The Government of New Zealand has put supermarkets on notice to regulate fair deals for every competitor operating in the market. David Clark, Minister of Commerce and Consumer Affairs, warned supermarkets to adapt to the changes required to increase competition or be prepared for the regulations.
He said, the supermarket industry is not competitive, and the buyers are not getting a fair deal. He added that the duopoly needs to break, and the government is planning the necessary legislation to do the same.
At present, grocery prices in New Zealand are among the highest in the OECD, implicating the fact that two big players, namely Foodstuffs New Zealand and the local Australian chain of supermarkets, Woolworths, make a duopoly with just few small other rivals.
The government is seeking to target the wholesale arms of these 2 big players, stating that they should be available to small business owners and new entrants as well.
Clark said that if every competitor will not have a proper access to wholesalers, there is no incentive to step into the market. The government has asked duopoly to open these to upcoming competitors, at a reasonable price.
He further said that if the supermarkets do not get a fair wholesale deal with their competitor, the government will make it happen for them.
In order to do so, the government has also introduced a law to stop current operators from extending legal contracts for lands in certain shopping malls and suburbs where rivals may seek to build.
Clerk will establish a new regulator as well to keep supermarkets honest and to facilitate a resolution scheme to resolve and avoid disputes between suppliers and retailers.
The government is also taking measures to mandate compulsory unit pricing on grocery items, so that buyers can compare several products.