Latest / Best of Business / Andrew Bayly: Commerce Minister outlines solutions to boost competition in supermarket sector

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Andrew Bayly: Commerce Minister outlines solutions to boost competition in supermarket sector · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks that'd be
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  Speaker 2: The Commerce Commission has reported that we are still getting
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  Speaker 2: ripped off at the supermarket Grocery Commission of pie Van
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  Speaker 2: Head and told us earlier that the ComCom is trying
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  Speaker 2: to tighten up the rules to stop the duopoly from
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  Speaker 2: ruling us.
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  Speaker 3: There's no one silver bullet, so we've got to use
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  Speaker 3: all of these different tools to their maximum effect to
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  Speaker 3: try and get change within the indury.
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  Speaker 2: You might need the help of the Commerce and Consumer
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  Speaker 2: Affairs Minister Andrew Bailey Andrew Hallow.
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  Speaker 3: Good afternoon.
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  Speaker 2: What are you going to do about it?
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  Speaker 3: Well, obviously there are a number of recommendations that the
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  Speaker 3: Commissioner can do on his own, and he should be
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  Speaker 3: doing that, and I'll be urging him to do as
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  Speaker 3: quickly as possible. From a government perspective, there's two sort
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  Speaker 3: of key areas. One is about allowing overseas investment to
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  Speaker 3: happen more easily in New Zealand's one of the most
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  Speaker 3: restrictive places in the world. But secondly, how we can
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  Speaker 3: deal with some of the planning rules. There's two pieces
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  Speaker 3: of the work are already underway at a government level,
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  Speaker 3: but really most of this sits with a commissioner, and
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  Speaker 3: I'll be urging him and the commission to get on
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  Speaker 3: with it and make it happen.
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  Speaker 2: Are the do we have overseas like possible competitors from
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  Speaker 2: overseas who are saying the overseas investment rules are keeping
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  Speaker 2: them out.
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  Speaker 3: Not specifically on supermarkets, because we simply don't have.
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  Speaker 2: People like one of the guys like Oldie saying to
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  Speaker 2: you about why they're not coming here.
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  Speaker 3: I did speak to Oldie, but they just don't see
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  Speaker 3: it as a market they wanted to go into. They'd
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  Speaker 3: rather pursue, for instance, Australia grow their market share there.
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  Speaker 2: Why not? Why are they interested in us?
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  Speaker 3: Oh it's a small, diversified you know, very difficult to enter,
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  Speaker 3: small market basically, And obviously people are talking about other players.
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  Speaker 3: I've been talking to one or two other players that
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  Speaker 3: possibly could come into New Zealand. But right now I
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  Speaker 3: couldn't put my hand on my heart and say there
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  Speaker 3: are lots of people lining up.
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  Speaker 2: So the solution is really already in country. It's a
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  Speaker 2: warehouse or something like that.
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  Speaker 3: Yeah, I think and that's a really important point whither
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  Speaker 3: because all strategies and business that was look after your
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  Speaker 3: customer first, and our current customers are people like the
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  Speaker 3: warehouse Costco night and day. We need to make sure
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  Speaker 3: that they can compete as robustly as possible, and right
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  Speaker 3: now they can't. They've got they can't get access the
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  Speaker 3: wholesale supplier of produce, which they should be able to
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  Speaker 3: at the same price that the supermarkets currently enjoy. So
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  Speaker 3: that part of the report from the Commissioner I certainly
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  Speaker 3: endorsed and support.
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  Speaker 2: Okay, So he says, this is p Vanhead and he
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  Speaker 2: says he wants to do a section fifty six inquiry
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  Speaker 2: and he wants you to give him permission to force
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  Speaker 2: the whole the supermarkets to wholesale to their competitors at
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  Speaker 2: the same level the wholesale to each other to themselves.
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  Speaker 2: Would you allow that.
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  Speaker 3: Well, he's got to do Section fifty six and that
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  Speaker 3: unlocks those backstop powers, so that's easy. He's identified a
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  Speaker 3: couple of the specific issues. One is the opt out provisions.
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  Speaker 3: So a number of multinationals, by way of example, have
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  Speaker 3: opted out of supplier agreements with the supermarkets, which means
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  Speaker 3: that new competitors. I'll give you example five Foo and Hamilton.
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  Speaker 3: A new operator there is having trouble getting access to
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  Speaker 3: toilet paper, which is a key requirement for a supermarket.
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  Speaker 3: So allowing those people to have access to the products
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  Speaker 3: is really really important.
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  Speaker 2: Well, why are they unable to get access to the
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  Speaker 2: toilet paper? Explain how that works.
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  Speaker 3: The suppliers simply said, I don't want to supply.
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  Speaker 2: To you because what they're looking after their mats A,
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  Speaker 2: food stuffs and woollies.
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  Speaker 3: Well, I can't appine on that, but what the commissioner
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  Speaker 3: wants to make sure is that people can't unnecessarily opt out.
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  Speaker 3: That's one side of the coin, but also there's things
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  Speaker 3: like supermarkets enjoy a price competitive advantage by having their
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  Speaker 3: own branded product, and the supermarket often they buy that
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  Speaker 3: at a cheaper rate than what a supplier will supply
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  Speaker 3: their own branded product, and so having a like for
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  Speaker 3: like basis. So if viewer night and Day, you should
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  Speaker 3: be able to get the same price for the home
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  Speaker 3: brand price that the supermarket gets rather than the higher
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  Speaker 3: price that they might have to How long is.
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  Speaker 2: This going to take to do a Section fifty inquiry
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  Speaker 2: and unlock that backstop?
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  Speaker 1: Oh?
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  Speaker 3: I think that the Commissioner will do that. He said
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  Speaker 3: he's going to start that process very soon. I think
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  Speaker 3: it's a matter of months.
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  Speaker 2: Is it really so? What in a matter of months
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  Speaker 2: we could see all of a sudden the wholesale situation.
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  Speaker 3: No, it's more to be done around that. Certainly unlock
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  Speaker 3: some of the powers, and then it's up to him
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  Speaker 3: how he implements that. He's also looking at beefing up
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  Speaker 3: and putting in place a wholesale code. We don't have
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  Speaker 3: one at the moment. So that's the second part of it.
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  Speaker 3: And then the third part is actually enforcing making sure
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  Speaker 3: that people who are supplying supermarkets so treat it fairly
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  Speaker 3: inequitably and still having anecdotal examples where people are not
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  Speaker 3: being fairly treated. And I've said to the Commis commission,
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  Speaker 3: I want you to be a courageous litigative if that's
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  Speaker 3: the case, if they have to take stronger actions, get
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  Speaker 3: on and make it happen.
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  Speaker 2: Is the solution to all of this not simply to
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  Speaker 2: break these things up, right, So you break up the
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  Speaker 2: wholesale and retail arms and create some real competition there.
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  Speaker 3: Well, you could jump to the that. I think the
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  Speaker 3: first thing will these reforms. Could these reforms lead to
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  Speaker 3: better outcomes? I think the possibility is very strongly they should,
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  Speaker 3: but they need to be done quickly. They're quite comprehensive
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  Speaker 3: what the Commissioner's proposed. But jumping to a break up,
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  Speaker 3: which a lot of participants have said that it does
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  Speaker 3: raise some significant issues around you know, you're forcing the
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  Speaker 3: Australian entity to be broken up here in New Zealand.
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  Speaker 3: It sets a precedent, so to go down that route
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  Speaker 3: you really need to act carefully. For instance, one area
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  Speaker 3: that we will be looking for and I'm looking forward
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  Speaker 3: to the report from the Commissioners on the one hundred
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  Speaker 3: plus pieces of land that the supermarkets currently own, whether
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  Speaker 3: in fact they are appropriate that they own them, if
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  Speaker 3: they're held for an anti competitive process. I'll be waiting
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  Speaker 3: for advice on the Communist Commission to say are they
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  Speaker 3: contrary to the Commis Act. If they were and are,
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  Speaker 3: then we might look at how we deal with that.
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  Speaker 3: We may require devestment. But I don't want to jump
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  Speaker 3: ahead to that. I want to see what the advice
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  Speaker 3: is and obviously you have to work it through with
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  Speaker 3: my Kebnet.
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  Speaker 2: Collins Andrew listen. Thank you very much for talking us
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  Speaker 2: through that. I really appreciate it. That's Andrew Bailey, the
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  Speaker 2: Commers and Consumer Affairs Minister.
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