Legislation tackling a power imbalance in the grocery industry is among a bunch of bills that have wound their way through the committee stage in Parliament this week.
The Grocery Industry Competition Bill, which passed its third and final reading this evening, seeks to improve competition and efficiency in the grocery industry, by taking measures such as establishing a Grocery Commissioner at the Commerce Commission, to referee the sector.
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Labour MP Jamie Strange has been centrally involved in shaping the Grocery Industry Competition Bill Photo: ©VNP / Phil Smith
A market study by the Commerce Commission indicated that consumers are routinely getting an unfair deal at the supermarket checkouts due to systemic competition problems in that grocery sector which is dominated by a duopoly of Foodstuffs and Woolworths. These two companies pull in over $1 million a day in excess profits from consumers, at a time when food prices are rising faster than inflation.
The government says the bill will enable a more level playing field for smaller retailers and new market entrants in the sector, allowing them to source and sell a wider range of groceries at better prices. The Grocery Commissioner will have a range of monitoring and enforcement tools and the ability to impose additional regulation on price and range, and require the major retailers to provide wholesale supply on certain terms.
Sector imbalance
The Economic Development, Science and Innovation Committee received a lot of submission on this Bill. The Labour MP Jamie Strange offered a useful example of how the duopoly affects those at the community level.
“I'll just mention one submitter that sort of stuck in my mind. It was a gentleman who owned a small dairy. And when he had to buy food for his dairy, he had to go to the wholesaler—the wholesaler was owned by one of the duopoly—and basically, they dictated the prices to him in terms of what he had to pay for the products,” he explained.
“So many of us have been to a corner dairy and thought, ‘Why are these prices so high?’ Well, one of the reasons is because they actually can't get the equivalent prices that the supermarkets get. Now, this dairy owner, if he goes directly to the producer, then the producer will go, ‘Well, what do I do? Do I give you the product or do I stay in with the duopoly? Do I risk being ostracised by the duopoly?’ So I mean there are serious power imbalances all over the place here.”
ACT against bill
The bill has had broad support in the House, apart from the ACT Party. Why? As ACT MP Simon Court explained, they see liberalisation of New Zealand’s resource management laws as the key to unlocking competition.
“Instead, you bring this farce of a bill telling us that a Grocery Commissioner is somehow going to wave a magic wand and the New Zealand grocery market will become more competitive while all of these other barriers, like the Resource Management Act and whatever this Labour Government's attempt at replacing it, what I’d call RMA 2.0-plus-some-more-people-allowed-to-object-to-what-you-want-to-do-with-your-private-property. Fix that, we say,” Court told MPs last month.
Other Bills to have their committee stage this week include the Charities Amendment Bill , the Worker Protection (Migrant and Other Employees) Bill and the Business Payment Practices Bill.