Gemma Rasmussen: Consumer NZ Head of Advocacy and Research on NZ First's plan to break up the supermarket duopoly

New Zealand First is heading into the election with a plan to break up the supermarket duopoly.

If re-elected, the party's promising to split Foodstuffs into two nationwide co-operatives - one for New World and Four Square, and the other for Pak'nSave.

Consumer NZ says the current Government's efforts to encourage a third player into the market have largely been unsuccessful. 

Head of Advocacy and Research, Gemma Rasmussen, has raised questions over this plan - and indicated it might not be the best solution to rising food prices.

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Episode Transcript

Speaker 1 (00:00):
Now New Zealand First has announced that will campaign on
splitting up food stuffs. The policy would force food stuffs
to split into two separate cooperatives, one for pack and
Safe and one for New World and four Square. The
idea is to break up the dwopoly that's dominating our
grocery sector at the moment. Jimma rasmunsen As from Consumer
is with us now high Gemma, Hi haveva do you
like this idea?

Speaker 2 (00:21):
I'm not sure about it. If I'm honest, I would
love to know what work has gone into coming up
with this proposal. I think the thing with the grocery
sector is often there's no one silver bullet. And the
risk with breaking up food stuffs is there could be
unintended consequences like operational costs go up, a whole lot

(00:45):
of setup costs and the price of food actually goes up.
It's very hard to prove that having three players is
the key to great competition. If you look at Australia,
they've got three players. They have just been going through
with their regulator looking to looking into excessive pricing and

(01:08):
there's been a whole raft of issues.

Speaker 1 (01:10):
Okay, so if this isn't the solution. What is the solution.

Speaker 2 (01:14):
Well, I think it's quite interesting to see what they're
doing in Australia. Actually, effective from July this year, the
government is introducing new laws which would ban excessive price
markups and this would be enforced by the regulator. This
could mean huge penalties up to ten million dollars or
ten percent of turnover. And what this really looks at

(01:35):
is when you get something, when the supermarket gets food
from a supplier, if the markup is beyond a reasonable
margin and incredibly excessive and there is then being sold
to consumers, the supermarkets would be in the firing line.
And I think this is one of the problems that
we've had in New Zealand. We hear from suppliers that
they're getting increasingly squeezed. They're really vulnerable, and it's very

(01:58):
opaque understanding the price that a supply ourselves to the
supermarket and then the price we pay on our shelves.

Speaker 1 (02:04):
Okay, So if they're doing this, I mean it's an
interesting idea out of Australia, But how do they like,
what do they decide? What products is it that can't
have excessive markups on them?

Speaker 2 (02:15):
So it would be what the atroub'll see is looking
for is egregious examples being sent to them. So it
could be many things within the supermarket, but it would
probably sit within the produce area, all those essential items
like bread, milk, cheese, things like that, so they'll be
looking for evidence. They would then be.

Speaker 1 (02:36):
Then with the same consume. I'm just thinking about this
and just wondering if this would work with this if
the same then applied. So let's say loaf of bread,
fair fair product to put it on. So that's in
the supermarkets, But would you apply the same rules to
a dairy down the road.

Speaker 2 (02:49):
No, you wouldn't. They're only focusing on the very large
souper markets, being so with over thirty billion annual revenue.
But if the supermarkets not having such excessive markups, that's
going to have a flow on effect. I mean, look
at what happens in New Zealand. Dairy owners go to
our supermarkets to buy products and then on sell them.

(03:10):
So it would go across the whole country. And it's
really about putting on notice as opposed to a whole overhaul.
It's making an example a few times with very high
penalties to stop the very intensive price markups that are happening.

Speaker 1 (03:27):
Okay, now do you understand just back to New Zealand
First's policy, do you understand the logic for splitting it
into Pack and Save on one side, New World and
four Square on the other.

Speaker 2 (03:37):
I'm not to be honest. I saw that they had
done this, and I'm not really sure of the logic
behind it why they have chosen to split it in
that way. I haven't spoken to anyone from the party
to understand exactly what is behind that.

Speaker 1 (03:50):
All right, hey, listen, Thank you very much appreciated Jim Rasmussen,
who is with Consuming New Zealand. For more from Heather
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