Competition market study into supermarkets

The Government response follows the Commerce Commission’s market study into the retail grocery sector. The market study found that competition is not currently working well for consumers in this sector, and that improved competition would place stronger pressures on retailers to offer New Zealand consumers better prices, quality, range and service in their supermarket shop.

The Commission made 14 recommendations aimed at improving competition in the New Zealand retail grocery sector.

Read the final retail grocery market study report(external link) — Commerce Commission

Government response to market study

The Government accepted 12 of the Commission’s 14 recommendations. Most of these have now been implemented.

Passing the Grocery Industry Competition Act

The Government passed the Grocery Industry Competition Act. The purpose of the Act is to improve competition in the grocery industry for the long-term benefit of consumers.

The Grocery Industry Competition Act:

  • establishes a Grocery Commissioner – a new grocery sector regulatory function in the Commerce Commission to provide oversight and ongoing review of the sector
  • regulates wholesale supply, including establishing a regulatory backstop, to help ensure a more competitive wholesale market
  • implements supplier-focused protections such as prohibiting the use of unfair contract terms, allowing opportunities for collective bargaining, and providing for a Grocery Supply Code of Conduct
  • provides for a dispute resolution scheme for suppliers and wholesale customers of the major grocery retailers.

Read the Act(external link) —

Passing the Commerce (Grocery Sector Covenants) Amendment Act

The Government has passed amendments to the Commerce Act to prohibit restrictive and exclusive covenants over land and leases to address a key competition issue in this sector.

Read the Act(external link) —

Introduced standards for mandatory unit pricing

The Government has passed regulations requiring certain retailers to display per unit pricing of grocery products in a clear and consistent way. This should help consumers more easily compare items on the shelf through, for example, the display of costs per kilogram or litre of product.

Read the regulations(external link) -

MBIE held initial consultation on unit pricing in mid-2022

MBIE consulted on the draft regulations between April and May 2023

Introduced a Grocery Supply Code of Conduct

The Government has implemented a mandatory Code of Conduct setting minimum conduct for how the main grocery retailers deal with their suppliers. This should improve the trading environment for suppliers, which is likely to have flow-on benefits for consumers.

Read the regulations(external link) –

MBIE held initial consultation on the Code in mid 2022

MBIE consulted on a draft of the Code between June and July 2023

Grocery Dispute Resolution Scheme

Work to appoint a dispute resolution scheme provider is underway.

The Scheme may hear disputes relating to the Grocery Supply Code and wholesale supply regime under Part 3 of the Grocery Industry Competition Act.

Other work

Government examined other options to improve competition, including requiring major grocery retailers to divest some of their stores or retail banners.

The Government has decided not to progress work on divestment at this stage. More information on this decision is provided in the further information section below.

Further information

Last updated: 14 September 2023