March 29, 2025 • 11 mins
The Government wants to make it easier for a third major supermarket to come in and break up the duopoly.
Nicola Willis announced today that she has issued a Request for Information, asking supermarkets what changes are needed to help them compete with the big two.
These include local supermarkets upping the ante enough to compete, or overseas companies launching in New Zealand.
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Episode Transcript
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Speaker 1 (00:05):
You're listening to the Weekend Collective podcast from News Talks.
I'd be so yes. The government wants to make it
easier for a third major supermarket to come in and
break up the geopoly and it's control over it. I guess.
And Nicol Willison announced that she is issued an RAFI,
which is a request for information asking asking challenges what
(00:26):
changes are needed to help them compete with the big two.
These include local supermarkets up in the ante to compete,
or overseas companies launching in New Zealand. And Finance Minister
Nichola Willis is with us. Now, good afternoon, Good afternoon, Tim.
So you're putting a line in the water. Are any
big fish going to bite?
Speaker 2 (00:47):
Well? I hope so. And this is our intention to
say what do we need to do to give you
a leg up so that you come here. But I'm
also aware that they might not, and if that's the case,
we're going to have to take further action. So I'm
at the same time as putting out this request for information,
I'm seeking advice from experts on what might be needed
(01:09):
to restructure the industry so that it becomes more competitive.
So we've got two coals in the fire at the
same time, because I'm determined that we have to make
more progress here. The simple factors the reforms that the
last government made in the grocery sector, the Grocery Commissioner says,
actually haven't had an impact on competition, and that's not
(01:30):
good enough because it means kiwis are continuing to pay
too much, and so we need to take more action.
Speaker 1 (01:36):
Certainly, A but pessimistic about getting some big players to
put some information in. Are you a bit pessimistic about it?
Speaker 2 (01:43):
Well, I am just realistic that it's not enough for
me to fit back wait for ld Or Coals to
turn up. So what I'm doing is really jangling out
the bait and saying, come on, what would it take.
And in the conversations I've had over the past few weeks,
what a lot of people say to me is, look,
the market is so non competitive at the moment that
(02:05):
anyone wanting to come into New Zealand might just say, whoa,
that's too hard because the big guys have so much
market power, they control the supplier relationships, they could squeeze
out a new infront. So I want to hear that. Formally,
what do people think of the barriers and what do
they think we should do to overcome them. And I'm
giving everyone the opportunity to put forward their best case.
Speaker 1 (02:28):
So it's a formal request for information. But as you've said,
you've had discussions. Have you had discussions with any of
the big players? In other words, do you sort of
know what answers you're going to get from that request
for information?
Speaker 2 (02:40):
Well, I haven't had the big players respond to the
bait so far. So the requests information, we're going to
personally send it to the big players and ask them
to take part. Now they might not, that's up to them.
But if they don't, they're in itself or the information
won't it to because it will tell us that they
look at New Zealand and they just they're not even interested.
(03:00):
And if that is the case, then my viewer is
we're in a bit of a dangerous situation because we
know that the New Zealand grocery sector is one of
the most least computers in the world. We know that
New Zealanders pay more for their groceries than many other
people do around the world, and we know that's something
to get better without more competition. So my view is
if we don't get another big player interested, then we
(03:23):
actually have a responsibility to think about how we make
the existing market more competitive. And that's why I'm putting
options on the table that are pretty bold, which is
including essentially winding back the clock and de merging some
of these supermarket brands that have all come together into
these two entities, because that might be what's needed to
(03:43):
get real competition on the ground.
Speaker 1 (03:46):
Currently, the revenue of that sector is twenty seven billion.
How many billion are we being overcharged?
Speaker 2 (03:52):
Do you reckon? Well, there are various views on that.
The Commerce Commission when they get their study in twenty
twenty two, I've entified around half a billion dollars of
what they called excess profits. When the grocery Mishner did
his report late last year, he said there was evidence
of increasing margins for supermarkets. He also said that there
(04:13):
was evidence that actually they're becoming more profitable over time.
So what we can see is this is a situation
that despite lots of regulation being added by the last government,
hasn't actually materially got better for shoppers. And that's the focus, right.
We've got to see that New Zealand is turning out
at the checkout feel they're getting a competitive and fair price,
(04:34):
and my concern is they're not right now.
Speaker 1 (04:36):
I guess the cynical consumer, not because of your announcement,
but just people would think, okay, well, in the end,
if we're going to say what five or ten bucks
a week, or are you looking at significant savings and
are we being significantly ripped off?
Speaker 2 (04:49):
Well, this is about fixing this for the long term.
So of course it's not just about the current situation.
It's the fact that it could get worse over time
if we don't have more competitive pressure. And it's about
the fact that this is New Zealand's second biggest cost
and their household budgets after housing. So yes, you wouldn't
(05:09):
expect that overnight prices would have but I think it's
really important that the cost that you pace every week
your grocery shop is a fair cost. I also fundamentally
believe in competitive markets, that is that businesses should be
competing against each other, putting pressure on prices, coming up
with innovative new offerings, doing exciting new things. And in
(05:32):
the absence of competition, I think Keywis will miss out
on that innovation and that dynamism and that price pressure
that a good economy has. So it's not only an
important sector for shop, it's also an important sector for
our food suppliers and other businesses in the supply chain,
and may be effit when it's more competitive as well.
Speaker 1 (05:49):
You might have heard Anthony Albanezi and said he's going
to be legislating. He said this today, is going to
legislate to prevent price gouging. Any chance you might be
wanted to copy his homework as well, well, that.
Speaker 2 (06:00):
Might be one of the options that comes up through
this RFI protest. It might be what a enterances would
be necessary. So, as I said, I'm open to considering
all options. I think the key thing for me is
we have to address not just the symptoms of a
lack of competition, but we actually have to get at
the underlying drivers and get more competitive pressure in there.
(06:22):
That's what I'm really motivated by, because actually you can
regulate and regulate and regulate, but in the end, if
you don't have a competitive industry, then these problems will
keep reoccurring.
Speaker 1 (06:32):
How do you balance the regulation side of it versus
your maybe other instinct, which is to sort of have
a freer market and without too much government interference, because
you'd be looking at potentially some significant government interference, aren't you.
Speaker 2 (06:47):
That's right, and that's why I don't take this action
today lightly because I'm pro business. I believe in businesses
competing inside free markets. But an orthodox economic approach sence
is but actually sometimes markets fail or are dysfunctional, and
when that's the case, there is an opportunity for intervention.
(07:07):
You know, for example, we regulate quite heavily the way
the electricity industry works, and of other industries. My concern
is that in New Zealand we've had so many mergers
and acquisitions in the grocery sector that it's no longer
of your functional market. And that's why I think it's
important to take pause and say, actually, this isn't a
functional market and it's not delivering, then should we be
(07:30):
thinking about how we restructure it. And I think the
other thing here is that when you compare New Zealand's
grocery sector with other countries in the world, we have
one of the least competitive. And that's caused the OACD
and others to say, actually, you need.
Speaker 1 (07:44):
To look at this guy, who's a good example, who's
a realistic example, you think we need to be more
like them.
Speaker 2 (07:50):
Well, when you look around the rest of the world,
you know, the United States has a highly fragmented grocery market.
They've got lots of different planners, lots of different formats.
You know, you can go to your big barn, your sits,
the bar, and your little barn. And that's also in
a state by state basis, because people say, oh, well,
the US is way bigger than us, but even if
you look at individual states in America, whether it's Colorado
(08:12):
or elsewhere, even at that state level, they have a
lot more competitives in the market, and that is absolutely
helping the US with cheaper food price.
Speaker 1 (08:21):
How far are you guys preferred to go as a
government in terms of financially assisting a new player to
come in, not just by regulation, but helping them with
the financial hurdles on I think, what's it called the
J curve? Ow it's such expensive, it so expensive at
the start.
Speaker 2 (08:36):
Look, I don't want to do that. I don't want
the government to own a supermarket or to be funding
or running a supermarket. And I guess my hypothesis is
if someone really can't get the funding to set up
a supermarket. Then aren't we better to work out why
that is and why it is that a bank or
(08:58):
a commercial lender isn't interested in investing. And that's why
I'm looking at the structural issues, because in a market
that's profitable like this is market sector is if things
are working well, people should want to invest their money
there because they think they can make a return. And
so I think, you know, the government investing in this
area would be pretty risky.
Speaker 1 (09:18):
Not doing it yourself, I mean, but saying giving them
some sort of interest free loans so they can get
themselves set up with land and the infrastructure they need.
Would you look at anything where you are investing not
necessarily running the show, I say.
Speaker 2 (09:32):
I think that if we get the market structure right,
and we get the regulatory environment right, a decent provider,
a decent operator with good capital behind them should be
able to get that kind of lending from the private market.
They shouldn't have to come to the government's cap and head.
So my first port of call is get the regulations
in the market structure right, rather than the government getting
(09:53):
itself involved in funding and financing and choosing who's the
best operator. That's a pretty steep hill to climb.
Speaker 1 (10:00):
As a tax player. F I'm listening, I'm wanting to
know how radical you're prepared to go. How hard are
you prepared to push these levers?
Speaker 2 (10:07):
Very very hard, Because, as I said, my concern is
the cost of living that New Zealanders faith. I've identified
grocery prices are a major thing that is driving that
sense of a high cost of living. They are at
the moment much higher than the rest of the world.
This isn't a competitive sector. I'm prepared to take the
(10:28):
actions that are needed to fix That doesn't mean tim
I shouldn't be careful. I should be careful because any
reforms we make have to deliver for shoppers and consumers.
I'm prepared to take bold action because this is something
that will make a difference to every Curisa market trolley
in the country and actually businesses around the country. So
it's a reform worth progressing.
Speaker 1 (10:51):
Foodstuffs is promising. It supports competition that delivers great value
for shoppers, and I can barely get through that without
rolling my eyes. What's your response to that, Well, my
response to.
Speaker 2 (11:04):
That is that when the Growthery Commissioner did his report
last year, he expressed his disappointment that the major SIS
market chains are still playing all sorts of games. There's
still hundreds of consumer complaints about their pricing approaches, there's
still issues with their wholesale regime, with the way they
deal with suppliers, and I think if they were very
(11:24):
serious about competition, and if they were very serious about
delivering a good deal for Kiwis, they would have made
a lot more progress than they had so far.
Speaker 1 (11:33):
Excellent, Hey, thanks so much for your time, Nicola, Willis
really appreciate it. For more from the Weekend Collective, listen
live to News Talk ZB weekends from three pm, or
follow the
Speaker 2 (11:43):
Podcast on iHeartRadio.
You're listening to the Weekend Collective podcast from News Talks.
I'd be so yes. The government wants to make it
easier for a third major supermarket to come in and
break up the geopoly and it's control over it. I guess.
And Nicol Willison announced that she is issued an RAFI,
which is a request for information asking asking challenges what
(00:26):
changes are needed to help them compete with the big two.
These include local supermarkets up in the ante to compete,
or overseas companies launching in New Zealand. And Finance Minister
Nichola Willis is with us. Now, good afternoon, Good afternoon, Tim.
So you're putting a line in the water. Are any
big fish going to bite?
Speaker 2 (00:47):
Well? I hope so. And this is our intention to
say what do we need to do to give you
a leg up so that you come here. But I'm
also aware that they might not, and if that's the case,
we're going to have to take further action. So I'm
at the same time as putting out this request for information,
I'm seeking advice from experts on what might be needed
(01:09):
to restructure the industry so that it becomes more competitive.
So we've got two coals in the fire at the
same time, because I'm determined that we have to make
more progress here. The simple factors the reforms that the
last government made in the grocery sector, the Grocery Commissioner says,
actually haven't had an impact on competition, and that's not
(01:30):
good enough because it means kiwis are continuing to pay
too much, and so we need to take more action.
Speaker 1 (01:36):
Certainly, A but pessimistic about getting some big players to
put some information in. Are you a bit pessimistic about it?
Speaker 2 (01:43):
Well, I am just realistic that it's not enough for
me to fit back wait for ld Or Coals to
turn up. So what I'm doing is really jangling out
the bait and saying, come on, what would it take.
And in the conversations I've had over the past few weeks,
what a lot of people say to me is, look,
the market is so non competitive at the moment that
(02:05):
anyone wanting to come into New Zealand might just say, whoa,
that's too hard because the big guys have so much
market power, they control the supplier relationships, they could squeeze
out a new infront. So I want to hear that. Formally,
what do people think of the barriers and what do
they think we should do to overcome them. And I'm
giving everyone the opportunity to put forward their best case.
Speaker 1 (02:28):
So it's a formal request for information. But as you've said,
you've had discussions. Have you had discussions with any of
the big players? In other words, do you sort of
know what answers you're going to get from that request
for information?
Speaker 2 (02:40):
Well, I haven't had the big players respond to the
bait so far. So the requests information, we're going to
personally send it to the big players and ask them
to take part. Now they might not, that's up to them.
But if they don't, they're in itself or the information
won't it to because it will tell us that they
look at New Zealand and they just they're not even interested.
(03:00):
And if that is the case, then my viewer is
we're in a bit of a dangerous situation because we
know that the New Zealand grocery sector is one of
the most least computers in the world. We know that
New Zealanders pay more for their groceries than many other
people do around the world, and we know that's something
to get better without more competition. So my view is
if we don't get another big player interested, then we
(03:23):
actually have a responsibility to think about how we make
the existing market more competitive. And that's why I'm putting
options on the table that are pretty bold, which is
including essentially winding back the clock and de merging some
of these supermarket brands that have all come together into
these two entities, because that might be what's needed to
(03:43):
get real competition on the ground.
Speaker 1 (03:46):
Currently, the revenue of that sector is twenty seven billion.
How many billion are we being overcharged?
Speaker 2 (03:52):
Do you reckon? Well, there are various views on that.
The Commerce Commission when they get their study in twenty
twenty two, I've entified around half a billion dollars of
what they called excess profits. When the grocery Mishner did
his report late last year, he said there was evidence
of increasing margins for supermarkets. He also said that there
(04:13):
was evidence that actually they're becoming more profitable over time.
So what we can see is this is a situation
that despite lots of regulation being added by the last government,
hasn't actually materially got better for shoppers. And that's the focus, right.
We've got to see that New Zealand is turning out
at the checkout feel they're getting a competitive and fair price,
(04:34):
and my concern is they're not right now.
Speaker 1 (04:36):
I guess the cynical consumer, not because of your announcement,
but just people would think, okay, well, in the end,
if we're going to say what five or ten bucks
a week, or are you looking at significant savings and
are we being significantly ripped off?
Speaker 2 (04:49):
Well, this is about fixing this for the long term.
So of course it's not just about the current situation.
It's the fact that it could get worse over time
if we don't have more competitive pressure. And it's about
the fact that this is New Zealand's second biggest cost
and their household budgets after housing. So yes, you wouldn't
(05:09):
expect that overnight prices would have but I think it's
really important that the cost that you pace every week
your grocery shop is a fair cost. I also fundamentally
believe in competitive markets, that is that businesses should be
competing against each other, putting pressure on prices, coming up
with innovative new offerings, doing exciting new things. And in
(05:32):
the absence of competition, I think Keywis will miss out
on that innovation and that dynamism and that price pressure
that a good economy has. So it's not only an
important sector for shop, it's also an important sector for
our food suppliers and other businesses in the supply chain,
and may be effit when it's more competitive as well.
Speaker 1 (05:49):
You might have heard Anthony Albanezi and said he's going
to be legislating. He said this today, is going to
legislate to prevent price gouging. Any chance you might be
wanted to copy his homework as well, well, that.
Speaker 2 (06:00):
Might be one of the options that comes up through
this RFI protest. It might be what a enterances would
be necessary. So, as I said, I'm open to considering
all options. I think the key thing for me is
we have to address not just the symptoms of a
lack of competition, but we actually have to get at
the underlying drivers and get more competitive pressure in there.
(06:22):
That's what I'm really motivated by, because actually you can
regulate and regulate and regulate, but in the end, if
you don't have a competitive industry, then these problems will
keep reoccurring.
Speaker 1 (06:32):
How do you balance the regulation side of it versus
your maybe other instinct, which is to sort of have
a freer market and without too much government interference, because
you'd be looking at potentially some significant government interference, aren't you.
Speaker 2 (06:47):
That's right, and that's why I don't take this action
today lightly because I'm pro business. I believe in businesses
competing inside free markets. But an orthodox economic approach sence
is but actually sometimes markets fail or are dysfunctional, and
when that's the case, there is an opportunity for intervention.
(07:07):
You know, for example, we regulate quite heavily the way
the electricity industry works, and of other industries. My concern
is that in New Zealand we've had so many mergers
and acquisitions in the grocery sector that it's no longer
of your functional market. And that's why I think it's
important to take pause and say, actually, this isn't a
functional market and it's not delivering, then should we be
(07:30):
thinking about how we restructure it. And I think the
other thing here is that when you compare New Zealand's
grocery sector with other countries in the world, we have
one of the least competitive. And that's caused the OACD
and others to say, actually, you need.
Speaker 1 (07:44):
To look at this guy, who's a good example, who's
a realistic example, you think we need to be more
like them.
Speaker 2 (07:50):
Well, when you look around the rest of the world,
you know, the United States has a highly fragmented grocery market.
They've got lots of different planners, lots of different formats.
You know, you can go to your big barn, your sits,
the bar, and your little barn. And that's also in
a state by state basis, because people say, oh, well,
the US is way bigger than us, but even if
you look at individual states in America, whether it's Colorado
(08:12):
or elsewhere, even at that state level, they have a
lot more competitives in the market, and that is absolutely
helping the US with cheaper food price.
Speaker 1 (08:21):
How far are you guys preferred to go as a
government in terms of financially assisting a new player to
come in, not just by regulation, but helping them with
the financial hurdles on I think, what's it called the
J curve? Ow it's such expensive, it so expensive at
the start.
Speaker 2 (08:36):
Look, I don't want to do that. I don't want
the government to own a supermarket or to be funding
or running a supermarket. And I guess my hypothesis is
if someone really can't get the funding to set up
a supermarket. Then aren't we better to work out why
that is and why it is that a bank or
(08:58):
a commercial lender isn't interested in investing. And that's why
I'm looking at the structural issues, because in a market
that's profitable like this is market sector is if things
are working well, people should want to invest their money
there because they think they can make a return. And
so I think, you know, the government investing in this
area would be pretty risky.
Speaker 1 (09:18):
Not doing it yourself, I mean, but saying giving them
some sort of interest free loans so they can get
themselves set up with land and the infrastructure they need.
Would you look at anything where you are investing not
necessarily running the show, I say.
Speaker 2 (09:32):
I think that if we get the market structure right,
and we get the regulatory environment right, a decent provider,
a decent operator with good capital behind them should be
able to get that kind of lending from the private market.
They shouldn't have to come to the government's cap and head.
So my first port of call is get the regulations
in the market structure right, rather than the government getting
(09:53):
itself involved in funding and financing and choosing who's the
best operator. That's a pretty steep hill to climb.
Speaker 1 (10:00):
As a tax player. F I'm listening, I'm wanting to
know how radical you're prepared to go. How hard are
you prepared to push these levers?
Speaker 2 (10:07):
Very very hard, Because, as I said, my concern is
the cost of living that New Zealanders faith. I've identified
grocery prices are a major thing that is driving that
sense of a high cost of living. They are at
the moment much higher than the rest of the world.
This isn't a competitive sector. I'm prepared to take the
(10:28):
actions that are needed to fix That doesn't mean tim
I shouldn't be careful. I should be careful because any
reforms we make have to deliver for shoppers and consumers.
I'm prepared to take bold action because this is something
that will make a difference to every Curisa market trolley
in the country and actually businesses around the country. So
it's a reform worth progressing.
Speaker 1 (10:51):
Foodstuffs is promising. It supports competition that delivers great value
for shoppers, and I can barely get through that without
rolling my eyes. What's your response to that, Well, my
response to.
Speaker 2 (11:04):
That is that when the Growthery Commissioner did his report
last year, he expressed his disappointment that the major SIS
market chains are still playing all sorts of games. There's
still hundreds of consumer complaints about their pricing approaches, there's
still issues with their wholesale regime, with the way they
deal with suppliers, and I think if they were very
(11:24):
serious about competition, and if they were very serious about
delivering a good deal for Kiwis, they would have made
a lot more progress than they had so far.
Speaker 1 (11:33):
Excellent, Hey, thanks so much for your time, Nicola, Willis
really appreciate it. For more from the Weekend Collective, listen
live to News Talk ZB weekends from three pm, or
follow the
Speaker 2 (11:43):
Podcast on iHeartRadio.
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