Govt fleshes out plan to improve supermarket competition

Focus Live: PM Ardern and David Clark on supermarket regulatory measures. Video / NZ Herald

The Government has detailed how it will make supermarket giants enable competitors to buy goods from their wholesale arms.

The idea is to give smaller retailers and new market entrants a leg-up, by helping them source and sell a wider range of groceries at better prices.

Commerce and Consumer Affairs Minister David Clark in late May said the Government would start working on a regulatory backstop to make big supermarket companies, like Foodstuffs and Woolworths, provide wholesale goods to competitors at a fair price.

Today he provided more details about the new rules.

“Under these changes the existing duopoly will be required to negotiate wholesale offerings to their competitors on commercial terms,” ​​Clark explained.

“However if those prices are not what we would expect in a competitive wholesale market the new Grocery Commissioner will be able to impose additional regulation to force fairer prices.

“Ultimately if these interventions don’t deliver a fair deal, new regulations can be utilized to require the major retailers to provide wholesale supply at certain terms, including price and range.”

Clark said the new system would incentivise the major supermarkets to “play fair”.

If they did not, the Commerce Commission could use powerful new tools to make them do so.

“Supermarkets are well advised to lock in good-faith wholesale arrangements on their own terms, or we will have no problem stepping in to make it happen,” he said.

“The grocery sector needs to change, so that competing retailers – whether they are independent dairies, smaller chains, or a new entrant – can offer a wider selection of products at competitive prices.

“Alongside these improvements to wholesale access, the Government is also building flexibility into its approach to a collective bargaining exemption for grocery suppliers.

“Many suppliers, particularly small ones, are unable to effectively negotiate terms of supply with the major grocery retailers on their own. This exemption will allow greater scope for them to do this collectively, helping to address imbalances in bargaining power.”