Grocery merger plan scorned by lobby group, union

Supplied: Foodstuffs. (Source: Foodstuffs North Island)

Foodstuffs supermarket owners have voted to merge their North and South Island operations, but there is fear a merger will only increase the grocer’s dominance and prices. 

This follows the Commerce Commission’s supermarket study, which found the New Zealand grocery sector was prevalent with unfair competition, unfair prices, and excessive profits.

The commission is currently considering whether to clear the deal with preliminary assessments suggesting this is unlikely.

A report by the OECD wanted to force divestment because the supermarket sector in New Zealand lacks competition.

The Grocery Action Group (GAG) believes it is New Zealand households that are going to pay the price of this merger at the checkout. 

“The only possible comfort we took from yesterday’s announcement was Chris Quin, CEO designate of the merged giant, saying he welcomed competition and he hoped the New Zealand business environment enabled more,” said Sue Chetwin, GAG chair and former CEO of Consumer NZ.

“That should help the Commerce Commission reject the merger because approving it would most certainly lessen competition in our supermarket sector.”

While consumers will potentially lose value in the merger, employees stand to gain pay transparency and clearer opportunities for career progression.

“It’s long overdue that Foodstuffs catch up with their competitors and bring wages and employment agreements into line with the rest of the industry so that local supermarkets have a better shot at recruiting staff and ensuring they stay in the job,” said Rudd Hughes, First Union National secretary for Retail and Finance.

A single national agreement for Foodstuff employees could save the grocery chain millions in consultant and negotiation fees.

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