by frog
That’s how the Commerce Commission is describing the Court of Appeal’s decision to block Woolworths and Foodstuffs from buying out their competitor the Warehouse. Commerce Commission Chair Paula Rebstock says New Zealand consumers know that more competition is needed in the supermarket sector:
“The Commission declined clearance in mid-2007 for acquisition by either Foodstuffs or Woolworths, because New Zealand’s supermarket retail market is already highly concentrated. There are high barriers to entry in the industry, yet The Warehouse is uniquely placed to compete with the supermarkets because of its existing property portfolio, extensive distribution networks and established brand.”
I thought the comments by Forsyth Barr analyst Guy Hallwright were compelling:
“Secondly it (a decision in favour of Woolworths and Foodstuffs) would open the way for duopolists in any area of business to overtake new entrants in the early days on the grounds that competition is not substantially diminished because there’s not much competition there yet.
“So, you would basically entrench duopolies,” Mr Hallwright said.
This is a good first start to stop the duopoly entrenching further. We now need to work to support small local grocers to build a sustainable business in their communities and to find ways to break down the barriers the supermarket duopoly has put between farmers, producers and consumers.
Published in Economy, Work, & Welfare by frog on Thu, July 31st, 2008
Tags: commerce commission, Food, foodstuffs, paula rebstock, supermarkets, Warehouse, woolworths
on the trolls and those who are unable to keep on topic
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“We now need to work to support small local grocers to build a sustainable business in their communities”
What “work” would that involve..? ‘Buy their stuff’?
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I think that after this decision, the Warehouse will pull out of retail food sales. While giving it a good go I dont think the numbers stack up for them.
This is based on watching the Sylvia Park Warehouse store were very little food shipping is done compared with the Foodtown, Pack ‘n Save supermarkets in the same shopping precinct.
This is not a blow to duopolocy rather a strenghtning of it.
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However, if you shop in areas with lower deciles, you’ll find that the Warehouse does quite a bit of grocery trade. Say, suburbs or inner city areas with a lot of student flats or council housing.
Oh, yeah, that doesn’t apply so much in Auckland, does it? Banks sold all your council housing…
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