Latest / Best of Business / Tex Edwards: MonopolyWatch research director on the Government's new plan to boost supermarket competition

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Tex Edwards: MonopolyWatch research director on the Government's new plan to boost supermarket competition · Best of Business

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  Speaker 2: So a twenty five billion dollar market and just two
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  Speaker 2: players control eighty two percent of it. We're talking about
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  Speaker 2: the supermarket sector. Finance Minister Nicholas and Nichola Willis today
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  Speaker 2: reiterated her plans to encourage a third player and more
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  Speaker 2: competition in the grocery sector, but she's a bit light
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  Speaker 2: on the detail. She said she'd like to remove regulations
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  Speaker 2: that discouraged you supermarkets, and she would like to help
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  Speaker 2: new entrants access land in a bid to break the
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  Speaker 2: current duopoly.
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  Speaker 3: Look, I am aware that we have received what's called
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  Speaker 3: an unsolicited proposal. We've said to all comers, if you
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  Speaker 3: want to come and invest in important infrastructure, bring us
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  Speaker 3: a proposal. And I've been informed that we have had
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  Speaker 3: a proposal. So what that tells me is there is
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  Speaker 3: some interest, and I'm sending a very clear message today
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  Speaker 3: that we should be engaging with that interest as a government.
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  Speaker 3: Want to take those proposals very seriously.
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  Speaker 2: So Tex Edwards used to run two Degrees. He's now
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  Speaker 2: the Monopoly Watch research director and he joins them now
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  Speaker 2: Heli techs Hi Andrew, I'm good. No concrete commitments given today.
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  Speaker 2: Everyone says that now no one, no one ever makes
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  Speaker 2: a concrete commitment. They talk about the problem, never a solution.
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  Speaker 4: Yeah, I think everybody can be encouraged that you've got
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  Speaker 4: ministerial focus on this. The debate and the public policy
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  Speaker 4: debate of breaking up the supermarkets is quickly moving on.
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  Speaker 4: I think I was personally encouraged by the minister's invitation
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  Speaker 4: to listen to proposals. The gorilla in the public policy
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  Speaker 4: room is a breakup of the incumbents. The Colicist Commission
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  Speaker 4: proved that there was an overbuild or supermarkets and on
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  Speaker 4: a square meterage basis, museum has an overbuild of supermarket.
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  Speaker 4: This is called a barrier to entry. And the sheer
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  Speaker 4: level of scale that you need to create a price
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  Speaker 4: output consumers means that you need some type of breakup.
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  Speaker 4: And it looks like the minister's inviting people and to
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  Speaker 4: discuss how that breakup would occur with today's announcement.
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  Speaker 2: Yes, but her main thing was that she's had an
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  Speaker 2: unsolicited proposal from a possible third party player. Do you
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  Speaker 2: believe that could happen? Because we all know the difficulties,
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  Speaker 2: the supply chain difficulties, and the difficulties in finding somewhere
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  Speaker 2: to put up a supermarket. Do you believe there really
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  Speaker 2: is a concrete, unsolicited proposal on the table.
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  Speaker 4: Several people have been looking at this industry, including ourselves
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  Speaker 4: and our British private equity people wouldn't believe, didn't believe
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  Speaker 4: that the New Zealand government would ever allow a three
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  Speaker 4: to two meager to take place in two thousand and six.
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  Speaker 4: That's the gorilla that created this problem. And there are
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  Speaker 4: there are answers in discussions of what a third would
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  Speaker 4: look like, but it's all what economists. Economists call this
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  Speaker 4: stuff peric competition, which they really meant to say pretend competition.
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  Speaker 4: And remember there's such laser focus on the two encartments.
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  Speaker 4: They would love a small four percent market share, five
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  Speaker 4: percent market share perric player, pretend competitive that come with
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  Speaker 4: a handful of storks. But I think that the public
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  Speaker 4: policy debate debate has moved on since then, and I
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  Speaker 4: think what the public, the common sense denominated public and
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  Speaker 4: the common sense tests here is actually winning is that
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  Speaker 4: you need a break up at the cartel. And our
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  Speaker 4: research showed Andrew that you needed at least one hundred
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  Speaker 4: and forty stores, and you needed control of your own
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  Speaker 4: distribution for warehouse system. And so because there's been an
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  Speaker 4: over build, unless it's a breakup, you're not going to
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  Speaker 4: get what we call price competition, and you're not going
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  Speaker 4: to see Nuschristian competition or sustainability competition. And it's it's
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  Speaker 4: the devil is absolutely in the detail. And anybody's experience
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  Speaker 4: in breaking up cartels knows that it's it's problematic and dangerous, redcapable.
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  Speaker 2: And it is a very big ask indeed. But I
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  Speaker 2: thank you for your thoughts. That's monopoly, watched research director
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  Speaker 2: text Edwards on News TALKSB.
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