Nicola Willis strongly signals she’s willing to get serious about supermarket duopoly, writes Anna Rawhiti-Connell in today’s extract from The Bulletin.
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Nicola Willis seeking information how to attract a third player to market
New Zealanders could be forgiven for being wary of announcements about tackling the supermarket duopoly.
As Max Rashbrooke wrote for The Spinoff at the end of February, reflecting on both a turn of phrase that’s become ubiquitous and the political holding pattern deployed when addressing matters of competition, “How many times do supermarkets and banks have to be put ‘on notice’ before something actually changes?” Rashbrook’s piece catalogues a long history of banks and supermarkets being “put on notice”.
Economic growth minister Nicola Willis announced yesterday that she was issuing a “Request for Information” asking supermarket companies what changes would be required to compete in the New Zealand market.
Stewart Sowman-Lund covered the first announcement from Willis in February, in which supermarkets were again “put on notice”, cataloguing some of the inherent difficulties in enticing a third player into the market and tackling pain at the supermarket checkout.
‘Fraught with risk’
Willis also announced she had “commissioned specialist external advice on ways the existing supermarket duopoly could be restructured to improve competition”. The Herald’s Jenée Tibshraeny has an excellent analysis (paywalled) of the risk Willis is taking, calling her commitment to trying to improve competition, “genuine “ but “Willis attempting to climb Mount Everest under the watchful eye of voters, categorically sick of paying too much for their groceries, is fraught with risk.”
The advice is being commissioned from Coriolis, the consultancy that told the Commerce Commission that breaking up the duopoly was the only real answer in 2021. A report prepared for the Ministry of Business, Innovation and Employment in 2022 by Coriolis, Sense Partners and Cognitus Economic Insight concluded: “Supermarket divestment could be net beneficial, but only if several key factors aligned well and several key risks could be adequately mitigated and “Divestment of the nature being considered here is unprecedented in New Zealand. The risks of unintended consequences are not trivial.”
May ‘strain coalition relations’
The Post’s Luke Malpass notes the move may “strain coalition relations” as the Act party “is decidedly unconvinced”.
Act leader David Seymour told The Post on Sunday, “Politicians seek advice all the time, that’s very different from it being Government policy, especially in a Coalition”. “One obvious concern is that if your Government is trying to attract overseas investment, threats to restructure their businesses in New Zealand might have the opposite effect,” he said.
While Labour called yesterday’s announcement “lip service to its promises to bring down the cost of living” and commerce and consumer affairs spokesperson Arena Williams said she had been expecting a “bigger announcement”, Malpass summises that the government “could well be in receipt of opposition support for this move.” “Hipkins’ Labour party,” he writes, “would be highly likely to vote in favour of structural separation, divestment or de-mergers in the sector, should it come to that.” Malpass notes the Green party would also “look at any such legislation favourably.”
Support from Consumer NZ and long-time advocate
Wilkis has received support from Consumer NZ. Chief executive Jon Duffy said, “It’s really good to hear the minister indicate that’s very much on the table, and she’ll be working on getting a plan together for that, whilst other measures are in play”. Speaking to Newstalk ZB this morning, long-time advocate in the telecommunications and grocery sectors, Ernie Newman, said he was sceptical before the announcement but is impressed by what he’s heard. He says Nicola Willis has come across as a “minister on a mission”, and she’s done her homework.
