2 Oct 2023

Labour commits to do 'more' on supermarket duopoly

2:47 pm on 2 October 2023
Labour's consumer affairs spokesperson Duncan Webb says if re-elected the party would back credible companies wanting to get into or expand into the New Zealand grocery sector, to improve competition.

Labour's Commerce and Consumer Affairs spokesperson Duncan Webb Photo: RNZ / Marika Khabazi

Labour is promising to help new supermarket retailers enter the market to help boost competition in the sector dominated by a duopoly.

Details on the plan remain vague, with the party suggesting a new supermarket chain "could" be given loans or the government could help secure land for them.

It follows news Sanitarium had restricted supplies of Weet-bix cereal to The Warehouse stores, while supplies continued to be provided to the main supermarket chains.

Commerce and Consumer Affairs spokesperson Duncan Webb made the promise at Auckland's City Mission, standing in for leader Chris Hipkins who had tested positive for Covid-19 over the weekend.

Webb said the policy on supermarkets was a much more proactive step than what had been done in the past.

"We have been talking to parties that want to enter the grocery industry but there are barriers, and we want to make sure we can actively remove those barriers and give new entrants the assistance they need ... we've said that we could remove regulatory impediments, we could provide financial assistance, or we could actively look for locations where they could locate their new businesses."

He clarified to reporters the financial assistance could mean loans, rather than grants, and the party "wouldn't be handing out money hand over fist".

"What we have is a duopoly where the market's been sewn up by two major players ... before we look at our competition law we want to actively promote a new entrant, a new entrant who's got the backing and ability to really shake up the market."

The loans could be at lower interest rates to help a new supermarket enter the market, but Webb was adamant the taxpayer would not left be worse off, with the support on offer being "at worst, fiscally neutral".

The government has already taken steps to crack down on land covenants which block new entrants from building a new supermarket, but Webb said there were further ways to help free up land. This could include freeing up some of the Crown's "significant land holdings" around New Zealand, or using fast-track consenting, Webb said.

Labour and National have both promised to continue with fast-track consenting, although the latter would do this via a return to the Resource Management Act until new replacement legislation is drafted to replace it, after scrapping Labour's approach.

National's leader Christopher Luxon said his experience in the sector had shown him the value of having a Grocery Commissioner with effective powers, and a code of conduct, but taxpayer money should not be used to prop up or support a new entrant into the market.

"We'd also love a third player to come into the market place but the way that you do that is you actually make it easier for them to do that and our overseas investment office process is very torturous, also our resource management act doesn't make it easier as well, or attractive."

Christopher Luxon and wife Amanda cast their vote in the Botany electorate on the first day of advance voting.

Christopher Luxon speaks to media after voting. Photo: RNZ / Tim Collins

He supported Labour's approach to the Weet-bix stoush however, saying the Grocery Commissioner should thoroughly investigate the matter.

"That's the point of a Grocery Commissioner, that's the point of actually having a strong code with some proper teeth, is to actually burrow in and find out what's going on. So I'm very supportive of them doing a full bore review of what's going on there," he said.

"If it's still not working, we'll go further, down the road."

Webb said the actions of Sanitarium "would mean that kids' breakfasts became more expensive and I think that's unethical".

"The question of whether it's legal or not is one that the Commerce Commission is looking at now, but I don't think that taking Weet-bix off the shelves of the lowest-priced retailer is an action that a responsible producer should take."

He said the Commerce Commissioner had spoken to Sanitarium and asked for an explanation.

"The best outcome would be for Sanitarium if there is a supply shortage to distribute that across all of the retailers rather than just one ... tightening it up [the law] so that you can't cut off one retailer to the benefit of others is something I'd be interested in considering."

He said Labour had been talking to internet-based supermarket Supie about delaying requirements for unit pricing because they were having trouble applying the new requirements (which Labour imposed) on their online platform.

"That's just one example of the kind of regulations that we could look at," Webb said. He denied the party's willingness to remove regulatory barriers meant there was red tape that needed to be cut.

"The red- the regulation is there for a reason. Obviously we want a proper for example consenting process, but when we can speed things up, we will."

He said they had not "picked a favourite" among potential incoming supermarkets - including from overseas players - and planned to "see all of the opportunities that are out there and pick the best one".

He said this would add to the Labour government's actions so far. These included appointing the Grocery Commissioner, setting up the code of conduct, work on making price labelling more consistent, and tackling a lack of competition for wholesaling.