Client update – Government market study into competition of supermarkets

Tuesday, November 17, 2020

This morning the Government announced that the Commerce Commission (Commission) will be conducting a market study into the state of competition in relation to New Zealand’s supermarkets.

The Government describes the aim of the study is to ensure that consumers are paying fair prices for groceries, with the Minister for Commerce and Consumer Affairs stating that New Zealand has one of the most concentrated retail grocery markets in the world and there are indicators that competition has weakened over time.

Once the terms of reference are notified in the Gazette on 19 November, the Commission will be able to begin its investigation. The Government has indicated that the Commission will publish its final report by 23 November 2021.

As part of the study, the Commission will consult with the sector and the public. This will most likely include consulting on the process, the publication of a preliminary issues paper, and the publication of a draft report (which is also compulsory), with the opportunity for industry and public submissions at all stages. The Commission may also hold a consultation conference.   

The Commission has broad information gathering powers under Part 7 of the Commerce Act 1986 (Act) should it require them, including the ability to compel a person to appear before it to give evidence.

The Commission’s final report is required to include its findings. The Commission may make recommendations in its report which may, without limitation, include one or more of the following:

  1. changes to legislation or other instruments;
  2. changes to the policies or practices of central or local government;
  3. changes to the policies or practices of a person or an organisation responsible for the oversight or regulation of a specified industry;
  4. changes to the amount or type of information made available by a person or an organisation in relation to a specified industry;
  5. that a person or an organisation research or monitor a specified matter; and
  6. that persons within a specified industry change their behaviour.

In addition to the above, there is nothing to stop the Commission from using the information it obtains during the course of its study for any of its other purposes or functions under the Act. For example, the Commission may use such information to further investigate (or prosecute) any potential instances of restrictive trade practices it identifies under Part 2 of the Act.

The announcement follows the Commission’s study into the retail fuel industry (final report available here) which concluded last year, where the Commission found that an active wholesale market does not exist in New Zealand, and that this is weakening price competition in the retail market. In its final report, the Commission made recommendations to the Government for improving competition primarily in the wholesale market, and also made recommendations that it considered would assist everyday consumers make better informed decisions when purchasing fuel.

If you would like to discuss any implications the new study may have on your business, or how you might want to participate in the study, please give your usual Duncan Cotterill contact a call or get in touch with a member of our corporate and commercial team.

 

Disclaimer: the content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.

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