March 30, 2025 • 9 mins
The Government announced a formal Request for Information looking into what it could take to bring a third supermarket chain to the country.
Economic Growth Minister Nicola Willis isn't ruling out a major restructure as she says all options are on the table.
Monopoly Watch Research Director Tex Edwards talks to Kerre Woodham about the announcement.
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Episode Transcript
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Speaker 1 (00:06):
You're listening to the Carrywood and Morning's podcast from News Talks,
he'd be We have.
Speaker 2 (00:12):
Been discussing Nikola Willis's threat to break up the current
supermarket duopoly. It appears it's inevitable unless the supermarkets can
come up with plans of their own. Yesterday, Nichola Willis
announced a formal request for information looking into what it
would take to bring in our third chain economic growth.
(00:33):
Minister Nikola Willis held the news conference yesterday saying a
major restructure is another option to bring competition into the market.
Monopoly Watch research director Texts Edwards joins me now a
very good morning.
Speaker 3 (00:47):
To you, morning to carry How you doing good?
Speaker 2 (00:49):
Thank you? Is it the place of government to interfere
in business or should it just be creating legislation that
allows a fair playing field.
Speaker 3 (01:01):
It's good question. Months for the last one hundred and
fifty years have protected people from wars, and for the
last one hundred and twenty years governments have protected consumers
from monopolies and cartels. And there's a very high bar,
(01:25):
the very high test when a government wants to go
into a marketplace and alter it. But clearly on this
occasion that high test, that high bar has been met,
and a cynic would say that the Minister of Economic Development,
Nichole Willis, isn't actually interfering in business. She's saving business,
(01:47):
she's saving capitalism. And what was noteworthy yesterday in her
very detailed discussion of what it would take to break
up supermarket cartel, what it would take to create lower prices,
she actually used the Margaret Thatcher discussion point when am
accused of it sounds commonists to break up supermarkets, and
(02:11):
I would argue that actually she's not breaking up a business,
she's breaking up a cartel, and she's creating business. Inevitably, employees,
suppliers and actually small business people will benefit from a
revised market structure supermarket.
Speaker 2 (02:27):
It's interesting because the consultants that she's getting advice from
stressed in a report prepared for Mby when the Labor
government was looking at much the same thing, that supermarket
divestment could be net beneficial only if several key factors
align well, and that any net benefits were not enjoyed
(02:47):
equally by all households. And they said, there's a really
real risk of unintended consequences.
Speaker 3 (02:55):
That's always the case with any invention into a market. Yeah,
it's always the case with any legislative process. But the
balance of probably probability is that a revised market structure
will order of magnitude improve consumer welfare point one and
point too in New Zealand. The sort of common sense
(03:18):
tests being broken here, Kerry, because we're not talking about
a European style market where there's lots of European countries
with the same population density and population basis New Zealand,
where there's four or five supermarkets and there's concern there competition.
Speaker 1 (03:35):
This is this is.
Speaker 3 (03:36):
Monopolization on steroids to train and die. A lot of
people don't call the New Zealand supermarkets are geopoly. They
call it a portfolio of geographic monopolies. And if you
fly in some of the big cities of New Zealand
in a helicopter over it, you'll see whole suburbs, or
whole districts, or whole or whole north and south part
(03:58):
of the city or district broken up into one particular
brand or the other. And so yes, absolutely it's the
place of sensible government. And the way that Nichol was
positioned herself was saying that Mirkerot attached did some of
the sort of stuff to create better consumer outcomes I
think was appropriate if you're suggesting it's not the place
(04:23):
for governments to intervene in the supermarket cartelitis.
Speaker 2 (04:28):
See it's interesting because you're the research director at Monopoly Watch,
but you also set up two degrees and the Reserve
Bank call it the two degrees effect when a disruptor
comes in and reshapes the market for the benefit of consumers.
It saw a substantial reduction and mobile phone charges once
you came in. But did you need the government to
(04:50):
legislate to do that?
Speaker 3 (04:53):
Yeah, I appreciate that. Probably a career highlights seeing the
Central Bank compliment the initiative we'd made. But actually, back
in the day, Kerry, we only se can we just
have oe C D road rules. We didn't want any
special favors or any any legislatiorlation that was going to
(05:16):
favor a third operator. We just wanted what everybody else
had in their market, which every other country in the
world at the time had what we call number portability.
Every other country had shell felltower access sharing, every other
country had a more equitable split up of the spectrum
(05:36):
that's the airwaves that used the mobile phone network. But
I'm going to say here that's why the Minister Willis's
initiative was so interesting use today because she cataloged not
just regulatory barriers of O I A and IRMA, but
she also highlighted that a clear comprehension that she understood
(05:57):
commercial barriers, which means abuse of market power. And I
was fascinated when she used the word. She left my
kids triathlon tracking on, I left it earlier to come
and it was such a good announcement. But she actually
catalogs with the word significant market power and abuse of
significant market power, and internationally that that's a very powerful
(06:21):
word from a regular perspective. In New Zealand, there is
no significant market power designation and there's no significant market
power rules. And this isn't this isn't sort of safe
interventional communism. This is just basic maintaining the processes of
capitalism and maintaining the processes of business. And I'm going
(06:42):
to say that Dancing Albanesi was very ill advised and
probably swamped by lobbyists when he said it's a communist
to break up a supermarket chain, because our response to
that was, well, you have a communist problems to Albanzi.
You've got you've got monopolization, which is the same problem
as Leonard Bridge You've had in the eighties, and the
(07:03):
Communist gratue that they only had one tooth market operators,
that that's why everything was so expensive in Communist Russure.
So quite quite exciting announcements, quite detailed.
Speaker 2 (07:14):
Yeah, it is, they're on the right track then.
Speaker 3 (07:18):
I think it's I think it's going to benefit consumers
in the medium term and the short term obviously, Kerry.
You know, every lawyer who's driving into work today, every
commercial it had to smile on their face. A lot
of consultants had to smile on their face because it's
a twenty five billion dollar sector. You know, there's six
(07:38):
hundred supermarkets, there's six huge distribution centers. It's quite a
big industry and the workstreame is profound.
Speaker 2 (07:48):
Any ideas about who you think the successful third player
might be or competitor might be.
Speaker 3 (07:55):
I think it's too early to figure out what a
brand name would be. It's really about the structure. And
I think that the open minded persona of the RFI
is really healthy, and I think most business people are
(08:17):
excited when they hear a minister talk about the Jacobs
because that's a sort of investment buzzword that the big
intestment funds love to hear about. You know that somebody
respects for the losses that they make up front. But
it's really going to be about the process and the
structure as opposed to the brand name of a challenge.
(08:37):
It's really going to be how many supermarkets they can
start with, what if any a breakup looks like. What
actually happened in the Commerce Commission inquiry is they found
out that through financially modeling how to get the business
to a third operator a fourth operator operate, there wasn't
a business case carrier to build out another four or
(08:58):
five hundred supermarkets in New Zealand. And there was a
really interesting statistic bit of a bottom number. But midway
through this four hundred page report that they cataloged that
there had been an over bill of large supermarket formats
in New Zealand, and that is actual as a barrier
to entry and who's going to come, it's more likely
(09:22):
to be a consortium and the NBA executives who read
all the proposals going to have a really exciting time,
which will inevitably in my mind lead to a breakup.
Speaker 2 (09:34):
Yeah, interesting text. Thank you so much for your insight.
I really appreciate it. Ticks Edwards, research director, Monopoly what
and of course, the man behind two degrees that completely
transformed the mobile market.
Speaker 1 (09:46):
For more from carry Wood and Mornings, listen live to
news talks that'd be from nine am weekdays, or follow
the podcast on iHeartRadio.
You're listening to the Carrywood and Morning's podcast from News Talks,
he'd be We have.
Speaker 2 (00:12):
Been discussing Nikola Willis's threat to break up the current
supermarket duopoly. It appears it's inevitable unless the supermarkets can
come up with plans of their own. Yesterday, Nichola Willis
announced a formal request for information looking into what it
would take to bring in our third chain economic growth.
(00:33):
Minister Nikola Willis held the news conference yesterday saying a
major restructure is another option to bring competition into the market.
Monopoly Watch research director Texts Edwards joins me now a
very good morning.
Speaker 3 (00:47):
To you, morning to carry How you doing good?
Speaker 2 (00:49):
Thank you? Is it the place of government to interfere
in business or should it just be creating legislation that
allows a fair playing field.
Speaker 3 (01:01):
It's good question. Months for the last one hundred and
fifty years have protected people from wars, and for the
last one hundred and twenty years governments have protected consumers
from monopolies and cartels. And there's a very high bar,
(01:25):
the very high test when a government wants to go
into a marketplace and alter it. But clearly on this
occasion that high test, that high bar has been met,
and a cynic would say that the Minister of Economic Development,
Nichole Willis, isn't actually interfering in business. She's saving business,
(01:47):
she's saving capitalism. And what was noteworthy yesterday in her
very detailed discussion of what it would take to break
up supermarket cartel, what it would take to create lower prices,
she actually used the Margaret Thatcher discussion point when am
accused of it sounds commonists to break up supermarkets, and
(02:11):
I would argue that actually she's not breaking up a business,
she's breaking up a cartel, and she's creating business. Inevitably, employees,
suppliers and actually small business people will benefit from a
revised market structure supermarket.
Speaker 2 (02:27):
It's interesting because the consultants that she's getting advice from
stressed in a report prepared for Mby when the Labor
government was looking at much the same thing, that supermarket
divestment could be net beneficial only if several key factors
align well, and that any net benefits were not enjoyed
(02:47):
equally by all households. And they said, there's a really
real risk of unintended consequences.
Speaker 3 (02:55):
That's always the case with any invention into a market. Yeah,
it's always the case with any legislative process. But the
balance of probably probability is that a revised market structure
will order of magnitude improve consumer welfare point one and
point too in New Zealand. The sort of common sense
(03:18):
tests being broken here, Kerry, because we're not talking about
a European style market where there's lots of European countries
with the same population density and population basis New Zealand,
where there's four or five supermarkets and there's concern there competition.
Speaker 1 (03:35):
This is this is.
Speaker 3 (03:36):
Monopolization on steroids to train and die. A lot of
people don't call the New Zealand supermarkets are geopoly. They
call it a portfolio of geographic monopolies. And if you
fly in some of the big cities of New Zealand
in a helicopter over it, you'll see whole suburbs, or
whole districts, or whole or whole north and south part
(03:58):
of the city or district broken up into one particular
brand or the other. And so yes, absolutely it's the
place of sensible government. And the way that Nichol was
positioned herself was saying that Mirkerot attached did some of
the sort of stuff to create better consumer outcomes I
think was appropriate if you're suggesting it's not the place
(04:23):
for governments to intervene in the supermarket cartelitis.
Speaker 2 (04:28):
See it's interesting because you're the research director at Monopoly Watch,
but you also set up two degrees and the Reserve
Bank call it the two degrees effect when a disruptor
comes in and reshapes the market for the benefit of consumers.
It saw a substantial reduction and mobile phone charges once
you came in. But did you need the government to
(04:50):
legislate to do that?
Speaker 3 (04:53):
Yeah, I appreciate that. Probably a career highlights seeing the
Central Bank compliment the initiative we'd made. But actually, back
in the day, Kerry, we only se can we just
have oe C D road rules. We didn't want any
special favors or any any legislatiorlation that was going to
(05:16):
favor a third operator. We just wanted what everybody else
had in their market, which every other country in the
world at the time had what we call number portability.
Every other country had shell felltower access sharing, every other
country had a more equitable split up of the spectrum
(05:36):
that's the airwaves that used the mobile phone network. But
I'm going to say here that's why the Minister Willis's
initiative was so interesting use today because she cataloged not
just regulatory barriers of O I A and IRMA, but
she also highlighted that a clear comprehension that she understood
(05:57):
commercial barriers, which means abuse of market power. And I
was fascinated when she used the word. She left my
kids triathlon tracking on, I left it earlier to come
and it was such a good announcement. But she actually
catalogs with the word significant market power and abuse of
significant market power, and internationally that that's a very powerful
(06:21):
word from a regular perspective. In New Zealand, there is
no significant market power designation and there's no significant market
power rules. And this isn't this isn't sort of safe
interventional communism. This is just basic maintaining the processes of
capitalism and maintaining the processes of business. And I'm going
(06:42):
to say that Dancing Albanesi was very ill advised and
probably swamped by lobbyists when he said it's a communist
to break up a supermarket chain, because our response to
that was, well, you have a communist problems to Albanzi.
You've got you've got monopolization, which is the same problem
as Leonard Bridge You've had in the eighties, and the
(07:03):
Communist gratue that they only had one tooth market operators,
that that's why everything was so expensive in Communist Russure.
So quite quite exciting announcements, quite detailed.
Speaker 2 (07:14):
Yeah, it is, they're on the right track then.
Speaker 3 (07:18):
I think it's I think it's going to benefit consumers
in the medium term and the short term obviously, Kerry.
You know, every lawyer who's driving into work today, every
commercial it had to smile on their face. A lot
of consultants had to smile on their face because it's
a twenty five billion dollar sector. You know, there's six
(07:38):
hundred supermarkets, there's six huge distribution centers. It's quite a
big industry and the workstreame is profound.
Speaker 2 (07:48):
Any ideas about who you think the successful third player
might be or competitor might be.
Speaker 3 (07:55):
I think it's too early to figure out what a
brand name would be. It's really about the structure. And
I think that the open minded persona of the RFI
is really healthy, and I think most business people are
(08:17):
excited when they hear a minister talk about the Jacobs
because that's a sort of investment buzzword that the big
intestment funds love to hear about. You know that somebody
respects for the losses that they make up front. But
it's really going to be about the process and the
structure as opposed to the brand name of a challenge.
(08:37):
It's really going to be how many supermarkets they can
start with, what if any a breakup looks like. What
actually happened in the Commerce Commission inquiry is they found
out that through financially modeling how to get the business
to a third operator a fourth operator operate, there wasn't
a business case carrier to build out another four or
(08:58):
five hundred supermarkets in New Zealand. And there was a
really interesting statistic bit of a bottom number. But midway
through this four hundred page report that they cataloged that
there had been an over bill of large supermarket formats
in New Zealand, and that is actual as a barrier
to entry and who's going to come, it's more likely
(09:22):
to be a consortium and the NBA executives who read
all the proposals going to have a really exciting time,
which will inevitably in my mind lead to a breakup.
Speaker 2 (09:34):
Yeah, interesting text. Thank you so much for your insight.
I really appreciate it. Ticks Edwards, research director, Monopoly what
and of course, the man behind two degrees that completely
transformed the mobile market.
Speaker 1 (09:46):
For more from carry Wood and Mornings, listen live to
news talks that'd be from nine am weekdays, or follow
the podcast on iHeartRadio.
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