By Rebecca Styles
Research Lead | Hautū Rangahau
The Government will appoint a Grocery Commissioner and are consulting on a Grocery Code of Conduct, the Commerce and Consumer Affairs Minister David Clark announced on Wednesday.
The Grocery Commissioner will be a referee for the supermarket sector, keeping the duopoly honest, and proactively blowing the whistle where it suspects there is a problem, Clark said.
The Grocery Commissioner will also ensure the Government’s reforms for the sector will be implemented so “Kiwis are getting a fair deal at the checkout”.
The appointment of the Grocery Commissioner is expected to happen early next year, after the Grocery Industry Competition Bill has passed through Parliament.
A Grocery Code of Conduct is also in the works. The code will ensure a level playing field between supermarkets and suppliers.
Consumer NZ will provide feedback on the Code of Conduct to ensure it delivers for suppliers and consumers.
Wednesday’s announcement covered two of Consumer’s recommended fixes for the supermarket industry.
Two other wins have been announced in recent weeks: consultation on the introduction of mandatory unit pricing, and legislation has passed to stop supermarkets placing restrictive covenants on land use and exclusivity covenants in leases.
While these changes are steps towards fairer prices for consumers, it’s going to take a while to see a difference at the till.
Consumer chief executive Jon Duffy said the Government’s recent announcements are unwinding 20 years of duopoly power.
“What we’re witnessing are the building blocks of a more competitive grocery sector and this will take time, perhaps even years.”
What are restrictive covenants?
Covenants have been used by both supermarket giants to restrict competitors setting up stores nearby.
The Commerce Commission’s market study in the supermarket sector found grocery retailers used more than 190 covenants on land, or in leases, to limit the availability of sites for competitors.
“We have officially put an end to the anti-competitive land wars which have been silently hampering competition in the grocery sector for years,” Clark said.
The new law also gives greater powers to the Commerce Commission to gather information about contracts and covenants to ensure grocers are playing by the rules.
Foodstuffs North Island and South Island (owner of New World, Pak’nSave and Four Square) and Woolworths (owner of Countdown and Fresh Choice) said in its submissions on the legislation that they’ve made plans to remove covenants.
