Latest / Best of Business / Gemma Rasmussen: Consumer NZ Head of Advocacy and Research on NZ First's plan to break up the supermarket duopoly

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Gemma Rasmussen: Consumer NZ Head of Advocacy and Research on NZ First's plan to break up the supermarket duopoly · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks'd be follow
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  Speaker 2: New Zealand First has announced that will campaign on splitting
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  Speaker 2: up food stuffs. The policy would force food stuffs to
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  Speaker 2: split into two separate cooperatives, one for pack and Safe
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  Speaker 2: and one for New World and four Square. The idea
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  Speaker 2: is to break up the dwopoly that's dominating our grocery
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  Speaker 2: sector at the moment. Jimma rasmunsen As from Consumer is
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  Speaker 2: with us now. Hi Gemma, Hi, Heava. Do you like
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  Speaker 2: this idea?
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  Speaker 3: I'm not sure about it. If I'm honest, I would
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  Speaker 3: love to know what work has gone into coming up
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  Speaker 3: with this proposal. I think the thing with the grocery
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  Speaker 3: sector is often there's no one silver bullet, and the
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  Speaker 3: risk with breaking up food stuffs is there could be
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  Speaker 3: unintended consequences like operational costs go up, a whole lot
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  Speaker 3: of setup costs and the price of food actually goes up.
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  Speaker 3: It's very hard to prove that having three players is
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  Speaker 3: the key to great competition. If you look at Australia,
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  Speaker 3: they've got three players and they have just been going
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  Speaker 3: through with their regulator looking to looking into excessive pricing
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  Speaker 3: and there's been a whole raft of issues.
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  Speaker 2: Okay, so if this isn't the solution, what is the solution.
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  Speaker 3: Well, I think it's quite interesting to see what they're
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  Speaker 3: doing in Australia. Actually, effective from July this year, the
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  Speaker 3: government is introducing new laws which would ban excessive price
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  Speaker 3: markups and this would be enforced by the regulator. This
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  Speaker 3: could mean huge penalties up to ten million dollars or
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  Speaker 3: ten percent of turnover. And what this really looks at
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  Speaker 3: is when you get something, when the supermarket gets food
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  Speaker 3: from a supplier, if the markup is beyond a reasonable
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  Speaker 3: margin and incredibly excessive and is then being sold to consumers,
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  Speaker 3: the supermarkets would be in the firing line. And I
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  Speaker 3: think this is one of the problems that we've had
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  Speaker 3: in New Zeland. We hear from suppliers that they're getting
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  Speaker 3: increasingly squeezed. They're really vulnerable, and it's very opaque understanding
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  Speaker 3: the price that a supply ourselves to the supermarket and
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  Speaker 3: then the price we pay on our shelves.
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  Speaker 2: Okay, so if they're doing this, I mean, it's an
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  Speaker 2: interesting idea out of Australia, But how do they like,
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  Speaker 2: what do they decide what products is it that can't
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  Speaker 2: have excessive markups on them?
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  Speaker 3: So it would be what the AH trouble See is
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  Speaker 3: looking for is egregious examples being sent to them. So
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  Speaker 3: it could be many things within the supermarket, but it
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  Speaker 3: would probably sit within the produce area, all those essential
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  Speaker 3: items like bread, milk, cheese, things like that, so they'll
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  Speaker 3: be looking for evidence. They would then be.
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  Speaker 2: Then with the same consume. I'm just thinking about this
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  Speaker 2: and just wondering if this would work. Get with this
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  Speaker 2: if the same then applied. So let's say loaf of bread,
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  Speaker 2: fair fair product to put it on. So that's in
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  Speaker 2: the supermarkets, But would you apply the same rules to
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  Speaker 2: a dairy down the road.
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  Speaker 3: No, you wouldn't. They're only focusing on the very large supermarkets,
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  Speaker 3: being so with over thirty billion annual revenue. But if
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  Speaker 3: the supermarkets are not having such excessive markups, that's going
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  Speaker 3: to have a flow on effect. I mean, look at
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  Speaker 3: what happens in New Zealand. Dairy owners go to our
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  Speaker 3: supermarkets to buy products and then on sell them, so
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  Speaker 3: it would go across the whole country. And it's really
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  Speaker 3: about putting on notice as opposed to a whole overhaul.
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  Speaker 3: It's making an example a few times with very high
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  Speaker 3: penalties to stop the very intensive price markups that are happening.
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  Speaker 2: Okay, now do you understand just back to New Zealand
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  Speaker 2: First's policy, do you understand the logic for splitting it
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  Speaker 2: into pack and Save on one side, New World and
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  Speaker 2: four Square on the other.
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  Speaker 3: I'm not to be honest, I saw that they had
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  Speaker 3: done this, and I'm not really sure of the logic
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  Speaker 3: behind it why they have chosen to split it in
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  Speaker 3: that way. I haven't spoken to anyone from the party
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  Speaker 3: to understand exactly water is behind that.
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  Speaker 2: All right, hey, listen, thank you very much, appreciate it.
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  Speaker 2: Jim Rasmussen, who is with Consuming New Zealand.
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