Friday, May 24, 2024

Competition-busting legislation checks out for supermarkets

Urgent Budget night legislation to stop major supermarkets blocking competitors from accessing land for new stores has been introduced today.

Minister of Commerce and Consumer Affairs, David Clark said the Commerce (Grocery Sector Covenants) Amendment Bill amends the Commerce Act 1986, banning restrictive covenants on land, and exclusive covenants on leases. It also makes existing covenants unenforceable.

“This is a major first step in delivering on our commitment to ensuring New Zealanders get a fairer deal at the checkout,” Dr Clark said.

“This legislation stops supermarkets from engaging in the anti-competitive land wars we’ve seen, where they buy up land or dictate the terms of leases to block their competitors from getting a foothold in the area.

“This practice leaves customers without choice and sees suburbs and shopping centres with only one option. An example of this is Ponsonby, in Auckland, which is only serviced by one provider.”

The Minister said that limiting supermarket options for consumers severely restricted their ability to shop around for a better range of products, and of course, a better price.

“This legislation is a clear signal of how seriously the Government’s is taking this issue. We’re tackling a root cause of the problem that prevents an even playing field for new competitors to enter the market.” 

“The Commerce Commission’s market study found competition is not working well for consumers in its current state. In fact, it found major grocery retailers are earning excess profits of around $1 million a day. Something needs to change.

“This is just the first part of the Government’s response to the retail grocery sector market study. I expect to release information about further steps the Government is taking to improve competition shortly,” Minister Clark said.

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