2degrees founder Tex Edwards behind audacious bid to break supermarket duopoly

Friday, 24 September 2021

Commerce Commission chairwoman Anna Rawlings presents the commission's draft report into the grocery sector in July.

Tex Edwards, the maverick entrepreneur who founded 2degrees and broke Spark and Vodafone’s duopoly over the mobile market, is understood to be leading a charge to do the same again with groceries.

Edwards is a key figure behind a submission filed with the Commerce Commission by an organisation identified only as “Northelia version 1.4” that set out a proposal to set up a third supermarket group.

Northelia said in its submission that it would be able to “mobilise a capital base in excess of $1 billion” to create a new supermarket chain, if the watchdog pushed ahead with market reforms and forced Countdown and New World and Pak ‘n Save owner Foodstuffs to sell 200 of their stores.

2degrees co-founder Tex Edwards once lodged bread and Sim cards with the Ministry of Business, Innovation and Employment as a deposit for 4G radio spectrum (file photo).

Edwards previously expressed ambitions for the supermarket industry in 2016, when he said Auckland's council-owned golf-courses should be dug up to support a third supermarket operator for the city.

Supermarkets have found themselves under increasing scrutiny in recent months.

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The commission is carrying out a market study of the supermarket industry and has suggested forcing Foodstuffs and Countdown to separate their wholesale and retail operations, and to sell stores, as two of the possible options to improve competition.

Northelia describes itself in its submission as “a group of experienced ‘done it before’ operating entrepreneurs, who have worked in the supermarket industry”.

The Commerce Commission is currently carrying out a market study of the supermarket industry.

It says it is “submitting in stealth”, because, its executive, investors and board needed “day jobs”, but offered to meet the commission to set out its intentions.

Edwards, who is currently a director of Hawaiki Cable, which operates a $445 million subsea internet cable connecting New Zealand to Australia and the United States, still lists four years’ work experience at Countdown’s Howick store in the 1970s on his LinkedIn profile.

He lists his duties there as including fetching trolleys, packing groceries, filling shelves and mopping floors.

Northelia was the name of the business set up by African telecommunications firm Econet in 2000, represented by Edwards, that later morphed into 2degrees.

Edwards was understood to not be in a position to comment because of personal commitments.

But sources close to Edwards confirmed his involvement in the supermarket submission and a new anonymous lobby group, Monopoly Watch NZ, that has been polling the public on its attitude to supermarket industry reforms.

Tex Edwards overcame doubters to establish 2degrees, but doing the same in groceries will require some unprecedented regulatory interventions, Northelia acknowledged.

Northelia’s submission says its supermarket chain would be New Zealand-owned, be supplied by an “independent competing open access wholesaler” and use world-class technology.

But it first required a “satisfactory intervention” from the Commerce Commission including a network of at least 125 supermarkets it could buy at non-monopolistic prices.

The submission also indicates the group would need access to an existing chains’ distribution centres while it became established, and that it acknowledged the interventions it was seeking had no global precedent.

It carried hallmarks of Edwards’ past regulatory appeals with flamboyant language, urging the commission “not to accept pyrrhic competition solutions and accept the noise of maintaining in perpetuity the dominance of the series of regional and suburban monopolies”.

Each page was stamped “urgent”.

“This report is dedicated to the 43,356 minimum wage workers in the two incumbent monopolies who sweat, worry, grunt, stretch, exhaust, smile, laugh, politely answer, and work damn hard to serve the public and navigate lockdowns and customer confusion,” it concludes.

Edwards’ past policy appeals to officials over telecommunications industry matters often amused as well as turning heads.

In 2013, while chief project director at 2degrees, he lodged a “deposit” with the Ministry of Business, Innovation and Employment for 4G radio spectrum in the form of bread and Sim cards.

Two years later he included his mother’s recipe for chocolate chip cookies at the end of a 37-page submission to the Commerce Commission.

Telecommunications Users Association chief executive Craig Young said Edwards had been the “trailblazer” in bringing about three-way competition in the $2.7b mobile market.

“I don’t think you can downplay his contribution on that.”

Edwards’ single-mindedness had contributed to his success, while his sometime usual way of getting his points across had garnered media attention and possibly led to the large firms he was targeting not taking him as seriously as they otherwise might, he agreed.

There were some parallels between the telecommunications and groceries markets, he said.

Food and Grocery Council chief executive, former National Party MP Katherine Rich, described Northelia’s submission in a LinkedIn post as “an interesting development”.

Rich said she did not know the identity of others involved in the venture.

The completion of the Commerce Commission’s market study has been pushed back from November until March, at the request of the commission.