Jail Time for Foodstuffs?

“You’ve just witnessed a crime. This could mean jail time.”

That’s a quote from a catchy little video clip recently posted on the Commerce Commission Web site. It shows two real estate agents having coffee and agreeing to split their territory. “I’ll keep to the north of the main road and you keep to the south.”

But it begs a massive question. If that applies to small real estate agents, surely it applies even more to a pair of the country’s biggest businesses?

I’m talking about Foodstuffs South Island and Foodstuffs North island. They have been around under the Foodstuffs name since the 1930s depression. Of course, they’ve morphed with time – these days FSSI may still be a genuine cooperative but FSNI appears more like a privately-held company with concentrated ownership – the overall structure is clouded in complexity.  

But the key point is the two openly admit they have agreed not to compete against each other across Cook Strait.

So if two tiny real estate agents could get jail time for exactly that, why not the vastly more powerful Foodstuffs owners?

The answer is there is no reason – only the lack of political will to enforce a blindingly obvious solution to a long-standing economic problem.

There would of course, be consequential changes needed. The two entities cooperate in procurement, share retail brands, advertise jointly and so on.

But that’s all fixable. Their joint entity Foodstuffs New Zealand would have to be shut down. Directors could no longer sit on the Boards in both islands. Some stores would have to be exchanged between the two and possibly re-branded – something that Woolworths have shown recently is easily done. And most importantly there would need to be a total absence of communication on matters to do with pricing, procurement and marketing. Otherwise, as the Commission tells the real estate agents unambiguously – “this could mean jail time.”

They’d probably want to re-name their companies to remove the implication of a “one Island” operation. Maybe “Mary’s Mart” and “Chris’s Kitchen.” But that’s easy – companies do it every hour of the day.

You'd have to give them time to comply - say a few months. Maybe before the 2026 election?

Way back, the non-competition didn’t matter – in the 1980s we had half a dozen competing supermarket chains with all the price and service competition that brings.

But now it absolutely matters. That’s probably a key reason why the Commission listened to many submitters and declined to let the two companies merge fully a year ago.

Others have highlighted this opportunity previously. Emeritus Professor Tim Hazledine of Auckland University has been among them, as well as Lisa Asher and other academics. None of this is rocket science. It seems the only people who don’t get both the problem and the solution are those with the power to fix it.

Its high time our political leaders were called to account on this. As we stand in the checkout queue watching the prices go up before our eyes, we should reflect that there is a solution staring them in the face.

The question to ask – to the political leaders, the Commerce Commission, and everyone else in positions to make a move is – “Do we have different standards for small businesses like real estate agents on one hand, and large businesses like supermarkets on the other?”

If the barriers are to do with the legislation then the legislation needs changing. And if they are to do with the politicians, then the politicians need changing.