Monopoly Watch New Zealand (MWNZ) says the pathway to
cheaper groceries and improved competition outcomes for
consumers looks clearer today, with the publication of
policy settings that, for the first time, put a workable
mechanism behind an idea the Commerce Commission first
floated five years ago.
The Commission’s 2022 market
study into the retail grocery sector raised structural
separation as a possible remedy for a market it found was
not delivering competitive outcomes for consumers. Until
now, that has remained a live idea without a costed,
mechanical answer to “how.” Today’s announcement
committing to the purchase of 120 existing supermarkets and
the establishment of new distribution centre capacity is the
first proposal MWNZ has seen that goes directly at the
actual constraint.
The right target: distribution,
not store count
MWNZ’s research has consistently
pointed to distribution infrastructure, not shelf count, as
the structural bottleneck in this market. The Commission’s
own analysis has found evidence of overbuild in store
numbers and floor space across the sector which means the
answer was never going to be building more supermarkets.
Today’s proposal reflects that: it targets the
distribution centres and distribution economics that
actually determine whether a new entrant can compete, rather
than adding storefronts to an already oversupplied retail
footprint.
Five areas the announcement puts into
sharper focus
Beyond the headline divestment
mechanism, MWNZ sees today’s announcement sharpening
debate on five specific consumer-facing
issues:
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1. Data property rights.
Consumers’ own shopping and loyalty data should
remain theirs to control and share, rather than becoming a
proprietary asset that entrenches the advantage of whichever
retailer collected it first.
2. Nutrition
competition. A genuinely competitive grocery market
should reward retailers for competing on the nutritional
value of what they sell, not only on headline
price.
3. Sustainability competition.
Waste reduction and supply chain sustainability
should be a dimension retailers compete on, rather than a
cost each incumbent can pass through
unchallenged.
4. Māori stewardship of assets.
Any restructuring of grocery retail and
distribution infrastructure is an opportunity to embed
genuine Māori governance and stewardship in the ownership
of the resulting assets, not an afterthought to be addressed
later.
5. Commerce Commission power and
funding. A structural remedy is only as effective
as the regulator’s capacity to monitor and enforce it
today’s announcement rightly pairs the structural change
with a commitment to strengthen the Commission’s powers
and funding.
“What makes sense here is that this
isn’t policy people arguing for more supermarkets, when
the Commission has already shown this market is overbuilt on
stores and square metreage.
The proposal goes
to the actual heart of the problem distribution centres and
the economics of distribution. That’s the structural
constraint we’ve been pointing to for years, and it’s the
first time we’ve seen a mechanism that addresses it directly
rather than play around the edges.”
MWNZ’s
focus from here during the election season is on the
evidence, not the politics: testing the published proposals
their cost assumptions, their implementation mechanics, and
their likely effect on consumer outcomes rather than
meaningless discussion about minutia detail and the fantasy
of building yet more supermarkets with an easier RMA , and
OIA , when its been proved that there is no business case
for more supermarkets shelve space
.