Government acts to improve competition in the retail grocery market

This follows the Commerce Commission’s market study which found that competition is not working well for consumers in this vital sector.

The Government has accepted 12 of the Commission’s 14 recommendations and is progressing work to deliver on the recommendations. The suite of actions and reform over the coming months includes:

• Commencing work on the Grocery Industry Competition Bill to progress several key regulatory changes, which will be introduced later this year.
• Opening consultation today on how to implement mandatory unit pricing on grocery products, so consumers can make informed purchasing comparisons and decisions. This consultation and information on how to have your say is available on our website.
• Upcoming consultation on a mandatory code of conduct between major grocery retailers and their suppliers, planned for late June.
• Progressing further work on recommendations to improve access to sites through planning law reform.
• Progressing work on options to establish a grocery sector regulatory role and dispute resolution scheme to deal with disputes between suppliers and retailers.
• Implementing the Commission’s recommended wholesale access model, while exploring options to develop a regulatory wholesale access regime to provide a ‘regulatory backstop’.
• Undertaking further work to examine additional steps to improve competition, like requiring major grocery retailers to divest some of their stores or retail banners.

This response aims to address the current barriers to entry and expansion in the retail grocery market, so that new competitors have a real prospect of entering the market and providing competition.

The bulk of these reforms will be given effect by the Grocery Industry Competition Bill, which is expected to be introduced later this year.

As part of this work, on 19 May 2022 the Government also introduced a Bill to prohibit restrictive and exclusive covenants over land and leases of the kind identified by the Commerce Commission. These covenants prevent competing grocery retailers or potential entrants from supplying groceries on a piece of land or from operating within the same mall or shopping centre as another grocery retailer. This Bill will improve the availability of land and sites for grocery retail affected by these covenants and is an important step in enabling competitors to enter the market.

Further updates will be provided as this work progresses.

Read more about the market study into supermarkets

Government acts on supermarket duopoly(external link) — Beehive.govt.nz