Release: Support for new retailers to increase supermarket competition

Labour will assist new retailers to set up business in New Zealand as part of its drive to cut the price of groceries and increase competition.

“We know that it’s tough right now for many people, and the high cost of food isn’t helping,” Commerce and Consumer Affairs spokesperson Duncan Webb said.

“The inquiry we ordered into competition in the grocery business showed the two big companies who control the grocery industry in New Zealand were making excess profits of around $1 million a day.

“We need to go further than we have to date to force the type of competition shoppers overseas experience.

“If we’re returned to Government, Labour will back credible companies wanting to get into or expand into the New Zealand grocery business.

“This could include finance, making sure land is available, regulatory changes, incubating innovation and accelerating competition.

“Healthy, affordable food is essential for Kiwi families. Our reforms have already seen new competitors in the grocery market driving down prices on key products.

“This includes appointing a Grocery Commissioner as watchdog over the supermarket duopoly and stopping the two major retailers tying up the best sites for supermarkets to keep competitors out of the market.

“The behaviour by Sanitarium last week shows why the existing players cannot be trusted to sort the market out. It refused to supply Weetbix to the retailer selling it cheapest – grocery challenger The Warehouse – citing supply shortages. Those claimed shortages don’t appear to be affecting supplies to the big supermarkets.

“Labour is committed to doing everything it can to cut the price of food, including taking the GST off fruit and vegetables. Getting more competition into the market will help even more,” Duncan Webb said.

Actions taken by the Labour Government so far include:

  • Introducing a Grocery Code of Conduct imposing stiff fines (the greater of 3% of turnover or $3 million) if they don’t treat suppliers fairly.
  • Appointing a Grocery Commissioner.
  • Banning restrictive land agreements that locked new entrants out of locations for new supermarkets.
  • Making unit pricing mandatory, so it’s easier to compare the prices of different products at the supermarket.
  • Requiring major grocery retailers to open wholesale offerings, including home brands, to other grocery retailers so they have direct access to a range of wholesale groceries at competitive prices.