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Supermarket duopoly: Goverment proposes giving ComCom new powers to stop land wars

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Countdown and Pak’nSave supermarkets in Napier. Photo / Warren Buckland

The Government wants to give the Commerce Commission new information-gathering powers to prevent land wars between supermarkets restricting competition.

Parliament’s Economic Development, Science and Innovation committee has recommended giving the Commission these powers by adding clauses to the Commerce (Grocery Sector Covenants) Amendment Bill, which is due to have its second reading in Parliament this week.

Commerce and Consumer Affairs Minister David Clark supports updating the Bill, which is aimed at preventing supermarkets from buying up land or dictating the terms of leases to block their competitors from getting a foothold in a neighbourhood.

The new proposal is to enable the Commerce Commission to require a grocery retailer to give it information about contracts, arrangements, understandings, or covenants that make it difficult for competing retailers to set up shop.

The aim of these powers is to help the Commerce Commission enforce the new rules.

Clark said he’s written to the Commission clarifying he expects it to make “proactive use of its monitoring powers” under the Bill, rather than just use the powers when it suspects there’s a problem.

Under the proposal, the Commission can only use its information gathering powers “for the purposes of assessing compliance with certain provisions of the Commerce Act 1989 and the Fair Trading Act 1986”.

Clark pointed to Ponsonby as an example of where restrictive covenants currently mean the Auckland suburb is only serviced by one grocery provider.

“The supermarkets have indicated they are committed to ditching restrictive covenants and leases, which is a great step in the right direction,” Clark said.

“We, however, need to make sure this process maintains its momentum, and that restrictive covenants are relegated to the history books for good.

“This legislation tackles one root cause of competition woes in the grocery sector, and ensures the Commerce Commission has the correct powers to help enact change.

“It also sends a signal to would-be competitors that access to suitable land, need not be a barrier anymore.”

This change is one of a number the Government is making on the back of a Commerce Commission study that recommended action it could take to improve competition in the grocery sector.

The Government is also working on providing a regulatory backstop to ensure supermarket companies enable competitors to buy goods from their wholesale arms.

“We’re also moving fast on the mandatory code of conduct, which will be heading out for public consultation in the coming weeks and the unit pricing scheme which is already out for feedback,” Clark said.

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