Consumer NZ welcomes supermarket investigation

Commerce Commission to undertake market study of supermarket industry.

20nov consumer nz welcomes supermarket hero

Consumer NZ is welcoming the government’s announcement the supermarket industry will be investigated in a market study to be done by the Commerce Commission.

Consumer NZ chief executive Jon Duffy said his organisation had been campaigning for an investigation into the supermarket sector and the announcement was good news for shoppers.

“New Zealand has one of the most concentrated supermarket industries in the world, dominated by two players. When you’ve got a market like this, there’s a big risk that consumers will end up paying higher prices because the usual competitive pressures don’t apply,” Duffy said.

Despite the high degree of concentration, the industry hadn’t been subject to any significant scrutiny from regulators.

“We need a wide-ranging investigation to gauge the degree to which the stores’ market power is affecting how much consumers pay,” he said.

Consumer NZ wanted the investigation not only to look at supermarkets’ contracts with their suppliers, but also the stores’ pricing practices and promotion of their private label brands. Private labels – the supermarkets’ own brands – offer the stores’ higher returns but mean other brands can be pushed off shop shelves.

“Supermarkets have a huge influence on the food supply chain, from the farm gate to the dinner table. Their practices not only affect what choices are available to consumers – and which brands end up on shop shelves – but also what we pay at the checkout. Consumers have the right to know whether this market power is being misused.”

In September, Consumer NZ made a complaint to the commission asking it to use its market study powers to investigate levels of competition in the industry. It also asked the commission to investigate supermarkets’ price promotions.

“The stores employ a confusing array of price promotions, which risk misleading consumers about the discount they may be getting. Based on our research, we think there are good grounds to question whether some of these discounts are genuine.”

The commission is required to complete its market study by 23 November 2021.

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Mandy T.
23 Nov 2020
It's just not right!

My husband and I have lived in the UAE for over 10 years and we regularly comment on how it is we are able to buy NZ export quality meat in the UAE cheaper than we buy NZ meat when we're back home on holiday? Something's fishy.

Birgit B.
22 Nov 2020
Thank you for paying attention

Thank you for the effort to investigate the supermarkets.
I was always wondering why the same supermarket chain e.g. Countdown prices the same product differently in different parts of Auckland. Seems unfair to consumers who live in more expensive suburbs.

Norman G
21 Nov 2020
Commerce Commission

Do you really think that the Commission will achieve anything at all? It was dopey enough in the first place to allow Woolworths Australia to buy Woolworths here, thus creating the duopoly. We dealt with the then 3 supermarkets as a supplier and obtaining a reasonable margin on our products was far better than now. Woolworths Australia sent over their chief head banger in those days who insisted that no matter we lost money, we had to reduce our prices/margins to them etc. In the end we sold the business as we made a decent profit on land and factory but none on our product. Foodstuffs is more innovative and reasonable in negotiations but that was several years ago. Nothing came of the
Commissions enquiry into fuel pricing and possible cartel and as I said, nothing will come of this. Another outfit that needs scrutiny is the Grocery Council. Ms Rich is being all righteous on this enquiry but, according to reports, has been super successful in blocking any requirements for manufactured groceries to include traffic lights or similar information re salt, sugar, additives etc. on their labelling. However, keep up the good work.

James B.
21 Nov 2020
Commerce Commission

Compared to the ACCC what passes for a Commerce Commission in NZ is a waste of space and an abysmal failure. I sincerely believe that this latest nonsense is another 'government' feel good project that will end after a year with no major accomplishment by a complicit Commission. I love the way they have their office solicitors sit in on their decision making processes so they can claim legal and professional privilege that even stymies the Ombudsman from looking further into their nonsense.

Mark H.
19 Nov 2020
Please, keep pressing the Commerce Commission for real benefits to poorer households

The Commerce Commission has been rather ineffectual. It has produced a number of reports in the last three years which have made little impact on cartel-like behaviours and the transfer of costs to poorer households. I can immediately think of three essential sectors where the outcomes have been very weak: fuel, electricity and banking.

We come off badly if we compare similar reviews in Australia. Their banking review bought real benefits that have not been transferred to NZ despite the majority of banks being Australian-owned.

I don't want this to be another ineffective review that brings no real benefit to the poorest households with few options to avoid the relatively high costs that wealthier households often avoid.

Personally, I would like to see more supermarkets in poorer areas so accessibility improves and the transport costs reduce for beneficiaries. An obvious example of this would be in northern Lower Hutt (Naenae/Avalon or Taita/Pomare).