The Government is ordering the country's competition regulator to probe the supermarket industry to ensure Kiwis aren't paying too much for their groceries. Video / Mark Mitchell
The Government is ordering the country's competition regulator to probe the supermarket industry to ensure Kiwis aren't paying too much for their groceries.
In doing so, it has pushed to one side calls for the Commerce Commissions to investigate the building construction industry – a probe that would likely impactthe price of housing in the country.
The Government this morning announced it has ordered the Commerce Commission to conduct a market study on supermarkets. Photo / Getty
This comes at a time when house prices have been skyrocketing and the Government has been under pressure to tame the market.
Speaking to media this morning, Minister of Commerce and Consumer Affairs David Clark said the Government wanted to "look at" the building materials sector.
"[But] we've got to prioritise these things. This is something that I have heard a lot about as I have moved around the country – people are concerned about their weekly shop and the cost of it."
That's something Prime Minister Jacinda Ardern agrees with; telling media this morning there was "good cause to look at whether or not New Zealand is being treated fairly."
The Government this morning announced it has ordered the Commerce Commission to conduct a market study on supermarkets.
Australian-owned Progressive owns Countdown while Foodstuffs owns New World, Pak'n Save and Four Square.
The investigation is similar to the one the commission did on the petrol market last year – that investigation led to a more transparent pricing strategy, which required fuel prices to be displayed on forecourt price boards.
After the market study was announced, petrol companies almost immediately lowered the price at the pump.
Clark hopes the probe into supermarkets will have the same effect.
"New Zealand has one of the most concentrated retail grocery markets in the world and there are indicators that competition in the sector has weakened over time," he said.
"Groceries are one of our most regular expenses, so we want to make sure pricing is fair."
He said the average Kiwi household spent roughly 17 per cent of their weekly expenses on food and this has been increasing each year.
The study means the Commerce Commission will have the power to demand information from the supermarket giants. Clark said he expected the two companies to cooperate.
After this morning's announcement, Countdown said it would cooperate fully with the Commerce Commission.
"We work hard every day to make food as affordable as we can for our customers," a spokesperson said.
"The New Zealand grocery market is intensely competitive and this can be seen by the huge array of choice that is available for customers - including supermarkets, specialty stores, fruit and vege shops, butchers, meal subscription services and more.
The outcome of the probe could lead to recommendations that could ensure the weekly shop is cheaper, Clark said.
The average Kiwi household spent roughly 17 per cent of their weekly expenses on food and this has been increasing each year. Photo / 123rf
Ardern promised to act on what the commission finds, when it reports back.
The study will take a year to complete and the Commerce Commission will report back to Clark on November 23 next year.
The aim of the market study is to look into how competitive the supermarket space is in New Zealand.
There are two dominant supermarket chains in New Zealand: Australian-owned Progressive and Foodstuffs. Progressive is the owner of Countdown while Foodstuffs owns New World, Pak'nSave and the smaller Four Square.
Clark said that some of the big supermarket chains have said there is already a healthy degree of competition in the sector – "we want to test whether that is the case".
"If issues affecting competition are identified in the study into supermarkets, the Government will consider the necessary changes to bring about better outcomes for consumers."
Consumer NZ chief executive Jon Duffy said the probe was good news for Kiwi shoppers.
"New Zealand has one of the most concentrated supermarket industries in the world, dominated by two players," he said.
"When you've got a market like this, there's a big risk that consumers will end up paying higher prices because the usual competitive pressures don't apply."
In September, Consumer NZ made a complaint to the commission asking it to use its market study powers to investigate levels of competition in the supermarket industry. They also asked them to investigate supermarket price promotions.
Despite the high degree of concentration, the supermarket industry hasn't been subject to any significant scrutiny from regulators, Duffy said.
"Supermarkets have a huge influence on the food supply chain, from the farm gate to the dinner table.
"Their practices not only affect what choices are available to consumers – and which brands end up on shop shelves – but also what we pay at the checkout.
"Consumers have the right to know whether this market power is being misused."
