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The Wire: "Supermarket duopoly" responsible for rising food prices, says Consumer NZ

2:12pm on 20 May 2022

Interview by Casper McGuire, adapted by Joel Armstrong

Listen to the full interview

Supermarket company Foodstuffs, owner of New World, PAK'nSAVE, and Four Square, announced a 10% price cut on 110 commonly purchased items over 13 weeks starting on May 16, after growing concerns about increasing food prices.

This came after Countdown, owned by Woolworths, announced they would lock prices on hundreds of 'essential' produce during the coming winter months.

Jon Duffy, Chief Executive of Consumer NZ, says these measures aren't enough and competition surrounding the supermarket industry isn't acceptable.

"We need to be concerned if the only thing putting downward pressure on prices is some bad publicity that the supermarkets are getting. That suggests to me that competition is not working as it should."

The Commerce Commission found that supermarkets are making $1m in excess profits per day. Duffy says that this is what is contributing to the cost of living, specifically the rise in food prices.

"If we can eliminate the ability for supermarkets to make supernormal profit, that's going to help in the long term, even when we don't have extraordinary inflation pressures outside of what's in the supermarket's control."

Food prices have increased drastically internationally due to the conflict in Ukraine, COVID-19 causing disruptions in the industry. However, the duopoly of supermarket competition in New Zealand doesn't allow for reasonable competition in prices. 

Duffy says the government helping new entrants set up competing supermarkets with Foodstuffs and Woolworths will force them to offer better prices and better service.

$11m has been allocated in the government's 2022 Budget to introduce more wholesale competition. 

The government has also announced in their budget plan they intend to push through legislation under urgency over the next few days to crack down on supermarkets using restrictive covenants to prevent competitors from accessing land to open new stores. 

"This is a major first step in delivering on our commitment to ensuring New Zealanders get a fairer deal at the checkout," Commerce and Consumer Affairs Minister David Clark said.

The Minister is set to make an official decision regarding regulating the supermarket at the end of this month.

Public Interest Journalism funded through NZ On Air.