Major supermarket chain Woolworths, owners of Countdown, says it cannot offer large scale wholesale supply at present but is working on delivering what the government wants.
Photo: Unsplash/ Eduardo Soares
Commerce and Consumer Affairs Minister David Clark announced the government's response to the Commerce Commission's findings on the supermarket sector after this afternoon's weekly Cabinet meeting, alongside Deputy Prime Minister Grant Robertson.
The steps taken by the government will match 12 of the Commission's 14 recommendations, and go further than the other two recommendations suggested.
The government is establishing a grocery sector watchdog and a mandatory code of conduct as it tries to tackle the supermarket duopoly.
It will also force supermarkets to open up their wholesale arms to would-be competitors if they have not already done so by the end of the year.
All the changes would ensure New Zealanders would pay fairer prices for their groceries, Clark said.
Both supermarket chains say they are committed to working with the government on the changes.
In a statement Woolworths NZ managing director Spencer Sonn said the chain supported the Commerce Commission's recommendations and while the government planned to go further, "we accept that change is needed, and we're committed to playing a positive role in a competitive grocery market for Kiwis".
"We don't yet have the capability to offer large scale wholesale supply, however, we are already in the process of planning how we achieve this," Sonn said.
"We're committed to working with the government to meet their expectations and with our supply partners who will play an important part in this."
He added that Woolworths knew times were tough for consumers and selling food "at the lowest prices" remained its focus.
Chris Quin Photo: Supplied / Foodstuffs
The second major supermarket chain, Foodstuffs, has also released a statement saying it would work with the government to implement the changes.
Its two cooperatives, Foodstuffs North Island and Foodstuffs South Island, were already working with the Ministry of Innovation, Business and Employment on the mandatory code, said managing director Chris Quin.
The code would provide "clarity" to the rules of engagement with suppliers, he said.
" ... and we have indicated our support for a set of principles that we believe will make a difference in providing clarity, certainty, fairness, meaningful consequences, and opportunities for redress when the code is not honoured."
Foodstuffs also supported the establishment of a regulator to monitor compliance with the code.
"We support the government's request that there be an active wholesale market in New Zealand, and the request for us to participate in that market.... what is key now is understanding the demand landscape and ensuring that suppliers work with us and our wholesale customers to enable those customers to access wholesale groceries at competitive prices," Quin said.
Code of conduct welcomed
The New Zealand Food & Grocery Council has welcomed the changes, especially the mandatory code of conduct.
"It's a major task unravelling the harm caused by New Zealand's duopoly market structure, but announcements today make the direction clear," chief executive Katherine Rich said.
New Zealand was the only country in the world operating a supermarket duopoly and new forms of competition would arise in the wake of the government's changes, she said.
"Independent retailers will never be competitive as long as they have to line up at the supermarket with everyone else.
"As we have said regularly, the wholesale market for groceries is broken, and competitive access to a full range of products is important to support healthy competition."
She praised Clark's work to arrive at today's announcement. "And he has made it clear today there is more to do.
"The changes he has quietly championed in the Commerce portfolio will make a difference to the competitiveness of New Zealand's grocery market."