Supermarket duopoly laid bare, faces forced competition
The two giants are accused of making excessive profits from squeezing both suppliers and consumers
Good morning and welcome to The Bulletin for Friday 30 July, by Alex Braae for The Spinoff. Presented in partnership with Z Energy.
In today’s edition: Supermarket duopoly laid bare, one industrial action ends while another restarts, and window closing for quarantine-free travel from Australia.
(Getty Images)
A couple of years ago former Spinoff staffer Henry Oliver made a very astute observation about the NBR Rich List, and I want to quote it at length to set up today's main story:
"Other than property investment, an inheritance, or buying severely undervalued public assets, the best way to get rich in New Zealand is working your way up from stocking shelves to owning a supermarket. Five of the new entrants own supermarkets. And most of them only own one. No wonder food is so expensive here."
In their latest market study, the Commerce Commission has warned that much more competition needs to be introduced into the supermarket duopoly, one way or another.Justin Giovannetti reports the commission found a broken market, with the two major supermarket companies wielding immense power over both consumers and suppliers. It also found supermarkets were making what were described as excessive profits. It was a draft report, and a final set of recommendations will be made in November.
But already the supermarkets are being put on notice about potential changes they could make to stave off more drastic steps, like a government-created new wholesale operation, or a third company being introduced into the market. In response, consumer affairs minister David Clark said the government was willing to act, but would wait for the final report.
Suppliers in particular will be cheered by the report. Speaking to Newsroom before the announcement, Yum granola founder Sarah Hedger spoke out about the pressure that gets put on by the supermarkets, going into detail about the tough negotiating strategy she's faced with. Hanging over it is an "implied threat" of being taken off the shelves, which given the dominance of supermarkets would cripple any business. Farmers Weekly reported the horticulture sector backed calls for a Code of Conduct to govern the relationship.
The industrial stand-off for Wellington bus drivers appears to be over, with union members voting to accept a deal from NZ Bus. Stuff's Joel Macmanus reports the drivers ended up with a pay rise, and their current conditions being preserved. The previous three offers put to union members were all voted down heavily, with those conditions being a particular sticking point. Meanwhile in industrial action, the DHB nurses have voted to strike over two eight hour periods in August and September.
The window is closing tonight for quarantine-free travel back from Australia, minus New South Wales. In a release, acting Covid minister Dr Ayesha Verrall said about 3000 seats were still available, after cancellations had picked up. A negative test will need to be shown as a pre-departure test, and returnees from Victoria will need to self-isolate at home until a further negative test comes back. Consular support will be available to those who for whatever reason can't come back.
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Tourism operators are concerned by the implications of a new plan to manage the Milford Sound, reports the ODT. In particular, it's the ban on cruise ships through the Sound, and the closure of the local airfield. The concern from Queenstown tourism operators is based on the idea they might get fewer visitors coming their way as a result. Locals however are a bit happier with it all, especially in light of over-tourism concerns before Covid. Speaking of which, there's an underlying assumption that international tourism returns at all, and I'm not sure anyone can say right now when or if that's going to happen.
A decline in overseas residential property owners is currently taking place, with twice as many selling as buying right now, reports Interest. The trend is interesting, even if the numbers are in the hundreds, so might not necessarily have a distorting effect on the market. Some transactions may not be included in the data if they took place through companies or trusts. Part of the reason for the decline in purchases is the foreign buyers ban that came in several years ago.
You might have heard about the Wallabies rugby team getting an exemption to come into New Zealand on economic grounds. Well, as Stuff reports, experts are questioning the robustness of the economic calculations, and suggesting the decision was really more about politics than economics. As a Hawke’s Bay apple grower put it succinctly, “if they cancelled the rugby they would have a few thousand grumpy people and they don’t like making people grumpy.”
Got some feedback about The Bulletin, or anything in the news?
Get in touch with me at thebulletin@thespinoff.co.nz
Right now on The Spinoff: Bernard Hickey looks at the profits of Rio Tinto, and what it says about the unequal electricity market. National MP Chris Bishop presents a set of ideas to improve the vaccine rollout. Justin Latif goes to Māngere College with the Polynesian Panthers to see a new generation of leaders being shaped. Toby Manhire reports on a study about how New Zealand is the likeliest place in the world to ride out a global apocalypse. Fiona Ralph writes in partnership with Share My Super about charities working to address poverty from all angles. Danyl Mclauchlan tries to unpack the meaning of Kafka in a way that even someone who is baffled by that kind of abstract literature might be able to understand (speaking personally here.) And Michael Andrew reviews and ranks the weirdest real estate agent ads in the country.
For a feature today, a lovely piece about the final bell being sounded for a Waikato school. Stuff's Aaron Leaman went to a gathering to farewell Pukemiro School, where the roll had dropped to just one pupil earlier this year. The school was out to the west of Huntly, in an area that used to house mining families, but with the industry gone so are the kids. Here's an excerpt:
As the procession traced a path through the empty classrooms and library, some used the opportunity to run their hands over the bare walls and shelves one last time. At one point, an attendee broke away from the procession to hug long-time teacher Katrina Andersen whose connection to the school dates back to 1979.
“I don’t ever want to let you go,” the woman said as she embraced Andersen.
[Ministry of education commissioner Brad] Totorewa said farewell ceremonies aren’t typically done when a school is closed. “I felt that, as commissioner, it was important that we provide an opportunity for connectivity to the past,” he said.
In sport, an extremely rich guy is putting out feelers to try and keep the America's Cup in New Zealand, reports the NZ Herald's (paywalled) Paul Lewis. Greymouth Petroleum CEO and chair Mark Dunphy wants to put together a package of private and government funding to get Emirates Team NZ to stay. Currently the frontrunners for the next hosting venue are believed to be Cork in Ireland, and Valencia in Spain.
And I got an email late last night from Axel, one of my regular correspondents, who said today could be a day for NZ rowing that could define a generation. He picked Emma Twigg for a gold at about 12.30, the women's eight to get at least a silver about half an hour after that, and the men's eight to potentially bag a bronze straight after that. Worth watching over the lunch break for sure.
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