National, Labour, NZ First, the Greens and Te Pāti Māori have all released policies for major state intervention in the supermarkets sector to break up or challenge the duopoly of Foodstuffs (Pak n’ Save, New World & Four Square) and Woolworths in recent weeks. National and NZ First have proposed breaking up Foodstuffs into separate competing Pak n’ Save and New World/Four square chains, while leaving Woolworths intact. Labour has proposed forcing both Foodstuffs and Woolworths to run their wholesale operations independently from their retail stores in a structural separation that echoes the breakup of Telecom into Chorus and Spark. The Greens have proposed to break up the supermarkets duopoly and force the sale of 120 stores and distribution centres from both Foodstuffs and Woolworths to a new state-owned competitor called KiwiMart, at a cost to buy and invest in the new operation of $2.8 billion. Te Pāti Māori has proposed providing a $800-$1000 per year tax credit for people earning less than $60,000 per year to be able to afford to buy eight weeks worth of kai. It would cost $2.8 billion a year in lost tax revenues. It has also proposed the Crown invest $100 million to support the creation of Māori run competitors to the duopoly. I discussed Labour’s proposal on Monday with Labour Commerce and Consumer Affairs Spokesperson Arena Williams and Monopoly Watch NZ founder Tex Edwards. The full discussion is in the video above. Tex’s position on what is needed to foster real competition that generates lower prices for consumers includes this checklist of necessary conditions: * Distribution centre competition: Most competitive tension occurs at the distribution-centre level. It is inevitable that new centres will need to be built. * Scale competition: Modelling shows that a minimum of approximately 18–22% revenue market share is needed to deliver a pathway to cost-out reductions. * Geographic competition: Competition is currently thwarted because whole suburbs and districts are served by only one banner. This needs to be resolved. * Data break-up and open access: It is 2026 — data and digital access are now as important as geographic distribution, particularly with the emergence of robotic, AI-driven distribution ecosystems built for direct home delivery in the dry-goods segment. * Supplier designation There is supplier appetite for change within the existing market structure, and part of the excess margin is shared with the supermarkets. Given the well- documented problems the third challenger, The Warehouse, had with suppliers, this issue is critical. * Fresh capital New stakeholders are needed to drive change and prevent inertia. Without fresh capital, the existing status quo will simply resume. * Challenger branding Consumer inertia is always a challenge for new entrants. Clearly explaining different market structures is crucial to winning scale and efficiencies. * Like-for-like segmental competition: The Sense report outlines two proposals for a Foodstuffs break-up. One option amounts to a behind-the-scenes voluntary undertaking that is too generous to the Pak’nSave owners, who would go on to dominate the budget segment. Pak’nSave needs to compete with a like-for-like offering — which is why this banner needs to be broken up. Foodstuffs’ own 2006 submissions confirmed this point. * Pathway to third-party experts: The Commerce Commission has a department that has been studying supermarket competition for over six years and has relevant expertise. It is essential that this team be given the time and resources to determine the best possible way forward. Here’s the Monopoly Watch post on that: Te Pāti Māori policy document In my view, neither the Labour or National plans allow for the creation of a big-enough new operator with access to equally cheap wholesale supplies, or are able to break the local monopolies held by Pak n’ Save stores in particular. National’s plan doesn’t break up the wholesale arms from the retail arms of either Foodstuffs or Woolworths. Labour’s plan doesn’t create the large-enough new competitor to Pak’ n Save stores to make a difference. It is relying on existing New World, Four Square and other independents scaling up. I think that would result in slow and patchy competition that leaves the Pak’ n Save stores with their local monopolies intact. The difference between this plan and Labour’s successful intervention in telecommunications was that it required regulation of some prices (interconnection fees), regulation of transferrable mobile numbers, state investment in UFB, and the sale of (arguably) cheap mobile spectrum that enabled the creation of a true and eventually large third competitor of Two Degrees, which was able to compete the mobile prices of Spark and Vodafone (now OneNZ) lower over a decade. Tex was a co-founder of Two Degrees. The Greens’ proposal is closer to the necessary conditions of a big-enough competitor to Pak n’ Save with enough capital to compete and grow, and with the ability to break the local monopolies. Although there is a risk KiwiMart simply takes over the Pak’ n Save monopolies of the stores it buys, and/or runs the chain to maximise dividends, similar to the state-controlled Genesis, Meridian & Mercury. I aim to do more of these Election Hoons on this and other topics. I welcome suggestions in the comments below. Paying subscribers are able to comment. Become a paying subscriber to see the full detail and analysis in my regular emails, and get access to all my videos and podcasts. Here’s an introductory offer for the first year for new subscribers. Paying subscribers support me to do the work and get it out through my various public channels, including YouTube, RNZ, 1News and NZ Herald. cheers Bernard This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit thekaka.substack.com/subscribe
