Supermarket sector competition reports are like Groundhog Day. Photo: 123RF
- Supermarket sector competition reports like Groundhog Day
- Grocery Commissioner concerns barely changed from last year
- Commissioner consulting on tougher measures to protect suppliers
- Supermarket chains back current code, digesting new regulator report.
Analysis - Compare the following two statements:
"Some of the signs I am seeing is that suppliers are very fearful of repercussion, there's a lack of trust."
And...
"My concern is that the power imbalance between the major supermarkets and small suppliers creates a reluctance among suppliers to push back."
They are both from Grocery Commissioner Pierre van Heerden - the first from August 2024, the second June 2025.
The nine months between the statements have produced another round of research, recommendations, and call for submissions with the aim of getting better deals for suppliers and consumers, forcing better behaviour and greater competition between the dominant Foodstuffs and Woolworths chains.
The Commerce Commission's original market study was ordered in 2020, the final report published in March 2022, and law changes came into effect in 2023.
The regulator looked to assist the transition through educating suppliers, offering them sample contracts to put to the supermarket chains, setting up a whistle blowing facility for those wanting to report bad behaviour, and a stern message to Foodstuffs and Woolworths to behave and play nice or risk the Grocery Commissioner's wrath.
And yet the latest report concludes much as the first report - the grocery sector is not competitive and the duopoly keeps throwing its weight around, while the small suppliers remain intimidated.
Grocery Commissioner Pierre van Heerden. Photo:
Education first, enforcement second
The Grocery Commissioner has sought to engage with the two big chains and change attitudes. They have conceded most of the easy ground such as ending land banking, accepting the mandatory code of conduct, and agreeing to look at freeing up their wholesale arrangements.
But clearly the original reforms have failed to cut through, hence the move to now strengthen the Grocery Supply Code to stop retailers charging suppliers for stocking shelves or for past-their-best by date groceries in the retailer's control; require retailers to reimburse suppliers if they buy stock at promotional prices, but later sell them at higher prices; and prohibit retailers from retaliating against suppliers who assert their rights under the code.
van Heerden told RNZ that he had the resolve and the resources to take legal action when justified, but that bringing about change in the sector takes time.
To date, the regulator has gone for the relatively low hanging fruit of misleading prices and advertising.
The challenge now is to bring about real change in supermarket actions. A prosecution or two may be needed.
Political salvos
The wild card in the supermarket debate is what will the government do.
Finance Minister Nicola Willis entered the debate verbal guns blazing in March saying the government was looking at all options to bring greater competition to the grocery sector. She said that could be done either by encouraging a major new player into the sector or possibly a 'nuclear option' of breaking up or restructuring the existing chains.
The government has issued a formal request for information (RFI) to accelerate improved competition, and advise on potential regulatory and legislative changes, and whether structural changes would be needed.
That was an option which the Commerce Commission shied away from as being too difficult, commercially and legally.
Going after supermarket chains assessed as profiteering from consumers reads well in headlines, but will the talk be turned into a walk?
Or will it be down to van Heerden to make progress slowly, one supermarket aisle at a time?
Gyles Beckford is RNZ's business editor.
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