Canterbury Mornings with John MacDonald

John MacDonald: Market not so super, says Commerce Commission


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If you go to the supermarket today, don’t waste your time asking to see the manager or the owner.  
Because they’ll be tucked away in the office upstairs, poring through the Commerce Commission’s final report on the way supermarkets are run here in New Zealand. 
After more than a year of working on it, the Commission has just released its recommendations on how supermarkets could be made to be more competitive so that we pay less for our groceries. 
They are just recommendations, and it will be up to the Government to decide whether it wants to implement any of them. 
Some of the things the Commerce Commission has looked into include: 
- The level of competition between supermarkets. 
- What supermarkets charge and how they set their prices. 
- Which supermarkets do we buy our groceries from and who supplies those supermarkets? 
- How supermarkets deal with their suppliers (the outfits that make the products, the farmers etc). 
- The level of competition between suppliers. 
- The levels of service, product ranges and the quality of groceries. 
The review itself is something Labour promised before the last election. It also promised a review of fuel prices. Don’t laugh. 
When Jacinda Ardern made the pre-election promise to look into the way supermarkets operate, she said: “We want to ensure the cost of living in New Zealand is fair”. 
Yesterday, she pushed back on National Party leader Christopher Luxon’s claim that we have a “cost of living crisis” here in New Zealand. 
So, I’m not sure what that says about the Prime Minister’s appetite for taking on some or any of the Commerce Commission’s final recommendations. 
They follow draft recommendations the Commission put out in July last year. Back then, it said the main problem was the lack of competition – with just two companies having control over the market: Foodstuffs (which owns Pak n Save, New World and Four Square) and Woolworths New Zealand (which owns Countdown). 
It said these two companies avoid competing with each other in price and seem to be making a lot more profits than supermarket companies around the world. 
My reading of that, at the time, was that the Commerce Commission thought the supermarket chains were working with each other so they could get away with charging customers as much as possible. 
And it appears that that is still the view of the Commerce Commission.  
It’s saying again today that competition isn’t working for consumers and has proposed a number of changes to increase competition which, it thinks, will end up with us paying less at the supermarket check-out.  
Remember, they're only recommendations – it’s going to be up to the Government whether it does anything. 
The Commerce Commission wants more competition – real competition. It says more land should be made available for other supermarket operators to set up shop. So, it’s telling the supermarkets they’re not to hold on to land just so a competitor can’t set up across the road. 
It says we need a mandatory code of conduct for supermarkets, to make sure they’re fair and reasonable when they deal with suppliers. In layperson’s terms, the Commission's telling supermarkets to stop bullying suppliers to drop their prices and not sign contracts with other retailers. 
It also thinks supermarkets need to be more upfront with their pricing and promotional activities, and easy-to-understand loyalty programs. 
So, if implemented, will these recommendations make any difference? 
I think more supermarket companies operating here would definitely make a difference. I also think a code of conduct to try and stop the supermarket companies from being bullying their suppliers is a must-have. 
Or will this just be like the Government's fuel price review, and will we still be paying through the nose at the supermarket check-out in a year’s time?

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