Commerce Commission supermarket report.

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JaseNZ

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#294149 8-Mar-2022 18:10

Yeah well that was a waste of time IMO.

Recommendations amount to fark all.

https://www.stuff.co.nz/business/industries/127989704/art-of-the-covenant-the-tactic-supermarkets-have-been-using-to-unduly-restrict-competition

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#2881334 8-Mar-2022 18:32

Yeah I bet the government were a bit disappointed too, strong condemnation with a range of strong penalties/recommendations from the CC would have perhaps helped with the cost of living crisis debate that has been in the news.

Jase2985

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#2881359 8-Mar-2022 19:23

what a joke, and how much has this cost the tax payers?

Lias

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#2881384 8-Mar-2022 20:54

It was always going to be a waste of money because they were trying to prove that the "Fast Moving Consumer Goods" market was in fact all about high prices not just selling LOTS of things at relatively low margins, which was utter BS from the get go.

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marmel

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#2881385 8-Mar-2022 20:57

Lias:
It was always going to be a waste of money because they were trying to prove that the "Fast Moving Consumer Goods" market was in fact all about high prices not just selling LOTS of things at relatively low margins, which was utter BS from the get go.

Well what they found was supermarkets do sell LOTS of items at margins a lot higher and in some cases double that which other operators overseas make with no reasonable explanation as to why.

shrub

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#2881392 8-Mar-2022 21:46

just like the fuel price report. Waste of time

Lias

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#2881394 8-Mar-2022 21:50

marmel:

Well what they found was supermarkets do sell LOTS of items at margins a lot higher and in some cases double that which other operators overseas make with no reasonable explanation as to why.

That's not what I read.

Section 4.57 "As shown in Figure 3.4 below, the average ROACE for the three major grocery retailers is slightly higher than, but similar to, the average ROACE for the overseas comparator companies. "

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1101

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#2883478 9-Mar-2022 09:30

well, they found that PRIVATE COMPANIES can set whatever profit margin they choose

My god, what a surprise.
Every other company can decide their own prices, so why cant supermarkets.

Whats next, regulating how much a plumber can charge ?
Regulating pricing on OEM car parts ?

This is why you go to local fruit & veg shops for cheaper pricing .

gbwelly

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#2883499 9-Mar-2022 10:02

1101:

well, they found that PRIVATE COMPANIES can set whatever profit margin they choose

My god, what a surprise.
Every other company can decide their own prices, so why cant supermarkets.

Whats next, regulating how much a plumber can charge ?
Regulating pricing on OEM car parts ?

This is why you go to local fruit & veg shops for cheaper pricing .

I guess you'd prefer it if the only ISP with fibre in NZ was Telecom then? (local loop unbundling)

Can't exactly nip down to the markets for some loo rolls or nappies.

Thankfully there is actual competition with aftermarket car components so I don't HAVE to buy a Nissan OEM alternator if I choose.

What people wanted was for retail and wholesale to be separated. Both would still remain PRIVATE COMPANIES who could set whatever profit margin they choose. Just that now, Countdown Retail could buy from Foodstuffs Wholesale if Countdown Wholesale set a profit margin that is higher than Countdown Retail want to pay.

surfisup1000

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#2883502 9-Mar-2022 10:08

1101:

well, they found that PRIVATE COMPANIES can set whatever profit margin they choose

There are a bunch of rules around pricing, and sales terms, and collusion, and monopolies.

Supermarkets are a duopoly. While they may not sit in a room agreeing on pricing, they could be communicating via pricing itself. Both sides lifting prices a bit, without entering into obvious pricing wars.

mattwnz

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#2883507 9-Mar-2022 10:19

When they found mobile telcos were a duopoly, they helped to get a 3rd operator, which directly increased competition and brought prices down. It doesnt' appear they are looking at doing this, so we could be waiting years for an actual 3rd big operator again.

I wonder how much better off NZers would be, if we hadn't been overpaying for food over the last 25 years of this duopoly. IMO the CC should never have allowed Foodtown to be sold in the 90's, as I recall back then there were serious concerns that a duopoly would lesson competition, and that has proven to be the case. I don't know how it was allowed.

Lias

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#2883529 9-Mar-2022 10:57

I swear you guys are reading a different report here.

The report is full of weasel word language because they really, really wanted to make the supermarket chains look like the bad guys, but they couldn't prove it. The best they could do was basically say that the ROACE of approximately 12% was double the 5.5% they believe it should be, but when they compared them to overseas grocery chains, all of the overseas chains had levels of ROACE around double their theoretical pulled out of their arse "this is what's fair" rate as well. They then basically said they were going to ignore that fact because it didn't help them try and make the supermarket chains look bad.

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insane

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#2883729 9-Mar-2022 13:08

Lias:

I swear you guys are reading a different report here.

The report is full of weasel word language because they really, really wanted to make the supermarket chains look like the bad guys, but they couldn't prove it. The best they could do was basically say that the ROACE of approximately 12% was double the 5.5% they believe it should be, but when they compared them to overseas grocery chains, all of the overseas chains had levels of ROACE around double their theoretical pulled out of their arse "this is what's fair" rate as well. They then basically said they were going to ignore that fact because it didn't help them try and make the supermarket chains look bad.

I blame the media :p

But in all seriousness, the media articles around this have painted that picture to fit their overarching narrative of big business and profits being bad. It's squarely aimed at the emotional heartstrings of the average kiwi who is facing rising cost of living and are looking at someone to blame for their new hobbies such as budgeting, saving, frugality, living within your means and what not.

marmel

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#2883743 9-Mar-2022 13:34

Lias:
I swear you guys are reading a different report here.

The report is full of weasel word language because they really, really wanted to make the supermarket chains look like the bad guys, but they couldn't prove it. The best they could do was basically say that the ROACE of approximately 12% was double the 5.5% they believe it should be, but when they compared them to overseas grocery chains, all of the overseas chains had levels of ROACE around double their theoretical pulled out of their arse "this is what's fair" rate as well. They then basically said they were going to ignore that fact because it didn't help them try and make the supermarket chains look bad.

What page(s) of the report state this?

marmel

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#2883764 9-Mar-2022 14:29

insane:
Lias:

I swear you guys are reading a different report here.

The report is full of weasel word language because they really, really wanted to make the supermarket chains look like the bad guys, but they couldn't prove it. The best they could do was basically say that the ROACE of approximately 12% was double the 5.5% they believe it should be, but when they compared them to overseas grocery chains, all of the overseas chains had levels of ROACE around double their theoretical pulled out of their arse "this is what's fair" rate as well. They then basically said they were going to ignore that fact because it didn't help them try and make the supermarket chains look bad.

I blame the media :p

But in all seriousness, the media articles around this have painted that picture to fit their overarching narrative of big business and profits being bad. It's squarely aimed at the emotional heartstrings of the average kiwi who is facing rising cost of living and are looking at someone to blame for their new hobbies such as budgeting, saving, frugality, living within your means and what not.

Profitable businesses are not bad and no one has stated that.

Large companies exploiting their duopoly to charge more to customers and pay less to suppliers is bad. Hence the CC investigation.

I also note that neither Foodstuffs or Progressive have come out swinging, all we got was a muted response accepting “there was work to do”. I think they realise they have probably dodged a bullet here.

I think if Labour get a third term and there hasn’t been some real action from the companies involved we may see more invasive measures taken.

Jas777

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#2883766 9-Mar-2022 14:44

marmel:

Large companies exploiting their duopoly to charge more to customers and pay less to suppliers is bad. Hence the CC investigation.

I also note that neither Foodstuffs or Progressive have come out swinging, all we got was a muted response accepting “there was work to do”. I think they realise they have probably dodged a bullet here.

I think if Labour get a third term and there hasn’t been some real action from the companies involved we may see more invasive measures taken.

What measures?

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