A new group aimed at improving supermarket competition says it will oppose Foodstuffs’ plans to merge North and South Island co-operatives.

The Grocery Action Group (GAG) says the Commerce Commission should throw out
the Foodstuffs application.

“Allowing the merger will lessen competition and inevitably lead to higher prices for consumers,” GAG chair Sue Chetwin said.

Chetwin was previously Consumer NZ chief executive and a Sunday newspaper editor.

The group said a Foodstuffs merger would consolidate market power for Foodstuffs, provide for less competition and even reduce the range of products available to consumers.

Foodstuffs operates New World, Pak’nSave and Four Square and Gilmours grocery retail outlets in the North Island. Their combined revenue was $9.8 billion in the 2023 financial year.

In the South Island, Foodstuffs operates Pak’nSave, New World, Four Square, Raeward Fresh, On the Spot and Trents stores. Combined revenue in FY23 was $3.8b.

“There is no evidence prices will come down or benefit consumers in any way, in fact the opposite is the case. It should therefore be rejected,” Chetwin added.

GAG said its founders had a wide range of advocacy backgrounds representing consumers, businesses and Māori interests.

The group has promised to hold the Commerce Commission and the Grocery Commissioner’s “feet to the fire” and apply pressure to fixing what it called a failed supermarket sector.

Chetwin said the merger application presented the Commission with a chance to back consumers.

“Its own supermarket report released in 2022 essentially said there was a market failure in this industry. There needed to be more competition for all New Zealanders to benefit from better prices, more choice and more convenient shopping,” Chetwin said.

GAG said “splitting up the duopoly” of Foodstuffs and Woolworths would give shoppers real competition.

Chetwin said even suppliers were scared of publicly opposing the merger.

“That just shows the tremendous amount of power the duopolists have,” she said.

“GAG is concerned at the slow pace of progress at the Commission regarding creating more competition.”

Chetwin said some consumers were changing their eating habits because they did not have the money to put food on the table, and needed help urgently.

“This merger application represents a real opportunity for the Commission to use its powers to say competition will be reduced even further if Foodstuffs is allowed to merge its North and South Island operations.”

Foodstuffs North Island chairman Dean Waddell in November said the merger would benefit New Zealanders.

“By being more efficient, we will be able to invest more heavily in these things. So yes, being more efficient will mean savings at the checkout,” Waddell said when the merger proposal was announced.

He also said the merger would remove the cost and complexity of having two support structures supporting the same brands across New Zealand.

The Warehouse quickly attacked the merger proposal.

“While there may be efficiencies for them, it’s going to be an uphill battle to convince New Zealand customers that they will also benefit with the lower grocery prices that they deserve,” The Warehouse chief executive Nick Grayston said at the time.

GAG said its members included Consumer Advocacy Council chair Deborah Hart and Māori leader and Agri-Women’s Development Trust patron Mavis Mullins.

It also said its establishment board included former Telecommunications Users Association chief executive Ernie Newman and Gilbert Peterson, former communications manager at the Employers & Manufacturers Association in Auckland.