The government says all options are on the table to introduce more competition in the supermarket sector, which may include the break or restructuring of the two existing supermarket chains.
Woolworth and FoodStuffs currently dominate the New Zealand supermarket sector.
The cabinet also agreed with a formal request for information (RFI) to accelerate improved competition.
Economic growth minister Nicola Willis said supermarket prices in New Zealand were high by international standards.
“It’s crucial that we get this market working effectively. Doing this will offer benefits to all shopping carts and create new business opportunities up and down in the supply chain.”
Willis said RFI would help the government determine the next potential regulatory and legislature changes and whether structural changes would be needed.
“I hope the people who told me things behind the bicycles will pour some of the things that happen in the supermarket sector take this opportunity to formally tell us that these things are happening and spell them up.”
She called “important step.”
“Employees are working with appointed consultants to consider options, including a possible demerit of existing entities.”
Willis said there were a variety of views on what this design would look like.
“Do you separate the wholesale from retail? Do you divide the existing marks? And if you do that, what is needed in terms of wholesale and storage and logistics, how would they be broken to match the new brands?”
The advice she is looking for a question “What is the ideal structure of the market” and how it can be achieved.
“I don’t want to move to the next stage of structural intervention,” Willis said, until it was clear what was preventing people who invested in the past and what measures could be taken to facilitate competition.
“I need to present a case to the cabinet for what was completely thought through the intervention.”
She said the information for RFI would be sought after in the next six weeks and would bring more recommendations to the office in mid -2025.
If legislation was needed, Willis said he wanted to be introduced before the end of the year and approved during this parliamentary mandate.
“I’m putting all the options on the table,” she said.
“I’m talking about potentially massive changes. We have to get the details right. And I think the New Zealands need confidence that we think of it thoroughly, that we explore all our options.”
The government reaffirmed that they would not establish a third supermarket chain.
In response, the work accused the National of not meeting supermarkets for making no significant change in the supermarket sector.
Commerce and consumer spokesman Arena Williams said the long-awaited announcement did not bring competition, introduced a new player nor reducing prices as promised.
She said the fact that the government was only asking for information and advice showed that it could not prioritize cost reduction.
Last month, Willis spoke at the New Zealand Economics Forum in Hamilton and explained the findings of a 2022 trade committee report showing that “competition among supermarket retailers is smooth, profits are high, and buyers pay higher prices than people in many other countries.”
Willis also noted that New Zealand supermarkets were the most expensive for cooking staples compared to the UK, Ireland and Australia.
In February, Willis ruled out the government opening its own supermarket chain and said the government could not force a third participant to the market to break the country’s supermarket duopoly.
In September last year, the Pierre Van Heerden grocery commissioner said the supermarket margins increased, the profits remained high and the two main operators, food and woolworths remained dominant.
“We want to see more competition and sustained pressure on major supermarkets to offer better results for consumers.”
He said that in a competitive margin of market retail growth would be limited or reduced, with price competition.
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