Latest / Best of Business / Sue Chetwin: Grocery Action Group chair on Foodstuffs looking to appeal Commerce Commission’s merger ruling

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Sue Chetwin: Grocery Action Group chair on Foodstuffs looking to appeal Commerce Commission’s merger ruling · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from News Talks be follow
• 0:12
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• 0:16
  Speaker 2: A food Stuff's merger is back on the table. Possibly
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  Speaker 2: it's headed to the High Court today. The company's appealing
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  Speaker 2: a twenty twenty four decision by the Commuce Commission that
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  Speaker 2: blocked its plan to join food Stuff's North Island and
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  Speaker 2: food Stuff South Island under one roof. Sue Chetwan is
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  Speaker 2: the chair of the Gross Reaction Group and with US
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  Speaker 2: High Suit HI what's the basis for the appeal?
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  Speaker 3: So what they're saying is that the Commerce Commission got
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  Speaker 3: it wrong, that there will be more efficiencies if the
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  Speaker 3: North and South can combine as one and the merger
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  Speaker 3: should be allowed to proceed. Of course, the Groce Reaction
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  Speaker 3: Group doesn't agree with that and does agree with the
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  Speaker 3: Commerce Commission in that we think that allowing the North
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  Speaker 3: and South merger basically just strengthens the duopoly and makes
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  Speaker 3: it hargh for suppliers. And that's what the Commuce Commission
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  Speaker 3: was arguing that that sort of upstream suppliers would have
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  Speaker 3: less choice as to who they supplied their goods to.
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  Speaker 3: At the moment they've got the North Island and the
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  Speaker 3: South Island food stuffs and woolwors. But if you merge
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  Speaker 3: to the North and South Island food stuffs you'd be
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  Speaker 3: down to two.
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  Speaker 2: Yeah, how much what proportion do you reckon of? I mean,
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  Speaker 2: I don't know if this is even possible to quantify,
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  Speaker 2: but what proportional of the margin is caused by the
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  Speaker 2: fact that we don't have that many players, that there
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  Speaker 2: is a constraint in the number of people that suppliers
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  Speaker 2: can negotiate with.
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  Speaker 3: Look, you know the Commics Commission has done sort of
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  Speaker 3: work around that, and of course the IECD has had
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  Speaker 3: a view on it, and that we pay very high
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  Speaker 3: prices for groceries in New Zealand and that is simply
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  Speaker 3: down to the fact that we don't really have enough competition.
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  Speaker 3: We have two players and who control eighty percent of
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  Speaker 3: the market.
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  Speaker 2: Did you see the news over the weekend that Tesco
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  Speaker 2: was courted to come here.
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  Speaker 3: Yes, and are not the only ones. The Government's been
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  Speaker 3: desperate to get somebody to come and of course there
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  Speaker 3: is Costco here, but you know they haven't been able
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  Speaker 3: to encourage anybody in. It would be really good effect
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  Speaker 3: did happen, but failing that what would be I guess
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  Speaker 3: the next best thing, or even the best thing, is
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  Speaker 3: to encourage some local players to to to have a go.
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  Speaker 2: Is this what it comes down to? Because it sounds
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  Speaker 2: like reading reading the reports over the weekend, it sounds
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  Speaker 2: like Nikolaulas had to personally invite TESCO to take a
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  Speaker 2: look at New Zealand. Is this what it's coming down to?
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  Speaker 2: That we and I remember the last labor administration. I
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  Speaker 2: don't know if it was David Clarke or somebody was
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  Speaker 2: chasing down it was Aldie. Do we have to actually
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  Speaker 2: have our ministers asking people to consider investing here.
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  Speaker 3: Look, I think we do, and and to give them
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  Speaker 3: they have Sure surely if we're not seen as being
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  Speaker 3: competitive here I think.
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  Speaker 2: But surely if I mean, these are global players, right,
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  Speaker 2: they'll have read the news. They'll have looked at it
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  Speaker 2: and gone, you know what eone's been talking about for
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  Speaker 2: the last four or five years, they need more supermarket players.
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  Speaker 2: Let's have a look at it. And surely they're all
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  Speaker 2: having a look and going nah.
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  Speaker 3: Look, I think that's exactly what the situation is. Whether
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  Speaker 3: rightly or wrongly, they have made a decision about you know,
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  Speaker 3: New Zealand's population and the competitiveness here, but the hurdle
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  Speaker 3: for them is so high because the two, you know,
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  Speaker 3: the duopoly here has eighty percent of the market. So
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  Speaker 3: you've got to come in and within a matter of
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  Speaker 3: sort of two years or possibly slightly longer, but not
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  Speaker 3: a lot longer, establish profitability in a country where there
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  Speaker 3: is this stronghold. So you've actually got to get supermarkets
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  Speaker 3: and physical buildings and get going and have the money
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  Speaker 3: to sort of hold on for a few years. And
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  Speaker 3: that's tough, and that's why we think, you know that
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  Speaker 3: the only way to make it happen is a forced
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  Speaker 3: avestment of some of the shops. Now, you know, break
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  Speaker 3: up New World and pack and.
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  Speaker 2: Say really, I mean, you don't think that we can
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  Speaker 2: change the rules even further, like make it easier to
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  Speaker 2: get in here, make it easier to consent a whole
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  Speaker 2: bunch of shops at once. Do kind of the red
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  Speaker 2: tape cutting? Would that not be sufficient?
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  Speaker 3: Locke doing that? You know that for any international player
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  Speaker 3: who wanted to come in here, you know, the red
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  Speaker 3: tape is at its lowest level. But it's just that,
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  Speaker 3: you know that very high bar in the grip that
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  Speaker 3: will Worth and Foods.
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  Speaker 2: Okay, so you're saying, unless Nikola Willis says the cahorne
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  Speaker 2: is to actually break up these these big businesses, nothing's
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  Speaker 2: going to change, No big players coming in.
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  Speaker 3: No. I would say that that is exactly the case.
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  Speaker 3: We could hope and pray for a big international player,
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  Speaker 3: but they've all had the opportunity and they've all said
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  Speaker 3: it looks like it's too tough.
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  Speaker 2: Good stuff. So it's good to talk to you. Thank
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  Speaker 2: you so much, soud Chetwin Grocery Action Group CHEF.
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