the report that the net result was sensitive to what happened to supply chain costs after a split. Under the timeline in the Sense Partners report, retail separation would begin in 2029 and take full effect by 2035.
According to the report's estimates, prices would be around 3.5% on average below where they would otherwise be in the first year after Foodstuffs was separated.
The authors put household gains in that first year at $110 to $730, with the $200 to $1320 range applying by 2035 and only once income growth was included.
But the consultants said in the report the outcome hinged on how much supermarket supply costs rose once warehousing, buying and back-office functions were duplicated.
Their central estimate of a $2.9 billion net benefit over 20 years assumed costs rose 1%.
At 2%, the benefit to consumers fell to $920 million.
Above that, the report said, a split would cost more than it returned.
Authors said they hadn't consulted industry, and that there might be "very high, or even insurmountable" legal and implementation hurdles outside the scope of their work.
The report also found that a hard-discount chain such as Aldi entering would cut the benefit of a Foodstuffs split by about 30%, because prices would already be lower.
The report also states that most of the $13.1 billion gain to shoppers would come from a $10.6 billion drop in supermarket operating profits. Foodstuffs stores are owned by their operators, who would keep their stores under National's plan.
Break-up has risks and benefits not guaranteed - Willis
While Willis said National would "pursue" a separation and committed to a review by the Commerce Commission, she did not commit to a separation herself.
She said: "Structural separation of this scale has risks and must be done carefully.
"Whether a separation would deliver net benefits for consumers would depend on how it is implemented and what happens to supply-chain costs.
"That is why National will not have politicians playing supermarket executive from the Cabinet table, whether by ordering a breakup themselves or spending billions of taxpayer dollars trying to run a supermarket.
Under the new fast-track system, qualifying supermarkets could be consented in under a year. (Source: 1News)
"The Commerce Commission has the independent expertise to test whether the benefits for shoppers outweigh the costs and to work through how any separation would operate in practice. There is a very high bar for this kind of intervention and National is not pursuing structural separation in any other sector.
"This will be a supermarket-specific process under the Grocery Industry Competition Act.
"However, after years of reviews and incremental reform, it’s clear the status quo isn’t working. It’s time for change.
National: Owner-operators not being targeted by policy
National made special mention of Foodstuffs owner-operators — the individual owners of New World, Four Square and Pak'nSave stores — in its announcement.
The issue was raised after a damning inquiry into Australia’s supermarkets. (Source: 1News)
“This policy is aimed at the uncompetitive structure individual Kiwi supermarkets are currently operating in, not the owner-operators who are hardworking people striving to do good by their community," Willis said.
“No owner of a Pak'nSave, New World or Four Square will be forced to sell or re-brand their business.
"Existing owner-operators would retain ownership of their businesses, continue to operate under their existing brands, and remain part of a larger group with the scale and infrastructure to support their store."
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