New Zealand Labour Vows to Investigate Supermarket, Building Supplies Prices

(Bloomberg) -- New Zealand's ruling Labour Party said it will investigate pricing in the supermarket and building supplies industries if it wins this month's election to ensure consumers are paying fair prices.

Labour would initiate a market study into supermarkets before the end of the year, and a similar review of building supplies in late 2021, Prime Minister Jacinda Ardern said in a statement Thursday. The studies to be conducted by the Commerce Commission will look at the structure, conditions and performance of the market to ensure there is sufficient competition to keep prices low.

“Groceries are one of our most regular expenses, and buying or renovating a home is the biggest investment many of us will make in our lifetime, so we want to make sure pricing is fair,” Ardern said. “We want to ensure the cost of living in New Zealand is fair and these market studies have the potential to help, by providing us the information we need to act.”

Labour is set to return to power at the Oct. 17 election. It had 47% support in a One News-Colmar Brunton poll published Sept. 28 and its ally the Greens had 7% backing, enabling them to comfortably form a government. The main opposition National Party had 33% support.

Last year, the Labour-led government requested a market study into the fuel industry, which concluded that consumers were paying higher prices for petrol and diesel than could be expected in a competitive market. Ardern followed up by pushing through a law to improve wholesale competition in the market designed to put downward pressure on pump prices.

New Zealand has one of the most concentrated grocery retail sectors in the world, and a market study will answer questions and concerns raised that consumers are paying more than they should, Ardern said. She said average weekly household spending on food has increased by more than the inflation rate and there is evidence of unequal buying power from the two dominant operators that may push prices up.

Labour said building materials can make up nearly a fifth of the cost of constructing a new home, and there is evidence of barriers to competition that may push prices higher. Two companies control 85% of concrete supply and one company controls 94% of the supply of plasterboard, it said.

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