Andrew Bayly: Commerce Minister outlines solutions to boost competition in supermarket sector

The Commerce Minister says a third big player in our supermarket sector is unlikely to come from overseas.

A first annual Commerce Commission report on the grocery market has found no meaningful improvement in competition.

It wants New Zealand's two major operators - Foodstuffs and Woolworths - pressured more and for it to be made it easier for a third to enter.

Minister Andrew Bayly says overseas giants like Aldi aren't interested in moving over to New Zealand.

"I've been talking to one or two other players who could possibly come to New Zealand - but right now, I couldn't put my hand on my heart and say there are lots of people lining up."

LISTEN ABOVE

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:00):
Now the Commerce Commission has reported that we are still
getting ripped off at the supermarket. Grocery Commissioner pie Van
head and told us earlier that the ComCom is trying
to tighten up the rules to stop the duopoly from
ruling us.

Speaker 2 (00:11):
There's no one silver bullet, so we've got to use
all of these different tools to their maximum effect to
try and get change within the indury.

Speaker 1 (00:20):
You might need the help of the Commerce and Consumer
Affairs Minister Andrew Bailey Andrew Hallow.

Speaker 2 (00:25):
Good afternoon.

Speaker 1 (00:26):
What are you going to do about it?

Speaker 2 (00:28):
Well, obviously there are a number of recommendations that the
Commissioner can do on his own, and he should be
doing that, and I'll be urging him to do as
quickly as possible. From a government perspective, there's two sort
of key areas. One is about allowing overseas investment to
happen more easily in New Zealand's one of the most
restrictive places in the world. But secondly, how we can

(00:49):
deal with some of the planning rules. So those two
pieces of the work are already underway at a government level,
but really most of this sits with a commissioner, and
I'll be urging him and the Commission to get on
with it and make it happen.

Speaker 1 (01:02):
Do we have overseas like possible competitors from overseas who
are saying the overseas investment rules are keeping them out.

Speaker 2 (01:08):
Not specifically on supermarkets, because we simply don't have people.

Speaker 1 (01:12):
Like what are the guys like Oldie saying to you
about why they're not coming here?

Speaker 2 (01:16):
I did speak to Oldie, but they just don't see
it as a market they wanted to go into. They'd
rather pursue, for instance, Australia grow their market share there.

Speaker 1 (01:24):
Why not? Why are they interested in us?

Speaker 2 (01:25):
Oh it's a small, diversified you know, very difficult to enter,
small market basically, And obviously people are talking about other players.
I've been talking to one or two other players that
possibly could come into New Zealand. But right now I
couldn't put my hand on my heart and say there
are lots of people lining up.

Speaker 1 (01:42):
So the solution is really already in country. It's a
warehouse or something like that.

Speaker 2 (01:45):
Yeah, I think. And that's a really important point hither,
because all strategies and business start with look after your
customer first, and our current customers are people like the
warehouse Costco night and day. We need to make sure
that they can compete as robustly as possible, and right
now they can't. They've got they can't get access the

(02:06):
wholesale supplier of produce which they should be able to
at the same price that the supermarkets currently enjoy. So
that part of the report from the Commissioner I certainly
endorsed and support.

Speaker 1 (02:17):
Okay, So he says, this is p Vanhead and he
says he wants to do a Section fifty six inquiry
and he wants you to give him permission to force
the whole the supermarkets to wholesale to their competitors at
the same level the wholesale to each other to themselves.
Would you allow that?

Speaker 2 (02:31):
Well, he's got to do Section fifty six and that
unlocks those backstop powers, so that's easy. He's identified a
couple of the specific issues. One is the opt out provisions.
So a number of multinationals, by way of example, have
opted out of supplier agreements with the supermarkets, which means
that a new competitive I'll give you example five Fio

(02:53):
and Hamilton new operator there is having trouble getting access
to toilet paper, which is a key requirement for a
SI market, So allowing those people to have access the
products is really really important.

Speaker 1 (03:04):
Well, why are they unable to get access to the
toilet paper? Explain how that works?

Speaker 2 (03:08):
The suppliers simply said, I don't want to supply.

Speaker 1 (03:10):
To you because what they're looking after their mates at
food stuff and woollies.

Speaker 2 (03:14):
Well, I can't appine on that, but what the Commissioner
wants to make sure is that people can't unnecessarily opt out.
That's one side of the coin. But also there's things
like supermarkets enjoy a price competitive advantage by having their
own branded product, and the supermarket often they buy that
at a cheaper rate than what a supplier will supply

(03:38):
their own branded product. And so having a like for
like basis. So if viewer night and day, you should
be able to get the same price for the home
brand price that the supermarket gets rather than the higher
price that they might have to.

Speaker 1 (03:49):
How long is this going to take to do a
Section fifty six inquiry and unlock that backstop.

Speaker 2 (03:54):
Oh? I think that the Commissioner will do that. He
said he's going to start that process very soon. I
think it's a matter of months.

Speaker 1 (03:59):
Is it really so what in a matter of months
we could see all of a sudden the wholesale situation.

Speaker 2 (04:04):
No, it's more to be done around that. Certainly unlock
some of the powers, and then it's up to him
how he implements that. He's also looking at beefing up
and putting in place a wholesale code. We don't have
one at the moment. So that's the second part of it.
And then the third part is actually enforcing making sure
that people who are supplying step markets have treat it

(04:26):
fairly inequitably and still having anecdotal examples where people are
not being fairly treated. And I've said to the Commis Commission,
I want you to be a courageous litigative if that's
the case, if they have to take stronger actions, get
on and make it happen.

Speaker 1 (04:42):
Is the solution to all of this not simply to
break these things up, right, So you break up the
wholesale and retail arms and create some real competition there.

Speaker 2 (04:50):
Well, you could jump to that. I think the first
thing will these reforms? Could these reforms lead to better outcomes?
I think the possibility is very strong that they should,
but they need to be done quickly. They're quite comprehensive
what the Commissioner's proposed, but jumping to a break up,
which a lot of participants have said that it does

(05:11):
raise some significant issues around you know, you're forcing the
Australian entity to be broken up here in New Zealand.
It sets a precedent, so to go down that route
you really need to act carefully. For instance, one area
that we will be looking for and I'm looking forward
to the report from the Commissioners on the one hundred
plus pieces of land that the submarkets currently own, where

(05:33):
in fact they are appropriate that they own them if
they're held for an anti competitive process. I'll be waiting
for advice on the Communic Commission to say are they
contrary to the comments Act? If they were and are,
then we might look at how we deal with that.
We may require investment, but I don't want to jump
ahead to that. I want to see what the advice

(05:53):
is and obviously have to work it through with my
cabinet colleagues.

Speaker 1 (05:56):
Andrew, listen, thank you very much for talking us through that.
I really appreciate it. That's Andrew Bailey, Commus and Consumer
Affairs Minister. For more from Hither Duplessy Allen Drive. Listen
live to news talks it'd be from four pm weekdays,
or follow the podcast on iHeartRadio