What Christopher Luxon knew about Commerce Minister Scott Simpson’s grocery link

Commerce and Consumer Affairs Minister Scott Simpson says he will have nothing to do with grocery sector regulation.

Prime Minister Christopher Luxon was aware the minister he put in charge of competition issues has a family member who owns a business in one of the country’s least competitive sectors.

Luxon last week appointed Scott Simpson Commerce and Consumer Affairs Minister and Minister for ACC, after Andrew Bayly resigned from his ministerial portfolios for clutching a staffer’s arm in what he described as an “animated” discussion.

However, the Herald earlier this week revealed Simpson recused himself of decision-making related to the grocery sector, as a close relative owns a supermarket.

“To ensure this conflict is managed appropriately in accordance with the Cabinet Manual, with the Prime Minister’s agreement, Nicola Willis will act as Commerce and Consumer Affairs Minister on all matters related to grocery regulation,” a spokeswoman for Luxon said in a statement.

Commenting further on the matter in person, Luxon suggested he knew about the conflict of interest before he appointed Simpson to the role.

“I was aware that he had a family relation that had a supermarket. Our process worked well, identified the conflict, he raised it, and we put the mitigations in place,” Luxon said.

“Commerce and Consumer Affairs is a really important portfolio. It is more than just supermarket competition.”

While neither Simpson nor Bayly (when he was a minister) are in Cabinet, Willis is one of the busiest and most powerful ministers.

“Nicola and I have been talking a lot about grocery regulation, what we want to do in that space,” Luxon said.

Addressing those at an economics conference at the University of Waikato last month, Willis said she was putting Foodstuffs and Woolworths “on notice” and was willing to “crack down on predatory pricing” and ensure competitors had “fair access to products”.

Speaking to media afterwards, she said she was willing to “do a deal” with any supermarket company eyeing an entrance into the New Zealand market.

She said she was happy to pave the way for a company to disrupt the duopoly that dominates the sector, but did not commit to making any regulatory changes.

“I want to get on and work with a third entrant to get them in the door, and that will need a bespoke arrangement that will be bespoke to that entrant,” Willis said, saying they may, hypothetically, need help with the Overseas Investment Act, access to capital or land, or particular terms around their access to the wholesale market.

“I’m opening the door. I’m saying let’s do a deal. I’m willing to give them the VIP treatment, because you know who wins from that? New Zealand shoppers.”

Willis knew of companies possibly interested in entering the market, but would not say who they were for commercial reasons.

Her comments followed the Commerce Commission spending more than a year investigating the level of competition in the grocery sector.

Finishing its study in March 2022, it concluded competition “was not working well for consumers” and New Zealand grocery prices were high by international standards.

The Labour Government responded by banning supermarkets from using restrictive covenants on land and leases to prevent competitors from setting up shop in certain suburbs and shopping centres.

It introduced an industry regulator, mandatory code of conduct, and compulsory unit pricing on groceries so consumers could easily compare prices.

In 2023, it also created a Grocery Commissioner role, appointing Pierre van Heerden to the job for five years.

The Labour Government looked into requiring dominant supermarket companies to sell retail stores to make way for new players, but did not push ahead with that.

Jenée Tibshraeny is the Herald’s Wellington business editor, based in the Parliamentary Press Gallery. She specialises in government and Reserve Bank policymaking, economics and banking.