Commerce Minister David Clark to announce a decision on regulations for the grocery sector. Video / NZ Herald
New Government measures to rein in the power of the supermarket duopoly have been warmly welcomed by the grocery and consumer sectors but aren't expected to reduce skyhigh prices at the checkout any time soon.
Consumer NZ welcomed the announcement of a permanent grocery commissioner is to be appointed, based at the watchdog Commerce Commission, and the release of a consultation paper on the Grocery Code of Conduct.
The New Zealand Food & Grocery Council said a grocery commissioner would "hold supermarkets' feet to the fire".
But Sarah Balle, the founder of emerging online grocery competitor Supie, said the announcements held no price relief for shoppers at the checkout.
"It's good for suppliers. We know suppliers haven't had a fair deal for a long time ... but this announcement isn't going to change prices at the checkout any time soon," she said.
New Zealanders didn't have time to wait for things to improve over time, she said.
"I know everyone has high hopes for Aldi and CostCo to arrive, but CostCo in Auckland is still not open.
"How long do consumers in Hamilton or Napier or Dunedin and Queenstown have to wait for an alternative?"
Even if overseas competitors did enter the market, they would set up in major centres first, Balle said.
Commerce and Consumer Affairs Minister David Clark, announcing the new measures, said the mandatory grocery code of conduct would be especially important for small, artisan supplier brands and emerging start-ups wanting to get their products on shelves.
Raglan Food Company co-owner Latesha Randall said the latest measures "can't happen soon enough in my opinion".
"[It's a] great move to have industry held accountable to a set of standards and a way of blowing the whistle when needed - it will benefit both suppliers and consumers."
Meanwhile, the two dominant supermarket companies put a brave face on after the announcements.
Spencer Sonn, managing director of Woolworths NZ, which operates Countdown stores, said the company supported both a grocery commissioner and a grocery code of conduct.
Chris Quinn, managing director of Foodstuffs NZ which operates New World and Pak'n Save supermarkets, also supported the appointment of a grocery commissioner and a mandatory code of conduct between major grocery retailers and suppliers.
Both companies said they had been engaging positively and constructively with the Government and regulators.
Consumer NZ chief executive Jon Duffy said the speed with which the Government was moving in response to the Commerce Commission's market study on the sector was impressive.
"This sends a clear message to the supermarkets they cannot keep making super-profits at the expense of struggling consumers.
"That said, the devil is in the detail - the Grocery Industry Competition Bill will set the powers of the regulator and the mandatory code of conduct will set the rules for fair play between supermarket industry participants."
Consumer NZ would provide feedback on the code of conduct to ensure it delivered for both suppliers and consumers, Duffy said.
He expected the new measures to have an effect on prices "over time".
Duffy said following the Commerce Commission's recent market study finding that the duopoly was making $1 million in excess profits a day, public sentiment towards the supermarkets had shifted over the past year "with trust plummeting".
The supermarkets had lost their social licence.
Duffy said one fishhook ahead would be whether the Commerce Commission was adequately resourced to support the grocery commissioner and its new role under incoming legislation.
Commerce and Consumer Affairs Minister David Clark has announced a Grocery Commissioner will be appointed as a watchdog for the supermarket duopoly. Photo / Mark Mitchell
The Food & Grocery Council said "a hard-nosed" approach to the current supermarket sector situation was what was needed and the Government's measures were the right way to go.
"The [Commerce] commission has a wealth of information at its fingertips the commissioner will be able to call on.
"As well as intimate knowledge of economic and competition regulation, fair trading, and consumer protection, the Commission now has a very deep understanding of the grocery sector thanks to its work on the grocery market study.
"If the experience of having the telecommunications regulator inside the Commerce Commission is anything to go by, the supermarkets can now expect their feet to be held to the fire over everything from pricing at the checkout to the egregious and stand-over tactics suffered by suppliers during negotiations over the past 10 or so years.
"We are looking forward to the legislation establishing the commissioner receiving passage through Parliament as a matter of priority and for a commissioner to be appointed soon after that."
The council encouraged companies and the public to make submissions on the mandatory code of conduct.
"David Clark is to be congratulated for advancing this work so swiftly, and now we await the next steps to implementing the Commerce Commission's 14 recommendations, including the final shape of the new wholesale regulation rules later this year."
