National to pursue separation of Foodstuffs
National will pursue the structural separation of Foodstuffs, subject to an independent Commerce Commission assessment, so Kiwis get a fairer deal at the checkout, National’s Finance and Economic Growth spokesperson Nicola Willis says.
“New Zealanders are paying more than they should for groceries because supermarket competition is still too weak. Families deserve more choice, better prices and supermarkets that have to fight harder for their dollars,” Ms Willis says.
“That is why a re-elected National Government will pursue the structural separation of Foodstuffs into two genuinely competing nationwide grocery chains, subject to an independent Commerce Commission assessment that it can be implemented in a way that delivers net benefits for shoppers.
“The proposed structure would see New World and Four Square as one nationwide chain and PAK’nSAVE as another. Together with Woolworths, this would mean New Zealand would have three major nationwide grocery chains.
“National will amend the Grocery Industry Competition Act in our first 100 days in Government to empower the Commerce Commission to develop and assess a detailed implementation plan, and determine whether the separation can be delivered in a way that leaves consumers better off.
“We will require the Commission to provide its recommendation in six months.
“Independent analysis estimates restructuring Foodstuffs could be worth around $200 to $1,320 a year, per household, by full rollout, depending on the household type and income. That’s real money back in the pockets of New Zealanders.
“It could also see $12.6 billion in consumer benefits over 20 years, with grocery prices projected to fall by around 3.5 per cent lower than they otherwise would be one year after separation, and around 5 per cent after six years,” Ms Willis says.
“More competition means supermarkets have to work harder for every customer, on price, specials, range and service. That is how shoppers get a better deal.
“The Commerce Commission has found weak supermarket competition is not working well for shoppers. Foodstuffs North Island, Foodstuffs South Island and Woolworths still account for around 82 per cent of the market combined, leaving New Zealanders with little choice about where to shop.
“Our Government has removed several barriers to competition by making it easier to consent and build new supermarkets, improving overseas investment settings and strengthening grocery competition rules. National's policy would accelerate the drive to greater competition.
“Under National’s policy, the Commission will have six months to test the separation proposal, consult affected businesses, owner-operators, suppliers and consumers, develop an implementation plan and make a formal recommendation.
“Our initial view is that New World and PAK’nSAVE would compete harder on prices, specials and service if they were genuinely independent of each other.
“They currently sit within the same Foodstuffs structures. Separation would create three major nationwide grocery chains and put more pressure on supermarkets to win and keep customers.
“If the Commission recommends separation, National will legislate to implement it.
“This policy is aimed at the uncompetitive structure individual Kiwi supermarkets are currently operating in, not the owner-operators who are hardworking people striving to do good by their community.
“No owner of a PAK’nSAVE, New World or Four Square will be forced to sell or re-brand their business. Existing owner-operators would retain ownership of their businesses, continue to operate under their existing brands, and remain part of a larger group with the scale and infrastructure to support their store.
“Structural separation of this scale has risks and must be done carefully. Whether a separation would deliver net benefits for consumers would depend on how it is implemented and what happens to supply-chain costs.
“That is why National will not have politicians playing supermarket executive from the Cabinet table, whether by ordering a breakup themselves or spending billions of taxpayer dollars trying to run a supermarket.
“The Commerce Commission has the independent expertise to test whether the benefits for shoppers outweigh the costs and to work through how any separation would operate in practice.
“There is a very high bar for this kind of intervention and National is not pursuing structural separation in any other sector. This will be a supermarket-specific process under the Grocery Industry Competition Act.
“However, after years of reviews and incremental reform, it’s clear the status quo isn’t working. It’s time for change.
“New Zealanders deserve a better deal at the checkout. National is campaigning to make that a reality as part of our plan to fix the basics and build the future.”
Link to full document HERE
