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Mike's Minute: Will the supermarket regulations achieve anything?

Author
Mike Hosking,
Publish Date
Tue, 31 May 2022, 10:42am

Mike's Minute: Will the supermarket regulations achieve anything?

Author
Mike Hosking,
Publish Date
Tue, 31 May 2022, 10:42am

As usual there's big, bold talk from the Government, this time on supermarkets.

This is their response to the Commerce Commission report into the industry. In simple terms, the market doesn't work as well as it could, and the Government are going to do something about it.

The exact same thing happened in petrol. Commerce Commission said the market wasn’t working as well as it could be and the Government said they would do something about it. In fact, Kris Faafoi, Minister at the time, said you could save 33 cents a litre by the time they were done.

Simple question, are you saving 33 cents?

So what will they do at the supermarket? The bit that sounds good is the players must open up their wholesale arms to other operators and conduct business at a fair price.

What's fair? Who decides? Is it on individual products? Is it on individual products that aren't on sale, on special, or loss leaders? Or just average prices? New products? What about seasonal products? Products that are locally sourced? Or internationally sourced? What about specialist products? Or is it just an average basket of products?

This mandatory wholesale grocery access scheme is going to be regulated and overseen by this new industry regulator. While that’s being sorted out, they say it'll be up by the end of the year, the Commerce Commission does the work.

So it looks like the Government dictates pricing, because the supermarket have to cut "fair" deals to anyone who wants one. It's the same as profits. David Clark was calling profits in the industry excessive. What's excessive?

Are there penalties? What about appeal rights when parties don’t agree?

If, as a result of this, no one new enters the field, or if someone does but doesn’t make it work, is that the industry's fault or a realisation the market of 5-ish million just isn't big enough for more big players?

What role, if any, does shopping around have? You can save plenty if you look. The Herald Focus team did it last week, look it up, the variances were huge.

This, yet again, is a government looking to run our lives. Yes, we all hate supermarkets like we all hate oil companies, telcos, airlines, and banks. But that doesn’t mean we need David Cark in our trolley any more than we needed Faafoi at the pump.

Let's check in, in 6 months shall we and see if the change to groceries is as spectacular as the change to petrol?