The Warehouse: Commissioner 'would welcome any competition in the market'

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A bid to take over The Warehouse Group could help rein in New Zealand’s supermarket duopoly, the grocery commissioner says.

The Warehouse has been approached by founder Sir Stephen Tindall and a private equity firm about a potential buyout that could position the company as a third player in the supermarket industry.

Grocery Commissioner Pierre van Heerden says he’s keeping a close eye on the proposal.

“We are watching it with interest because we would welcome any competition in the market that increases competition at the moment.”

The grocery regime has been set up to ensure new players, or existing small players, can have a fair go at competition in the industry, van Heerden said.

He said issues with suppliers would be dealt with quickly but the Commission needed to know where to look.

Grocery retailers can’t put pressure on suppliers and there is an anonymous supporting tool in place for reporting this, he said.

“What that gives me, is it gives me the ability for the team to get in and ask specific of the retailers and delve down to find the issue.”

Good competition was expected but needed to be fair, he said.

“We will be looking at it very carefully and ensuring that all our powers are used.”

The Warehouse had sites, staff, shelving and logistical systems in place “so it does certainly make sense”.

“At the moment they’ve got around 9000 products that they supply but that’s really for the top up shop, it’s not the main shop.

“What we would really love to see is more competition on the main shop and I believe they do have the capability to do that but then again, as you say, there’s a lot of water to go under the bridge.”

Director of public policy group Monopoly Watch, Tex Edwards, told Morning Report people were “falling over their skiis” over this and “hadn’t looked at the facts being presented to the financial markets”.

“This is an indicative only non-binding offer so what we know about The Warehouse and what’s been published in financial markets, The Warehouse has really substantial, serious restructuring issues at stake…” Edwards said.

“We know that there’s just been an initial offer and there’s so much more work to do to create a third operator…”

The essential DNA of a third operator sits inside the existing Warehouse infrastructure, he said.

“But what really is required is a level of levelling of the playing field since the three-to-two merger that sort of created this duopoly, monopoly situation in supermarkets…”

Consumers want a like-for-like third operator, he said.