The ACT Party claims National MPs are "exasperated" with their party's policy to break up the supermarket duopoly, a policy ACT leader David Seymour described as a "race to the bottom… to beat up the supermarkets the most".
National's leader, Christopher Luxon, however, is defending the policy, stating it will be based on a review of evidence and presents an opportunity for small businesses.
Last week, National pledged to split Pak'nSave from New World and Four Square, contingent on an independent Commerce Commission assessment. This mirrors a proposal previously made by New Zealand First in April.
Meanwhile, Labour is proposing to outlaw price-gouging on essentials and to separate the retail and wholesale operations of Woolworths and Foodstuffs. The Greens aim to compel Woolworths and Foodstuffs to sell some of their stores and wholesale divisions to the government.
Seymour expressed skepticism about the effectiveness of these proposed solutions in lowering grocery prices, questioning whether supermarkets are indeed making excessive profits. He warned that such policies could have a chilling effect on business investment and innovation, both domestically and internationally.
"The most important question is well what else will these policies do? And the effect on New Zealand business, both inside and outside the country, people's willingness to invest and innovate - which by the way, is what we actually need if we want higher wages and a more affordable life - is terribly chilling. Because once you start with one industry, the first question is who's next?"
The duopoly of Woolworths and Foodstuffs holds an 82 percent market share. Efforts to introduce a third nationwide supermarket chain have been unsuccessful, although Costco opened its first New Zealand store in West Auckland approximately four years ago and plans further expansion.
Seymour highlighted that Costco only agreed to enter the New Zealand market after receiving a five-year exemption from rules requiring supermarkets to supply other retailers at wholesale prices. He argued that this demonstrates how regulatory uncertainty and policies like those proposed by other parties can deter necessary investment.
He questioned whether any party proposing radical solutions could be "absolutely sure" about the correct market structure for groceries in New Zealand.
"We've been doing this in New Zealand for too long. I mean, Jacinda [Ardern, former prime minister] said we're being fleeced by the petrol stations, we had to go with the farmers for a while, landlords were the baddies at one point, so we put more taxes and regulations on them. The banks have been in for a good beating, now it's the supermarket.
"There's only 5 million of us, guys. We've got to stop and actually start asking, well, how do you get the kind of investment and innovation that leads to more competitive offerings, higher wages and better prices?"
Seymour claimed that at least five National MPs had approached ACT with concerns about their party's supermarket policy.
"It's hard enough to do business as it is in any country without worrying if your own government's going to attack you."
Luxon, responding to nearly 500 open letters from Foodstuffs owner-operators expressing concern, stated that his policy is "not about business, it's actually about the fact that we believe in competition."
"We are very pro-business and we're also pro-competition. And actually, the owner-operators, the 400-500 that are in that Foodstuffs group, are incredible.
"It's actually a sector I worked in for 18 years... I can't think of a single [other] market that has 82 percent market share with two players. I mean, other 5 million people countries I operated in around the world would have three to five operators, typically.
"It's a market in New Zealand that has a 4 percent margin. I mean, many countries around the world would have 1.5 to 2 percent ... there's an excess profit being made every day, and it's about then not just jumping to a populist easy answer."
He emphasized that the policy is being handed over to the Commerce Commission for a six-month review, and National will proceed only if the commission deems it the right course of action.
Luxon denied awareness of National MPs urging Seymour to halt the policy, stating that caucus backs the policies and concerns are discussed internally.
He suggested that the proposed changes could create opportunities for small businesses, such as owner-operators expanding their holdings or developing new store formats.
Labour's commerce and consumer affairs spokesperson, Arena Williams, argued that separating the duopoly's wholesale dominance over smaller retailers is crucial for lowering prices.
"The two major grocers have locked in their market power with not only suppliers but with small grocers as well, by dominating the market not only in retail but also in wholesale. We're going to stop that."
Williams stated that Labour's new plan, developed over three years, addresses issues identified by the Commerce Commission's 2022 market study regarding the separation model.
"What they identified with that model was that there were two problems with it... And they also identified some problems with the way that supplies are bought essentially by only two buyers with huge market power over them. We've also fixed that… That's what's taken us three years, but we're certain that this is the model which won't see prices rise in the short-term, like the one proposed by National, and it's the one that's best understood by the market, so we can get underway quickly."
Labour also plans to ban price-gouging, with Williams citing evidence from the Commerce Commission's 2022 study that supermarkets were making excess profits of $1 million per day.
"Anyone who is price gouging will need to stop that... The Commerce Commission gave that evidence to [the] government and [Finance Minister] Nicola Willis has sat on it for three years and not taken action while New Zealanders cannot afford to put food on the table. We're saying this is serious, and that's why we're introducing a serious law which has big punishments for anyone who is price gouging."
Chris Quin, chief executive of Foodstuffs North Island, told Midday Report that neither National nor Labour's proposals would effectively lower food prices for New Zealanders. He warned that increased regulation could lead to higher costs for consumers.
Quin denied that Four Square operators are contractually prevented from lowering prices, stating that all stores are expected to match or beat promoted prices.
He attributed high food prices to rising costs of fuel, power, insurance, and a weak exchange rate.
