This week saw more action taken as part of the Government’s response to the retail grocery market study.
Following the shake-up announced in May, the Government will establish a Grocery Commissioner to hold the sector to account and ramp up competition, Minister of Commerce and Consumer Affairs Dr David Clark announced this week.
New Grocery Commissioner
A Grocery Commissioner to hold the sector to account and ramp up competition, the Minister of Commerce and Consumer Affairs Dr David Clark announced this week. The new industry watchdog will be based in the Commerce Commission, and will help keep pressure on the grocery sector, by providing annual state-of-competition reviews.
“Global factors continue to drive up the cost of living around the world and high grocery prices are making it hard for New Zealanders right now which is why the Government has taken a range of steps to take the pressure off immediately while also tackling the underlying problem in the supermarket sector which is lack of competition,” David Clark said.
Clark said the current situation has the duopoly making “roughly twice what a reasonable return on capital would be. So effectively, half of what they’re making now is what the Commerce Commission has suggested would be a reasonable return on capital.”
“The Grocery Commissioner will be a referee of the sector, keeping the supermarket duopoly honest and blowing the whistle where it suspects there is a problem. They will maintain a close eye on how Government’s reforms for the sector are implemented and ensure Kiwis are getting a fair deal at the checkout”, he said.
“By placing this role in the Commerce Commission it will have access to a wealth of information when it comes to economic and competition regulation, fair trading, consumer protection and the grocery sector itself.”
The legislation to establish the role is expected to be introduced to parliament later this year and the first Commissioner will be appointed following the Bill’s passing. It follows the passing of legislation last week banning major supermarkets from blocking their competitors’ access to land to set up new stores.
Draft Code of conduct
A mandatory code of conduct between major grocery retailers and their suppliers was also released for consultation. Clark said the purpose of the code is to ensure suppliers get a fair deal. The draft paper was developed with input from representatives from major grocery retailers and groups representing suppliers and consumers. It will be open for feedback for five weeks.
“Historically, there has been an imbalance in the bargaining power major grocery retailers have over their suppliers. The Grocery Code of Conduct will address this by preventing the major retailers from using their power to push costs and risks onto those suppliers. It will ensure that this relationship is conducted fairly” Clark said. “This is especially important for the small, artisan brands and the emerging start-ups that want to get their products on shelves. We want them to feel empowered and we also want consumers to have the added variety when they go to the supermarket,”
Clark said the grocery sector environment had “not been conducive to fair practice, and we are expecting it will be from now and into the future”.