Supermarkets are on notice with the government going further than expected in its response to the Commerce Commission’s supermarket study. But change for shoppers won’t come quickly, writes Anna Rawhiti-Connell in the Bulletin.

Government drops the regulation hammer

“If supermarkets do not strike good faith wholesale deals with their competitors, our regulatory measures will make it happen for them.” So said the minister of commerce and consumer affairs David Clark yesterday. In announcing the government’s response to the Commerce Commission inquiry into supermarkets, Clark said the government was putting supermarkets on notice, and they needed to change “at pace”. The government agreed with 12 out 14 recommendations from the Commerce Commission but has gone further by threatening regulation of the wholesale access regime and will install a “watchdog” to provide annual reviews instead of an audit every three years. Stuff has an explainer on the changes here.

Sword still dangling

Stuff’s Susan Edmunds has taken a look at how much difference these changes might make for shoppers. In short, they probably won’t provide quick relief. Consumer NZ chief executive Jon Duffy says the changes are good but that the most interesting aspect is the work MBIE is undertaking around requiring major grocery retailers to divest some of their stores. It’s essentially a sword of Damocles left to hang over the supermarket’s heads. Managing Director of Foodstuffs NZ, Chris Quin has responded by saying “Foodstuffs is embracing the challenges laid down in the final report and by the Government to improve competition to benefit consumers.”

The proof is in the egg pudding we can’t afford to make 

The price of food has blown out into such an issue for people, Stuff has reporters running a food price “Amazing Race” over the next five days. It’s early days but they’ve uncovered price differences between supermarkets and regions that should have the good people of Waihi out protesting. Eggs that cost $5.85 at New World St Martins in Christchurch cost $8.69 at New World Waihi. The exact same brand of eggs! The same supermarket. The same commitment to price rollbacks. There may well be “plausible reasons” for this like transport costs, but the public isn’t in much of a mood to stomach them.

What’s riding on it for the government and the people who vote for them/buy food?

Obviously the government would like us to stop being outraged by the price of eggs. Politically, it needs to work as a salve to the blows it’s taken on the cost of living. The $350 allowance announced in the budget will be wiped out for many via interest rate rises which banks began rolling out yesterday. In the here and now they’ll be hoping it pushes supermarkets to do more to drop prices but commentators say real change won’t happen without more competition. Lastly, it’s an invitation to competitors who might’ve found hurdles like land covenants (dealt with via the budget) and wholesale access insurmountable. That will apply to local companies like the Warehouse, who Robertson namechecked a couple of times at the post-cabinet announcement, and perhaps overseas players like Aldi or Tesco.