Foodstuffs says it will appeal the Commerce Commission's decision to decline its application to merge Foodstuffs North Island and Foodstuffs South Island.
Foodstuffs North Island and Foodstuffs South Island operate some of New Zealand’s best-known supermarket banners – New World, Pak’nSave and Four Square.
The commission rejected the merger proposal saying it was not convinced the benefits would flow to customers.
Sue Chetwin chairs the Grocery Action Group, which advocates for fairer prices and more competition in New Zealand’s grocery sector. She is a former Consumer NZ chief executive.
OPINION
No surprises then that supermarket giant Foodstuffs will appeal the Commerce Commission decision to reject its application to merge its North and South Island operations.
But there’s no joy for consumers in this and we should be concerned.
From a duopoly player, the announcement of the intention to appeal is more of the same turf protection.
Ignore the wealth of evidence collected by the commission when it rejected the merger, by the vast majority of submitters who opposed it, by the OECD which noted the high prices and lack of competition in our market, by suppliers already under the cosh by a duopoly wielding duopoly power, and of course the little ole consumer.
It’s the consumer in Aotearoa New Zealand who keeps paying some of the highest prices on the planet for food.
Of course, Foodstuffs has every right to appeal – it has spent a vast fortune on lawyers and consultants both here and overseas to get its merger application this far. But there’s a difference between having a right to appeal and exercising it.
Foodstuffs needs to read the tea leaves. And the tea leaves should be telling the bosses at head office, consumers don’t want this merger, neither do suppliers, producers, nor the regulators.
No amount of piffle from the top saying the merger would allow Foodstuffs to make prices more competitive, ultimately benefitting customers should be believed. The co-operative could do that now, but doesn’t. When has a duopoly ever had consumer interests at heart?
This is the same co-operative that is being investigated by the commission for running potentially false specials, that had to be dragged into offering workable unit pricing for customers, through regulation, that has been pinged for land banking and covenants which prevent competitors from opening stores, and that has had to see the appointment of a Grocery Commissioner to oversee activities.
Finally, and most importantly, it runs some of the most profitable supermarkets in the world.
Where is the customer in any of that?
There might well have been customers able to shop at community leader David Letele’s South Auckland food bank up until a month ago. This is a food bank, which Letele says, services more and more people – working class, middle class - all being pushed down. He’s had to close this much-needed service because he couldn’t keep up with demand.
The commission quite rightly rejected Foodstuffs’ merger application, following its own supermarket study, released in 2022, which found an uncompetitive market and unfair pricing.
The essential role of the commission in determining competition matters in this country cannot be overstated. The number of market surveys it has done is mounting - and all point to a lack of competition in essential markets, driving up prices.
'It’s the consumer in Aotearoa New Zealand who keeps paying some of the highest prices on the planet for food.'
But none come more essential than the ability to afford to eat. By rejecting the Foodstuffs’ merger proposal, the commission is upholding its mandate to protect the interests of consumers.
The commission’s decision is supported by a broad array of stakeholders, including independent retailers, suppliers, consumer advocacy groups, and economic experts.
These groups have consistently voiced concerns about the potential negative impacts of increased market concentration, such as reduced consumer choice, higher prices, and diminished innovation within the grocery sector.
The ongoing scrutiny of Foodstuffs' practices highlights the need for robust regulatory frameworks that can effectively curtail anti-competitive behaviour.
As consumers, we must advocate for transparency, accountability, and fairness in the marketplace to ensure that our interests are safeguarded in the face of corporate manoeuvring.
The rejection of Foodstuffs' merger application is a victory for fair competition and consumer rights in New Zealand.
At the Grocery Action Group, we will be doing everything we can to make sure this appeal is rejected.
