As grocery and electricity bills continue to rise, shaking up the supermarket duopoly and gentailer club is proving to be an uphill challenge, writes Catherine McGregor in today’s extract from The Bulletin.

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Sticker shock at the checkout continues

While inflation is easing, food prices are still surging, reports the Sunday Star-Times’ Aimee Shaw (paywalled). The overall price of food has risen every single month for the past 14 months, Shaw writes, pushing food inflation well above the headline CPI. Stats NZ’s latest release backs that up: food prices were up 5.0% in the year to August, much higher than the official inflation rate of just 2.7%.

A number of factors, including global demand for our dairy products, lie behind the rising costs. But the “stickiness” of grocery prices indicates that the duopoly’s market dominance plays a big part, says Lincoln University’s Alan Renwick. He notes that prices tend to be hiked quickly on the back of global supply shocks, but come down slowly (or not at all) when shortages ease. It’s one more data point showing why many experts believe unlocking competition – in supermarkets and elsewhere – is the key to getting the NZ economy back on track.

Red tape not the only barrier

In the Weekend Post (paywalled), Tom Pullar-Strecker reports on the government’s push to simplify food-labelling rules to let more information be published online (accessed via QR codes and the like) with less having to be printed on packaging. The hope is that the new rules will lower barriers for supermarket challengers wanting to import prepackaged items from overseas, allowing them to bypass the duopoly’s supply chains and ultimately matching or even undercutting prices at Woolworths and Foodstuffs.

The move is just one of a suite of reforms aimed at encouraging competition across various business sectors, but as Pullar-Strecker writes in the SST (paywalled), the government faces a number of challenges – some of their own making. He argues that National seems too ready to “take advice from what it may think are like-minded sources in the private sector at face value”, pointing to electricity gentailers’ line last week – apparently fully accepted by ministers – that their under-investment in new generation stems from concerns about capital raising. Instead, writes Pullar-Strecker, “the more obvious explanation for under-investment is that it suits the power companies to keep the energy market on the precipice of shortage, as it means higher prices and higher profits – just as their duty to shareholders requires”.

New powers for the Commerce Commission

Also in the government’s pro-competition arsenal is its Commerce Act overhaul, which as Jenée Tibshraeny recently reported in the Herald, would arm the Commerce Commission with the ability to tackle “killer acquisitions” (where dominant companies acquire and shut down innovative startups) and predatory pricing (where businesses cut prices below cost, then hike them again once they’ve driven out their competition), as well as to seek court orders to restore competition when it’s been harmed.

The aim, says economic growth minister Nicola Willis, is a more nimble competition regime that can intervene earlier. She says the current settings “are outdated, lack clarity and have led to some of our most important markets being dominated by only a handful of players”. Officials say the reforms are intended to modernise a framework that hasn’t had a major refresh in nearly two decades; ministers want the changes in place by mid-2026.

Fair trading rule changes meet blowback

The road to increased competition never runs smooth, however. As Andrea Vance reports in the Weekend Post (paywalled), a separate suite of fair-trading changes, designed in part to encourage competition, has run into a wall of opposition from major industry groups. Among the proposals they’re rejecting are sharply higher penalties for breaches and plans to automatically update product-safety standards in line with overseas changes, which they say could put them at risk of accidental non-compliance.

In a letter to ministers, they complain about a lack of consultation and allege the plan appears to lack “evidence or empirical data”. David Seymour’s Ministry of Regulation is understood to have also offered a “robust critique” of the proposals, Vance reports. Nicola Willis has agreed to meet business leaders today to discuss their concerns.

More reading:

• Abby Wallace: Broke, hungry and over it: How the supermarket duopoly hurts students (Critic Te Ārohi)
• Max Rashbrooke: How many times do supermarkets and banks have to be put ‘on notice’ before something actually changes? (The Spinoff)