Consumer NZ has launched a petition calling on the government to do more to deliver "a fairer price" at the supermarket checkout.
Photo: Unsplash / Tara Clark
In a petition to Consumer Affairs Minister David Clark, it asked the government to go beyond the Commerce Commission's recommendations and set up a state-owned wholesaler or provide an access regime to smaller chains and new entrants.
Consumer New Zealand chief executive Jon Duffy said supermarkets were are taking "more than $1 million in excess profits" from shoppers every day.
"These profits are twice what they should be. We need more competition to drive down prices and give New Zealanders a fairer price at the checkout."
Duffy told Morning Report in order to fix the supermarket duopoly, the government needed to play a larger role.
He said despite the profit that could be made in New Zealand's competitive supermarket sector, over the past 20 years the country had not seen any new entrant.
Duffy said this was because of the lack of access to reasonably priced wholesale groceries.
"We think there's a role for the government here to either enter the wholesale market itself and set up a wholesaling chain, which has a whole lot of advantages particularly when it comes to introducing sustainability into the supply chain," he added.
The watchdog also suggested the government have a system where the existing supermarkets provide wholesale services to other players.
Duffy said this could be a more practical solution, and that hard regulations were needed to ensure supermarkets played fairly with the smaller players.
Countdown spokesperson Kiri Hannifin said in a statement they were actively working on the recommendations put forth by the Commerce Commission, including around voluntarily opening up wholesale supply.
She said while wholesale was not something they were currently set up to do, and it was extremely complex, they were well aware of the commission's expectations.
Photo: 123rf.com
Hannifin added that it disagreed with the Consumer NZ's commentary around excessive profits.
"The fact is that once we pay tax, our net profit is 2.4c in the dollar, or $2.40 on a $100 shop", the statement said.
"It's misleading to suggest that we have control over price inflation and the kind of cost increases all of us are facing at the moment. We pay suppliers 63c in the dollar, and in New Zealand, 15 percent is added on top of all food."
Duffy said there was no easy answer to fix the competition issue but in order to unravel 20 years of duopolistic behaviour, hard choices needed to be made.
"We are dealing with essential services here. We dealing with the ability of New Zealanders to put food on the table so we take this matter very seriously", he said,
The Commerce Commission report
Released in March, the Commerce Commission's report highlighted that New Zealand's retail grocery prices appeared comparatively high by international standards and the profitability of major retailers appeared high.
To tackle this, it recommended that more land be made available for new grocery stores, by making changes to planning laws and banning the use of restrictive land covenants.
It also called for the improvements to be made to the wholesale supply of a range of groceries at competitive prices, by requiring the major retailers to consider any requests they receive to supply competitors.
Commerce and Consumer Affairs Minister David Clark said he had not ruled out going further than the Commerce Commission's recommendations.
He told Morning Report the government accepted the commission's findings and would announce its repines at the end of this month.
A government backed wholesaler was unlikely, he said, but he would give further consideration to a "regulatory backstop". He said he had asked officials to have a look at the option of regulation on wholesale supply.
National wants the government to crack on with efforts to rein in the big supermarket chains, beginning with the Commerce Commission's recent recommendations.
National's leader, Christopher Luxon, said the government should first introduce a strong code of conduct with an enforcer.
"We've got a duopoly in this market. We need to make sure that it's actually competitive and we should be creating the mechanisms that do that through the Commerce Commission.
"Take those recommendations, implement them strongly; if they're not working go back to it again and we put tougher recommendations in."
