Law introduced to create new stores for greater competition from supermarkets

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Legislation which prohibits large supermarkets from blocking access to competitors’ land to set up new stores is paving the way for greater competition in the sector, said the Minister for Commerce and Consumer Affairs, Dr David Clark.

The new law is the first in a series of measures the government is taking to achieve better checkout results following a Commerce Commission investigation that found competition in the grocery sector in detail does not work.

“We have officially ended the anti-competitive land wars that have been silently hampering competition in the grocery industry for years,” said David Clark.

“This law will prevent large supermarkets from dictating the terms of leases to prevent opposition traders from setting up shop in an area.

“This is great news for potential competitors to established supermarkets – especially those who have struggled in the past to find suitable sites to set up new stores.”

The Grocery Sector Covenants Amendment Bill amends the Commerce Act 1986, prohibiting restrictive land covenants and exclusive lease covenants. It also renders existing commitments unenforceable.

“Limiting the supermarket options available to consumers severely limits their ability to shop for a better range of products and, of course, a better price,” said David Clark.

“We introduced this legislation on an emergency basis on budget night because it directly addresses one of the key competitive issues in the grocery market that acts as a barrier to fairer pricing.

“Budget 2022 provided a cost of living payment for around 2.1 million Kiwis to help deal with the impact of rising prices, and fixing our supermarket sector is another action we can take. .

“The Commerce Commission found the supermarket duopoly was making excess profits of $1 million a day. The government and the Kiwis have made it clear that this is not sustainable.

“We are talking about the excess money Kiwis have to shell out every day. That is why the government has taken swift action.

“The bill also strengthens the Commission’s information-gathering powers. As a result, it will have the legal mandate to demand documentation relating to contracts, arrangements and undertakings to ensure they comply with the law. I expect this power to be used proactively, and not just when the Commission suspects something is wrong.

“There is more to come to provide greater competition. We continue to work at pace on a regulatory backstop to ensure a wholesale access regime is in place to support competitors entering the market.

“And, we are also making rapid progress on the mandatory code of conduct, which will be subject to public consultation in the coming weeks and on the unit pricing system which is already under consideration,” said David Clark.

(With contributions from the New Zealand government press release)

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