Commerce Commission empowered to crackdown on covenants
New powers will be given to the Commerce Commission allowing it to require supermarkets to hand over information regarding contracts, arrangements and land covenants which make it difficult for competing retailers to set up shop.
“The Government and New Zealanders have been very clear that the grocery sector is not working in its current state. Budget 2022 delivered a cost of living payment for about 2.1 million Kiwis to help with the impact of rising prices, and fixing our supermarket sector is another action we can take,” Minister of Commerce and Consumer Affairs David Clark said.
“We’re cracking down on the anti-competitive land wars we’ve seen for years, where the supermarkets have been allowed to buy up land or dictate the terms of leases to block their competitors from getting a foothold in a neighbourhood.”
A Government committee has considered the Grocery Sector Covenants Amendment Bill, and proposed some changes which will enhance the Commerce Commission’s information gathering powers. This will be included in the debate when Parliament considers the Bill this week.
“This proposal means the Commission, as industry watchdog, has legal mandate to make sure this practice is ended quickly. It will be able to access documents relating to contracts, arrangements and covenants to ensure compliance,” David Clark said
“Analysis has shown supermarkets currently earn $1 million a day in excess profit, that’s coming straight from the pockets of kiwi consumers.
“Limiting supermarket options for consumers severely restricts their ability to shop around for a better range of products, and of course, a better price.
“An example of restrictive covenants having an impact is found in Ponsonby in Auckland, which is only serviced by one grocery provider.
“I have written to the Commission, and relayed my expectation that it makes proactive use of its monitoring powers given under the Bill, not just where it suspects there is an issue occurring.
“The supermarkets have indicated they are committed to ditching restrictive covenants and leases, which is a great step in the right direction. We, however, need to make sure this process maintains its momentum, and that restrictive covenants are relegated to the history books for good.
“This legislation tackles one root cause of competition woes in the grocery sector, and ensures the Commerce Commission has the correct powers to help enact change.
“It also sends a signal to would-be competitors that access to suitable land, need not be a barrier anymore.
“As this Bill passes through the House, Government continues to work at pace on a regulatory backstop to ensure there is a wholesale access regime in place to support the duopoly’s would-be competitors.
“We’re also moving fast on the mandatory code of conduct, which will be heading out for public consultation in the coming weeks and the unit pricing scheme which is already out for feedback,” David Clark said.