Consumers could end up worse off with higher prices and less choice if the government tries to free up the wholesale grocery sector, according to an academic.
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Consumer New Zealand has started a petition to get the government to set up a state-owned wholesaler or ensure access to smaller chains and new entrants as one option to improve competition in the grocery sector.
But Auckland University of Technology economist Richard Meade said there was evidence that interference in wholesale arrangements did not necessarily deliver cheaper prices.
"It may sound perverse ... but if you introduce retail operators who are not integrated with the wholesalers then it makes them more likely to raise their prices."
He said the call for a state-run grocery wholesaler was neither sensible nor desirable.
"Our experience of state-run commercial activities is a good lesson in why they are better run by consumer-focused operators that fail if they get things wrong."
Meade said the Commerce Commission's recommendations to prevent land banking by the two established operators and to make more land available for new grocery stores by removing planning restrictions were balanced and could be useful.
But he noted New Zealand's small population and population density worked against the appearance of any significant new nationwide operator such as the low cost German based Aldi, which has captured a significant part of the Australian market.
However, he said the appearance of the US bulk retailer Costco, soon to open in Auckland, might offer some competition to the big two: Countdown and Foodstuffs.
"Having Costco enter should be a pretty good lesson on what added competition might do for this sector, whether that can be rolled out nationwide remains to be seen," Meade said.
"But fundamentally you can't have a third supermarket operator if it's not profitable after the set up costs, then you can't do much better than the duopoly."
Meade said the Warehouse's unsuccessful venture into grocery retailing in the mid-2000s suggested there might not be enough profit in the market for a major third operator.
