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Supermarkets - a Solution

So here's a really good solution to the problem of market failure in the grocery sector, staring us in the face.

Foodstuffs are wanting the Commerce Commission to approve amalgamation of their North Island and South Island businesses into a single entity. Gut reaction is no way - it would just add even more to their market dominance.

But on reflection I say maybe - on one absolute condition. That at the same time as they amalgamate geographically, they divest structurally into completely independent wholesale, and retail businesses.

It will be a win-win. Foodstuffs will gain the benefits they are seeking - single national operations with economies in areas like IT systems and executive teams. Meanwhile consumers, independent retailers and suppliers will get the massive gain of a totally independent wholesale operation. Thats what the market needs so desperately.

This idea has some similarity to the way Steven Joyce broke up Telecom. Joyce offered Telecom $1 billion of government money to build the ultra-fast broadband project on condition they agreed to separate voluntarily - getting the benefits for the country while avoiding potentially, years of costly legal action. Telecom went for it in the proverbial nanosecond.

So Grocery Commissioner Pierre van Heerden - there's a suggestion for you. (And even though I'm a consultant I won't charge like Senate PR for it nor insist on a Commission email address or laptop - if you like the idea you can buy me a beer).

Good luck.


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