1 00:00:00,120 --> 00:00:03,280 Speaker 1: So the Commerce Commission cracking down on unfair behavior. What 2 00:00:03,320 --> 00:00:06,120 Speaker 1: they say is unfair behavior in the grocery sector. The 3 00:00:06,240 --> 00:00:11,560 Speaker 1: Grocery Commissioner is worried about promotional payments between the big supermarkets, 4 00:00:11,600 --> 00:00:14,960 Speaker 1: the dropoly and the suppliers. He says that around five 5 00:00:15,000 --> 00:00:18,439 Speaker 1: billion dollars a year in promotional rebates contributes to higher 6 00:00:18,480 --> 00:00:24,639 Speaker 1: average prices for goods and contributes to price fluctuation. He's 7 00:00:24,680 --> 00:00:27,640 Speaker 1: warning the ComCom may have to act if the supermarkets 8 00:00:27,640 --> 00:00:30,440 Speaker 1: don't voluntarily stop the rate at which this is happening. 9 00:00:30,920 --> 00:00:34,080 Speaker 1: Ernie Newman is a grocery policy expert with me this morning. Ernie, 10 00:00:34,080 --> 00:00:37,320 Speaker 1: good morning, Good day Ryan. Can you explain to me 11 00:00:37,600 --> 00:00:42,879 Speaker 1: why offering discounts or specials at the supermarket getting rid 12 00:00:42,920 --> 00:00:45,880 Speaker 1: of those would make life better for us consumers? 13 00:00:47,200 --> 00:00:49,800 Speaker 2: Yeah, it's interesting. It's a very complicated market that we're 14 00:00:49,840 --> 00:00:53,120 Speaker 2: talking about here, But what the Commissioner is showing in 15 00:00:53,200 --> 00:00:56,040 Speaker 2: this report is that there are these vast sums of 16 00:00:56,120 --> 00:00:59,840 Speaker 2: money that the supermarkets are negotiating from their largest supply, 17 00:01:00,160 --> 00:01:04,480 Speaker 2: is not all of which is being passed on to consumers. 18 00:01:04,560 --> 00:01:07,400 Speaker 2: So they're talking now about five billion a year in 19 00:01:07,520 --> 00:01:11,760 Speaker 2: discounts and rebates. And promotional allowances and whatever. And when 20 00:01:11,760 --> 00:01:13,240 Speaker 2: you come to work that I tried to do the 21 00:01:13,280 --> 00:01:15,480 Speaker 2: math last night, it comes to you know, for a 22 00:01:15,520 --> 00:01:18,120 Speaker 2: family of four, that's about four grand a year per 23 00:01:18,240 --> 00:01:22,320 Speaker 2: family that the supermarkets are getting in discounts with their suppliers, 24 00:01:22,840 --> 00:01:25,160 Speaker 2: not all by means of which is being passed on 25 00:01:25,640 --> 00:01:27,120 Speaker 2: to consumers at the checkout. 26 00:01:27,280 --> 00:01:29,320 Speaker 1: You better how much is being passed on and isn't 27 00:01:29,360 --> 00:01:31,560 Speaker 1: being passed on? Wouldn't that be central to whether you 28 00:01:31,640 --> 00:01:32,560 Speaker 1: do anything about it? 29 00:01:33,480 --> 00:01:36,920 Speaker 2: Well? Yeah, but the way in which the Commissioner is 30 00:01:36,959 --> 00:01:39,320 Speaker 2: phrasing was it's pretty obvious there is a very very 31 00:01:39,400 --> 00:01:42,440 Speaker 2: large amount that is simply going into the pockets of 32 00:01:42,000 --> 00:01:45,480 Speaker 2: the supermarkets and not being passed on. And you know, 33 00:01:45,520 --> 00:01:49,320 Speaker 2: in a proper competitive market that would not be possible 34 00:01:49,560 --> 00:01:52,920 Speaker 2: because of one supermarket didn't pass it on to the customers. 35 00:01:53,200 --> 00:01:55,640 Speaker 2: Another one would problem is, of course, we've got a 36 00:01:55,640 --> 00:01:59,200 Speaker 2: broken market here. We've only got a duopoly with two 37 00:01:59,240 --> 00:02:03,400 Speaker 2: people making decisions for supermarkets at wholesale and retail level 38 00:02:03,440 --> 00:02:06,400 Speaker 2: for the entire country. So our market is broken. 39 00:02:06,600 --> 00:02:09,920 Speaker 1: Okay, And if what you're saying is true, then you know, 40 00:02:09,960 --> 00:02:12,799 Speaker 1: when we started this whole exercise about the supermarkets. We 41 00:02:12,800 --> 00:02:14,760 Speaker 1: were told they were making a million dollars a day 42 00:02:14,800 --> 00:02:17,440 Speaker 1: in excess profits. So three hundred and sixty old million 43 00:02:17,480 --> 00:02:20,200 Speaker 1: dollars a year. What you're now talking about, and what 44 00:02:20,200 --> 00:02:22,840 Speaker 1: the Commission is now talking about is billions. 45 00:02:23,520 --> 00:02:27,280 Speaker 2: Yeah. Yeah, so come out of loose money floating around? 46 00:02:27,320 --> 00:02:30,440 Speaker 1: Did we underest? Are you saying that the million dollars 47 00:02:30,480 --> 00:02:35,280 Speaker 1: a day in excess profits was out by what tens 48 00:02:35,440 --> 00:02:36,960 Speaker 1: hundreds of millions financially? 49 00:02:37,160 --> 00:02:40,160 Speaker 2: Yeah? Yeah, there's far more loose money floating around in 50 00:02:40,160 --> 00:02:45,239 Speaker 2: this sector than the Compress Commission has identified in previous occasions. 51 00:02:46,120 --> 00:02:48,480 Speaker 1: But the problem is they haven't. They haven't identified it, 52 00:02:48,680 --> 00:02:50,840 Speaker 1: had they They've just said, hey, look there are five 53 00:02:50,880 --> 00:02:53,799 Speaker 1: billion dollars of payments going from A to B. They 54 00:02:53,840 --> 00:02:56,400 Speaker 1: haven't said how much of it's actually been passed on 55 00:02:56,600 --> 00:02:59,000 Speaker 1: or not. This is a Is this not a phishing exercise? 56 00:02:59,680 --> 00:03:02,440 Speaker 2: No, it's more than that. The problem we've got here 57 00:03:02,520 --> 00:03:04,760 Speaker 2: is we've got a market that is almost it's almost 58 00:03:04,919 --> 00:03:09,760 Speaker 2: mafia alike. You know, there are just so many discounts 59 00:03:09,800 --> 00:03:13,520 Speaker 2: and rebates and allowances and money going sort of under 60 00:03:13,560 --> 00:03:17,560 Speaker 2: the table, but nobody from outside can you can absolutely 61 00:03:17,600 --> 00:03:20,359 Speaker 2: say with certainty how much loose money. There is slotting 62 00:03:20,440 --> 00:03:23,280 Speaker 2: around in the system. What we do know is that 63 00:03:23,360 --> 00:03:26,600 Speaker 2: it's the supermarket servant at the top level and not 64 00:03:26,720 --> 00:03:28,600 Speaker 2: the consumers that are getting the benefit of a great 65 00:03:28,639 --> 00:03:29,080 Speaker 2: deal of this. 66 00:03:29,800 --> 00:03:32,160 Speaker 1: Ernie, appreciate your time this morning. Ernie Newman, who's a 67 00:03:32,200 --> 00:03:35,160 Speaker 1: grocery policy experts, has gone nine minutes away from six 68 00:03:35,440 --> 00:03:38,680 Speaker 1: loads of texts on this. Ryan Specials add variety and 69 00:03:38,800 --> 00:03:42,320 Speaker 1: fun to the drag of shopping. I love this. Don't 70 00:03:42,600 --> 00:03:45,560 Speaker 1: touch my don't you come for my specials? Commerce Commission 71 00:03:46,240 --> 00:03:49,640 Speaker 1: this is interesting. I'm a supplier to food stuffs, and 72 00:03:49,720 --> 00:03:52,240 Speaker 1: what the commissioner is talking about is that we might 73 00:03:52,280 --> 00:03:54,400 Speaker 1: have a product that we want to sell at say 74 00:03:54,440 --> 00:03:58,040 Speaker 1: two dollars fifty every day, but food stuffs make us 75 00:03:58,080 --> 00:04:01,400 Speaker 1: put the price up so many a year so that 76 00:04:01,480 --> 00:04:04,560 Speaker 1: they can call it a special, when all we really 77 00:04:04,560 --> 00:04:07,720 Speaker 1: want to do is to have the price lower every day. 78 00:04:08,160 --> 00:04:11,720 Speaker 1: But the question is overall, as the price on average 79 00:04:11,840 --> 00:04:14,520 Speaker 1: higher or lower than it would otherwise be, That's the question. 80 00:04:15,560 --> 00:04:18,520 Speaker 2: For more from Early Edition with Ryan Bridge. 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