Supermarkets Slammed For Bad Behaviour

Another day, another report that reveals how badly the duopoly supermarkets of Woolworths and Foodstuffs are treating their customers and suppliers to benefit themselves.

“Kiwi consumers deserve so much better than this. We are still paying some of the highest prices on the planet to put food on the table and we have known this for more than three years,” said Grocery Action Group chair Sue Chetwin.

Today’s report from the Commerce Commission slams the supermarket duopoly sector for the way it treats its suppliers by making unrealistic demands of them and asking them to wear costs the supermarkets should be covering. The Commission also says this is a significant issue for any potential competitors who face an insurmountable battle to get wholesale groceries at a reasonable price.

“The report reveals the supermarkets suppliers are being subsidised by around $5 billion in rebates, discounts and promotional payments. Competitors just cannot compete with that power inbalance.

“It doesn’t work for consumers either because prices bounce around so much they no longer know what a fair price might be,” Chetwin said.

“The report shows once again that despite the Commission and the Government calling out this appalling behavour the incumbents continue to treat consumers and suppliers as if they own them,” Chetwin said.

“In many respects they do. Foodstuffs and Woolworths hold more than 80% of the market. This lack of competition means consumers have no to little choice about where they shop.”

Grocery Action also notes the large suppliers are complicit in this play because the lack of competition also helps keep their prices high.

GAG is concerned improvements to the supply and wholesale codes proposed by the Commission, including prohibiting retaliation against suppliers who assert their rights will not be enough.

“The Commission is asking the duopoly to ‘voluntarily’ change the wholesale code over the next 12 months – that’s like politely asking the greedy to stop being greedy. It won’t work.

“We have already seen the duopoly play by its own rules. The industry has been on notice since the Commission released its Supermarket Study in 2022, which said supermarkets were making excessive profits and that a lack of competition meant we were paying some of the highest prices in the world for food, but nothing has changed.

“Hopefully this latest report will assist the Grocery Minister Nicola Willis, to conclude that forced divestment of the supermarkets to allow more competition needs to happen now, not in some distant future. Consumers will thank her.”

Grocery Action background

The Grocery Action Group was formed to bring down the prices of groceries for all Kiwis. Our vision is to influence government, the regulators and other parties to deliver a competitive and consumer-focused grocery sector in New Zealand. Our board is made up of consumer, industry, supplier and Māori interest experts. For more info visit gag.org.nz

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