Willis said she had not received advice on how many new stores would be required to provide real competition. Photo: RNZ
Economic Growth Minister Nicola Willis has again called for more competition in the supermarket sector, saying a new player would be "really really welcome".
Even if it means forcing the current duopoly to split or rolling out the red carpet to an international player with some tweaks to the law - though her preference would be for a local company to take on Foodstuffs and Progressive.
Willis revived the long-discussed problem at the opening of the two-day New Zealand Economics Forum in Hamilton on Thursday, saying Kiwis were paying among the highest prices in the OECD for kitchen staples.
But rectifying that would not be achieved overnight. The Finance inister said she had not received advice on how many new stores would be required to provide real competition.
"In my view, in each of your major centres you'd want a few of the stores so that people could actively say, 'Well, I'm not going to go to one of the major players today. I'm going to go to that store, because I think it has more affordable products and choices and I like it,'" she told Morning Report on Friday.
The two supermarket chains were already being prosecuted by the Commerce Commission over "inaccurate pricing and misleading specials".
Willis said there had been expressions of interest from overseas, but would not say who or how many, citing commercial considerations.
"I don't want to muck this up. I want to create a maximum opportunity that we get competition into the supermarket in New Zealand."
The biggest hurdle cited by offshore operators was the Overseas Investment Act, "because they might need to apply and then wait for many months to get permission to purchase land to build a supermarket on, and sometimes they don't even get the permission to build the supermarket".
"And we know that the Resource Management Act has also proposed (sic) problems in the past where they've actually been opposed by other shops in the area who say, 'No, look, we don't want you to open a supermarket there.' So there's two things that currently create delay."
She said there had been interest from local businesspeople too, and she wanted to find ways to help them get started.
"There has been some interest from people in New Zealand about consolidating to create a supermarket chain, and I am, just as excited - if not more excited - about that proposition as an international player coming in.
"The key thing is getting access to a supply chain for the food products, and look, I'm sure that there are New Zealand players who could do that."
Nicola Willis. Photo: RNZ / Marika Khabazi
A quicker fix - but lower on the preference scale - would be splitting up one or both of the existing duopoly, or requiring them to give up unused land to new competitors.
"The alternative is not to do anything and to let the current arrangement become more and more entrenched. I think it's better to be taking action now."
The Commerce Commission's probe into the wholesale market was due to report back mid-year.
"I'm open to what those recommendations might be."
'Feisty' talk welcomed
The man who helped break up the mobile network duopoly in New Zealand says the supermarket sector will not become competitive without the forceful breaking up of the current industry leaders.
2degrees founder and Monopoly Watch spokesperson Tex Edwards said he was "very encouraged" by Willis' "feisty" words.
"I think as comprehension builds in officials in Wellington of just actually what the barriers are and how well the incumbents… have built barriers to entry I think it's very healthy."
He said it was "almost inevitable" that Willis' least-favourite option - forcibly breaking up the duopoly, rather than getting a new entrant from overseas or locally - would need to happen.
Tex Edwards. Photo: RNZ / Cole Eastham-Farrelly
"When we've taken advice on how long it would take to build just 100 stores, and we had a property consultant look at it, it was going to take 20 years to assemble a portfolio of of stores that would be half as good as the incumbents.
"But more importantly… the Commerce Commission published that there'd been an overbuild of supermarkets, particularly inthe big macroto category, and that overbuild is used as a barrier to entry.
"And what's actually happened as the public policy debate has continued on, is that more people understand what pretend competition is, versus real competition."
A third operator would help reduce prices by using lower prices as a way to attract shoppers away from the legacy supermarkets, Edwards said - noting that when 2degrees launched, it "halved the price on day one and started getting traction".
"The third operator has to fight their way into the market."
The minimum capital required would be around 2$ billion, he said, to create a competitor that could have enough clout to get the existing supermarket chains to lower their prices. And getting an offshore company to open a big enough range of stores here would just take too long.
Edwards said investors in London he spoke to could not believe New Zealand ended up with a duopoly in the first place.
"I think there's a healthy debate going on in Wellington, and I think the officials are getting better and better comprehension of what's needed."
Sign up for Ngā Pitopito Kōrero, a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
