Labour has announced that if elected, it will compel Foodstuffs and Woolworths to separate their retail and wholesale operations, aiming to boost competition for smaller grocers.
Under Labour's proposal, the two major supermarket companies would be required to run their wholesale divisions independently, creating entities named "Foodstuffs Wholesale" and "Woolworths Wholesale." This move would grant independent grocers a guaranteed right to purchase stock on fair terms and free smaller stores like Four Square from trade restraints that allegedly inflate prices. Stricter regulations on supplier fees are also part of the plan.
This announcement follows a similar proposal from National last week, which stated it would pursue the breakup of Foodstuffs into separate chains for Pak'nSave and New World/Four Square, contingent on a Commerce Commission review.
Labour leader Chris Hipkins emphasized that his party's policy is designed to "back the small grocers." He stated that the current market structure allows large chains to sell goods to independent grocers at higher prices than they charge their own retail outlets, indicating a lack of genuine competition. Labour aims to implement its legislative framework within the first 100 days of taking office.
Arena Williams, Labour's commerce spokesperson, asserted that Labour would act decisively to open the market and enable more supermarkets to offer lower prices, thereby increasing consumer choice and savings. She criticized National's approach, suggesting that their reliance on further reviews, especially close to an election, would not benefit New Zealanders.
This policy development suggests that regardless of the election outcome, the grocery duopoly is likely to face government intervention.
National's finance spokesperson, Nicola Willis, acknowledged the growing consensus for structural change in the grocery market but criticized Labour's plan as lacking detail and being a potential "experiment." She stated that National's proposal is based on extensive evidence and expert analysis.
ACT leader David Seymour criticized the interventionist approach of both parties, calling Labour's plan a "cynical race to the bottom" that could lead to costly restructures and deter investment. ACT, a coalition partner with National, has indicated it would not support supermarket breakups.
Labour drew a parallel to its past reforms in the telecommunications sector, where splitting Telecom into retail and wholesale arms led to better deals for consumers. Hipkins argued that Labour has a proven track record of implementing such bold changes, contrasting it with National's approach.
Woolworths stated that it understands the cost of living pressures and has been working with the government on structural changes, including establishing a wholesale business. They emphasized their commitment to a competitive sector and to providing quality food at low prices.
Foodstuffs expressed its willingness to consider Labour's proposal, stating that any plan should focus on delivering lower prices, better choice, and improved service for customers. They also highlighted their ongoing efforts to expand and strengthen their wholesale offerings.
