The Chair of the National Maori Authority, Matthew Tukaki, has said that the Governments bill to address the issue of major grocery retailers lodging and obtaining restrictive covenants on land and by exclusivity covenants in leases of sites is a great step in the right direction, it still needs to be monitored and enforced – to put it simply “We just don’t trust the big supermarket chains” Tukaki said
Submissions on the Bill close today with Tukaki saying that Foodstuffs and Countdown have a long history of land banking and getting leases negotiated that essentially stop other players from enter the market.
“What I would also say is that these reforms into the grocery sector need to keep rolling. Whether its a third operator that is backed by Maori interests or someone else – we need more competition. And that competition must drive better prices for producers and suppliers but also obviously for consumers. We have a cost of living challenge in this country and in no ones world should be more expensive to buy the same produce and goods on New Zealand supermarket shelves than it is for some of those same products we export. We are a nation that not only grows enough to feed ourselves but also a large number of people in other countries. So if we are the food bowl then why are so many New Zealanders struggling to buy food?” Tukaki said
“The Authority agrees with the approach being taken with the Bill being introduced to the house and congratulate the Government. Therefore, we agree with the Bill in its current form. However, we signal that work will need to be done to enforce the notion of the Bill when it comes to the market operators. To be very clear we do not trust that the market operators will implement the intent of the Bill without being pushed or whereby the legislation is not enforced. The market operators have previously signalled that they would themselves. Let’s be very clear here the market operators have been in the business of purchasing large tracts of land for development or to lock competitors out.” Tukaki said
“The last decade is writ large with the property development interests of the large operators and while they have made statements in the past when it comes to divesting such assets careful monitoring must be in place – as well as a large stick should they not meet their obligations. Also, we remain concerned that the operators might also get into the business of selling a property to a franchise holder or other connected party only to lease it back. Each property deal and purchase and sale agreement must be heavily scrutinised if the spirit and intent of the legislation is to be applied as New Zealanders expect.” Tukaki said
Other issues raised by Tukaki in the Commerce Commission review included:
We do not believe that the current arrangements that have seen a duopoly essentially develop in Aotearoa is fair and equitable for Māori suppliers and producers of goods
Conversely, we would suggest that this duopoly also extends to all producers, not just Māori, when it comes to unfair leverage in favour of the two larger supermarket chains
We do not believe that either supermarket is necessarily adhering to the Principles of Te Tiriti as it is not clear what their Māori engagement strategies are. For example, we are talking specifically about Māori growers and producers as opposed to the usual narrative built around consumers alone
Therefore, the existence of two should be counter balanced by the potential new entry into the market
Deepening our concern is the land banking of property or the holding onto titles to expand their existing network of stores and supermarkets but also as leverage that would stop potentially new entrants from market entry – thereby signalling to us that should a Māori entity emerge (or any other) both chains could use their respective balance sheets and property assets as a “grey counterweight” that would prohibit market entry
Further to this is the concern that we have around fair and equitable purchasing arrangements for Māori producers and suppliers – we note that margins are not always fully disclosed in these negotiations. We also remain concerned that subtle coercion exists in the race for primary points of presence on supermarket shelves
Notwithstanding we are also concerned that both chains are importing cheaper goods from overseas thereby using that as an additional counterweight to further drive prices down on behalf of producers and growers
With that in mind we are also deeply concerned that the purchasing power of Countdown through its Australian owners also plays in the supply chains of Aotearoa through their home branded goods. The same is true, potentially on a smaller scale, with Foodstuffs and the “Pams” brands of goods 7
Finally, is the much needed korero on what this could mean for better competition policy and tighter monitoring of this sector from a supplier perspective. Currently the dominance of the larger players is not conducive to the ongoing sustainability of small to mid-size producers.
Read the original submission here: Maori Authority Chair tells Commerce Commission its time to break the supermarket duopoly (maorieverywhere.com)