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.