Consumers Losers In Foodstuffs Supermarket Owners Vote To Merge

A vote by Foodstuffs supermarket owners to merge their North and South Island operations will further increase their dominance but consumers will be the losers at the checkout, the Grocery Action Group (GAG) says.

“Of course the Foodstuffs owners would vote for more power and control over the prices consumers pay, and also prices they pay their suppliers,” said Sue Chetwin, GAG’s chair.

“For the owners it’s about making their supermarkets even more into the money making machines they already are,” she said. “For them what’s not to like?”

“But for their customers such a merger would reduce competition further and make it even harder for a new player to enter the market.”

The Commerce Commission is considering an application from Foodstuffs to merge its North and South Island operations. This follows its supermarket study which found unfair competition, unfair prices and excessive profits were hallmarks of the New Zealand grocery sector. The OECD, in a report released this year, also said the supermarket sector in New Zealand lacked competition which meant consumers were paying too much for their groceries. It said it might be time to look at giving the regulator power to force divestment.

GAG strongly opposes the merger and agrees the regulator should be given more powers to break up the big duopoly.

“The only possible comfort we took from yesterday’s announcement was Chris Quin, CEO designate of the merged giant, saying he welcomed competition and he hoped the New Zealand business environment enabled more.”

“That should help the Commerce Commission reject the merger because approving it would most certainly lessen competition in our supermarket sector.”

© Scoop Media