Market study into supermarkets
On 17 November 2020, the Government announced that it would conduct a market study into supermarkets.
The study will allow the Commerce Commission to investigate any factors that may affect competition for the supply or acquisition of groceries by retailers in New Zealand.
This topic was chosen as the candidate of the study because of public concerns about a high level of concentration in the market for groceries. In addition, research conducted by the Productivity Hub indicates that competition levels in the sector have weakened over time.
Competition in New Zealand: highlights from the latest data [PDF 1.7MB](external link) - New Zealand Productivity Commission
The Government has also heard that unequal bargaining power between supermarkets and suppliers pushes prices unreasonably low for suppliers, which could impede investment in innovation and quality. While low prices benefit consumers, it is unclear how much of this is being passed onto consumers, with the cost of food making up 17% of household weekly expenses.
The study will also make inquiries into the supplier side of the grocery market. This means that if competition problems are found, small business suppliers are likely to benefit from any recommendations.
The Commerce Commission has published a draft report, which is available on its website.
Market study into the grocery sector(external link) — Commerce Commission
Due to the impact of COVID-19 lockdowns, the final report is now due to be made publicly available by 8 March 2022.
Find out more about the second market study: