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Speaker 1: Afternoon. The first annual Commerce Commission report into our supermarkets

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Speaker 1: has found no meaningful improvement in competition. It has been

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Speaker 1: now more than two years since the ComCom and the

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Speaker 1: government first started cracking down on supermarkets, but instead of

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Speaker 1: things getting better, they've actually got worse. Per Van Heerden

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Speaker 1: is the Grocery Commissioner, Hope heer hi Ether, you've said

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Speaker 1: that they're ripping us off. How are they ripping us off?

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Speaker 2: Well, when we look at the report, their margins have

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Speaker 2: actually increased over the last period, the profitability is still high,

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Speaker 2: and they've still got major dominance in the industry. So

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Speaker 2: when we combine all of those things, we can see

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Speaker 2: that competition isn't working the way it should be.

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Speaker 1: So are you saying that they are extorting us?

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Speaker 2: I wouldn't go as far as saying extorting, but they

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Speaker 2: are making more margin.

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Speaker 1: Yeah, But so is that ripping us off by making

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Speaker 1: more money off us?

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Speaker 2: Yes? I believe in competition. If they are making more

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Speaker 2: than is accepted overseas, know that QI consumers are paying

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Speaker 2: too much and KEII consumers deserve better.

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Speaker 1: How much more are they making off fast than is

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Speaker 1: accepted overseas?

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Speaker 2: I don't have the figure with me right here, but

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Speaker 2: from memory, the return on assets is about eleven percent

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Speaker 2: versus five and a half six.

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Speaker 1: Overseas, so it's like double.

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Speaker 2: Yes, it is quite a significant difference between what others

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Speaker 2: overseas are making where there's more competition than what's happening

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Speaker 2: in New Zealand.

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Speaker 1: How much of the margins gone up by.

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Speaker 2: The margins have gone up by about three percent when

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Speaker 2: we look at the different ones, Fruit and veggies has

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Speaker 2: gone up about zero point four percent from memory, so

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Speaker 2: overall they've gone up. And when we say the margins

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Speaker 2: have gone up, this is the difference between what the

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Speaker 2: suppliers are ch maardging to the supermarkets with their inflation

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Speaker 2: and what the supermarkets have increased their prices by. So

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Speaker 2: that margin has increased.

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Speaker 1: Ah, So it's not as so the suppliers are getting

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Speaker 1: a certain amount of money and yet we as consumers

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Speaker 1: are getting priced over and above that and that's going up,

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Speaker 1: That gap is going up.

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Speaker 2: That is correct, okay, because we do have inflation and

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Speaker 2: we've got to recognize that. But you know, in a

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Speaker 2: in a competitive market, you'd expect that those margins are constrained.

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Speaker 1: Now, Pier, the problem is this ist no surprise to

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Speaker 1: me at all, because when the government did the crackdown

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Speaker 1: on supermarkets, it was never going to work, right it

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Speaker 1: was it was too lily lived, it was weak. So

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Speaker 1: it hasn't worked. It's not going to work. What are

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Speaker 1: you going to do to change things?

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Speaker 2: What we're doing is we've got quite a few powers

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Speaker 2: that haven't been unlocked yet, and we want to make

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Speaker 2: sure that we unlock all of those. What are those

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Speaker 2: powers once we've Once we've used that, then we can

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Speaker 2: say to the government this is where we're at, and

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Speaker 2: then they can make a decision what they want to

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Speaker 2: do from there. Are those For instance, if I take

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Speaker 2: the wholesale side of things, we've got to do a

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Speaker 2: Section fifty six inquiry in order to unlock what it

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Speaker 2: is called the backstops, so where we give a report

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Speaker 2: to the minister, and the minister then says to the

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Speaker 2: wholesalers that you've got to supply to other wholesalers at

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Speaker 2: the same price that you supply to your own stores.

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Speaker 2: That's one of the backstops on the supply code. What

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Speaker 2: we're doing. It's been in force now for five months.

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Speaker 2: We see it's not working the way it was intended

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Speaker 2: to there's some advantages already, but we've taken early actions.

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Speaker 2: So with all of these we're actually getting ahead of

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Speaker 2: the game and starting early to make all of the

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Speaker 2: improvements to the system. There's no one silver bullet. Was

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Speaker 2: it would be very easy. There's no one silver bullet.

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Speaker 2: So we've got to use all of these different tools

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Speaker 2: to their maximum effect to try and get change within

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Speaker 2: the injury.

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Speaker 1: How long will it take you to get this stuff done?

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Speaker 2: Well? When we look at overseas, Australia and Finland. In

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Speaker 2: Australia without a regime like we have, it took Ald

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Speaker 2: ten years to get to ten percent of the market share.

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Speaker 2: In Finland, Ledal was also ten years to get to

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Speaker 2: ten percent. I don't believe we have ten years. No

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Speaker 2: one is wanting to sit around, and no consumers specifically

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Speaker 2: wants to sit around for ten years. We have a

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Speaker 2: unique situation and that we've got a world first in

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Speaker 2: this grocery regime that we want to use to pull

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Speaker 2: all those levers. See what we can get done, See

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Speaker 2: if we can get another player in the market, improve competition.

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Speaker 2: And I think when we look at geographic areas like Auckland,

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Speaker 2: there's actually been a decrease already in the concentration of

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Speaker 2: the major grocery supermarkets by about four percent. So it

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Speaker 2: shows me that if competition is working and even the

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Speaker 2: smaller and slightly bigger like Costco come in, they can

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Speaker 2: have an impact and I believe we can change things

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Speaker 2: within our industry.

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Speaker 1: You can't let the merger go through at foodstuffs with

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Speaker 1: the stuff going on, can you.

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Speaker 2: Well either, you know, I can't comment on that at

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Speaker 2: the moment. We are in the process of reviewing it

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Speaker 2: and the decision on that will come out on the

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Speaker 2: first of October.

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Speaker 1: All right, Pier, thank you, I really appreciate your time.

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Speaker 1: That's Pvnhead and the Grocery Commissioner. Now a lot of

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Speaker 1: the power will lay in the hands of Andrew Bailey,

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Speaker 1: the Commerce Minister. He's with us after six o'clock. For

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