The New Zealand Government has launched an investigation into competition in the supermarket industry, a sector that is largely dominated by two major players – Countdown and Foodstuffs.

Minister of commerce and consumer affairs David Clark noted that, as groceries are one of Kiwis’ most regular expenses, the government wants to ensure pricing is fair.

“New Zealand has one of the most concentrated retail grocery markets in the world and there are indicators that competition in the sector has weakened over time,” Clark said.

“We also know that the average Kiwi household spends roughly 17 percent of its weekly expenses on food, and this has been increasing year on year.

“It’s been a tough year for many Kiwis and launching this study is an early fulfillment of a Labour Party campaign commitment to make sure we’re not paying more than we should during the weekly shop.”

ConsumerNZ has backed the decision, stating the concentrated nature of New Zealand’s supermarket sector means Kiwis could be paying higher prices since competitive pressures don’t apply.

The consumer advocate group also said the investigation should look not only supermarkets’ contracts with their suppliers, but also the stores’ pricing practices and promotion of their private label brands – which they fear are used to drive margins up and smaller brands off shelves.

“We need a wide-ranging investigation to gauge the degree to which the stores’ market power is affecting how much consumers pay,” ConsumerNZ chief executive Jon Duffy said.

“The stores employ a confusing array of price promotions, which risk misleading consumers about the discount they may be getting. Based on our research, we think there are good grounds to question whether some of these discounts are genuine.”