Minister ordered supermarket study done faster

Tuesday, 12 January 2021

The Commerce Commission is carrying out an inquiry into prices and a lack of competition in NZ's supermarkets. (First published November 2020)

Government officials thought the Commerce Commission would need 16 months to complete a market study into supermarket industry, before being told by Commerce Minister David Clark to get it done faster.

Clark made good on a Labour election manifesto commitment in November when he announced the study into the $21 billion groceries industry, saying groceries were one of people’s biggest expenses and that the Government wanted to make sure prices were fair.

A briefing to incoming ministers prepared by the Ministry of Business, Innovation and Employment said the study was expected to take at least 16 months.

That would have meant the commission’s next market study, into the building supplies industry, would not have been able to begin until about June next year.

* Countdown posts $20m rise in net profit as watchdog advances its market review

The release of the Commerce Commission’s study into New Zealand’s supermarkets has been delayed until May 2022.

* Why Countdown and Foodstuffs may be offering better deals next year

* NZ too small for another supermarket to break Foodstuff and Countdown duopoly

But Clark instead ordered the commission to complete the supermarket study and finalise any recommendations within 12 months, by November 23, potentially clearing the way for the building supplies study to get under way by the end of the year.

A Cabinet paper prepared by Clark indicated the deadline had “some risks” but said he was confident the study could be carried out by the commission in 12 months.

The risks could be mitigated if the watchdog focused its attention on “key product and supply lines that will have the most value”, he said.

Industry insiders expect one result of the review will be a regulated industry code similar to Australia’s Food and Grocery Code of Conduct or Britain’s Groceries Supply Code of Practice, to protect suppliers from Countdown and Foodstuffs’ market power.

Commission chairwoman Anna Rawlings said in December that the purpose of the market study was to look at whether competition was working well for consumers, and if not, what could be done to improve it.

Submissions on a preliminary paper setting out the commission’s approach to the study close on February 4.

– An earlier version of this story incorrectly reported that the market study had been delayed and would take 16 months to complete.