Governing party pledges to break up one of New Zealand’s top retailers re-elected
The New Zealand National Party has announced it will pursue the structural separation of Foodstuffs, subject to an independent Commerce Commission assessment, if it wins the upcoming election.
Foodstuffs, which manages supermarket brands including Pak’nSave, New World, and Four Square brands, makes up one half of the country’s supermarket duopoly with Woolworths. Together the two account for a market share of more than 80 per cent.
National’s finance and economic growth spokesperson Nicola Willis said the proposed structure of the breakup would see New World and Four Square as one nationwide chain and Pak’nSave as another. Together with Woolworths, this would mean New Zealand would have three major nationwide grocery chains.
“New Zealanders are paying more than they should for groceries because supermarket competition is still too weak. Families deserve more choice, better prices and supermarkets that have to fight harder for their dollars,” Willis said.
“That is why a re-elected National government will pursue the structural separation of Foodstuffs into two genuinely competing nationwide grocery chains, subject to an independent Commerce Commission assessment that it can be implemented in a way that delivers net benefits for shoppers.
National will amend the Grocery Industry Competition Act in our first 100 days in Government to empower the Commerce Commission to develop and assess a detailed implementation plan, and determine whether the separation can be delivered in a way that leaves consumers better off. We will require the Commission to provide its recommendation in six months.”
1news reported a Foodstuffs spokesperson said National’s announcement “would have significant implications for our co-operatives”.
“Our immediate focus is supporting our owner-operators, our 3000 supply chain and support centre team members, and the many New Zealand businesses that work with us, all of whom are hearing proposals that could fundamentally change the co-operatives they own, work for and support, and the businesses they have spent years building in communities throughout New Zealand,” the company said in a statement.
“Any proposal of this scale raises important questions about how long a major restructure would take to implement, the level of disruption involved, the costs of making those changes, and whether those costs and disruptions would ultimately deliver meaningful savings at the checkout.
“These are significant issues that deserve careful consideration. We will take the time to thoroughly review the proposal and its implications before providing further comment.”
The National policy document for the proposal said its plan targeted Foodstuffs with the aim of reorganising the company’s structure so that its groups compete against each other across both islands.
“At present, Foodstuffs is divided geographically. Foodstuffs North Island operates New World, Pak’nSave and Four Square across the North Island. Foodstuffs South Island operates the same banners across the South Island,” the document said.
”Foodstuffs North Island and Foodstuffs South Island do not compete against each other for customers in the same local markets. So the fundamental divide within Foodstuffs is currently North Island versus South Island, rather than New World and Four Square versus Pak’nSave. In practice, that means each island is largely a contest between Woolworths and the Foodstuffs cooperative operating in that island.
“National wants to change that competitive dynamic. Under the proposal, Pak’nSave would become one nationwide grocery business, competing directly against a separate nationwide New World and Four Square business, as well as Woolworths.”
