Nicola Willis keeps supermarket break-up in back pocket for now

Wednesday, 27 August 2025

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Economic Growth Minister Nicola Willis has announced a series of measures that she says will create an “express lane for new supermarkets” to set up shop.

The moves come almost three years to the day after former Prime Minister Jacinda Ardern promised to boost competition through a wholesale regime that she said would “unlock the stockroom doors” of Woolworths and Foodstuffs for rivals.

As expected, the changes outlined by Willis include allowing businesses to use the fast-track regime to apply for consents to build supermarkets, and reforms designed to make it harder for large businesses to use so-called predatory or “pocket” pricing to undercut competitors before they become established.

However, the Government is keeping the option of forcing Foodstuffs and Woolworths to sell some of their supermarkets to make way for a new rival in its back pocket for now, while continuing to investigate the option.

Willis said new rules on predatory pricing could effect other industries where the practice has been alleged, which include petrol retailing.

Any supermarket developer will be allowed to apply for consents under the Fast-track scheme as long as they meet the criteria, which include improving competition nationally or regionally. A fact sheet provided by Willis’ office said it was hard to see how a current major supermarket could argue this, although it might be possible in some cases.

Cabinet was “lined up” on the policies, Willis said.

Sue Chetwin, spokesperson for the Grocery Action Group lobby group, said Fast-track planning for supermarkets would not be enough to bring down prices and “only bold, decisive structural reform” would deliver genuine relief at the checkouts.

“The time for half-measures has passed. Meaningful, enforceable structural changes — alongside streamlined planning processes for newcomers — are the only way to ensure genuine competition,” she said.

Anti-monopoly campaigner Tex Edwards said the changes that had been proposed could improve competition eventually “but not today or tomorrow”.

Fellow competition advocate Ernie Newman said Willis was attempting to fix “the wrong problem”.

“New Zealand’s core issue is not having too few supermarkets, but having supermarket ownership concentrated in too few hands.”

Labour finance spokesperson Barbara Edmonds accused the Government of dithering and “tinkering around the edges” with measures that would not make any immediate difference. “National talked a big game on cost of living and haven’t delivered,” she said.

The Ministry of Business, Innovation and Employment (MBIE) called for information earlier this year from businesses that might be interested in setting up a third nationwide supermarket group.

It received 24 responses from a mix of existing companies, prospective competitors, advocacy groups and other interested parties.

“Some respondents argued that the only way to truly improve supermarket competition is for the Government to forcibly break up Foodstuffs and/or Woolworths due to their entrenched market positions,” Willis acknowledged.

But she said other matters were raised, such as restrictive council zoning and resource management and building consenting issues which meant it took an average of 18 months to get resource consent to build a new supermarket with the process costing about $1m.

Woolworths reported it spent more than $3m and it took four years to get consent for a new supermarket in Halswell, Christchurch, while under a Fast-track system consenting could take under a year, according to information provided by Willis’ office.

The Government was conducting a cost-benefit analysis on “specific options for restructuring the duopoly” and that would inform future advice Willis intends to take to Cabinet on whether further legislative changes were required to improve competition, she said.

But she said a decision to restructure the supermarkets was not a decision that would be taken lightly.

“It would be a significant intervention that would carry costs and risks that would need to be rigorously weighted against the potential benefits to shoppers.”

It was disappointing that some international retailers such as Aldi and Lidl opted not to take part in the MBIE process, she said.

“It’s possible that the changes we are announcing today will encourage them to take a more serious look at New Zealand.”

The Government had been in talks with Costco about its plans to open more stores in New Zealand, Willis said.

“Costco has confirmed the Government’s express lane consenting approach will assist with their future expansion plans. They have also confirmed they can see opportunities for new stores to be built in New Zealand in the next few years.”

Other measures announced by Willis today are streamlining building consents for new supermarkets by selecting a single building consent authority to manage them, and a directive to the Overseas Investment Act to encourage entrants.

A selection process was under way regarding which consenting authority would carry out the new role, with confirmation expected before the end of the year.

The Government would also explore options for potential importers of food to bring new product lines into the country, Willis said.

She made clear that could involve loosening or adapting existing rules on food labelling.

Willis indicated in March that the Government would be prepared to break-up Foodstuffs and Woolworths if it could not attract a third supermarket company into the market, and said in May that it needed to keep all options on the table.

However, she appeared to dial-down expectations of any immediate radical structural reform last month, despite admitting then that overseas interest in setting up a new nationwide supermarket group had not been as high as she would have liked.

What the Government says it was told about why it’s hard to set up supermarkets in NZ

Key themes included:

Restrictive council zoning

Resource management and building consent issues

Limited access to suitable sites

Difficulty accessing competitively priced groceries from domestic suppliers

Regulatory barriers including consenting time frames and food labelling requirements for imported foods

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