Supermarket trolly held by hand Photo by Karolina Grabowska from Pexels
Photo by Karolina Grabowska from Pexels

Lloyd Burr: I’m not entirely on board with forcing Woolworths NZ and Foodstuffs to sell off hundreds of supermarkets

Opinion 02/11/2021

OPINION: I hate the supermarket duopoly here more than the next person. 

I hate that 2 companies control our food supply and our food prices. It means high prices and less selection. It means growers and suppliers are easily screwed down on their price. 

It means mega profits for just two companies. 

So I’m all for another player entering the market, to take on Woolworths NZ - which runs Countdown, FreshChoice and SuperValue - and Foodstuffs - which runs New World, PaknSav, and Four Square. 

So I’m all for more choice, and less monotony and cheaper prices and our growers and producers being treated with more dignity. 

But I’m not entirely on board with a proposal by the Commerce Commission that the government should force Woolworths NZ and Foodstuffs to sell off a portion of their supermarkets to a third operator.

That’s right: force two private companies to sell off possibly hundreds of their supermarkets to a new supermarket company. 

The Commerce Commission is holding hearings looking at the supermarket sector, particularly at the power Woolworths NZ and Foodstuffs exert which is preventing another player entering the market. 

The Commission will soon suggest a number of solutions to the government, most of which are expected to include the forced divesting of assets by both Woolworths NZ and Foodstuffs. 

That means forcing them to sell off hundreds of supermarkets so a new player can enter the market, which in theory would mean more competition, more options for growers and producers, and more options for consumers. 

It would in theory mean cheaper prices. It’s a bold move, and it would -theoretically - radically adjust the market. But it seems to me like an overly authoritarian move for the government to make. 

It is far too interventionist, surely? 

Imagine the government intervening in other duopolistic industries? That’s the precedent this sets. Surely there must be another way to nurture the creation of a third player in the supermarket sector? 

Surely the answer is not allowing the government to come in with a bulldozer and drive it right through the middle of private enterprise. 

Catch Lloyd Burr Live every weekday from 4pm on Magic Talk.