Hopes end to land-banking will create supermarket competition

May 21, 2022

One way the Government is trying to address the cost of living crisis in the Budget is by urgently moving to stop supermarkets land banking to prevent competition.

In response to recommendations by the Commerce Commission, the Government is rushing through a law change that would rip up covenants that allow operators to effectively landbank by preventing others from building on a site.

The covenants have made it difficult for operators to compete against duopoly outfits Progressive Enterprises and Foodstuffs.

"It’s been a dirty secret for a long time to use land banking and blocks on leases to keep competitors out, so immediately, anybody who wants to come into the market knows they’ll be able to get a site," Katherine Rich from the Food and Grocery Council said.

Rich is confident ending the practice will make a difference to increasing competition.

READ MORE: Shopper finds ordering groceries from Aus cheaper than NZ supermarket

Commerce Minister David Clark said the practice has been used to block rivals setting up shop.

"To stop their competitors coming into New Zealand, or even into their suburb, they put a restrictive covenant or a lease on land."

National is supporting the bill.

"We need to be able to make sure there are less barriers for entry, if it means retailers can come in, it makes them easier to do so, that’s a good thing," leader Christopher Luxon said.

It is not known exactly how many sites are covered as it’s been a tightly held secret.

Countdown refused to tell 1News how widespread its use of covenants is.

Foodstuffs says it’s released 78 out of 135 titles and are working on removing the rest.

Both companies say they support the legislation.

Rich expects Māori businesses to take advantage of new opportunities, and independent retailers.

Night 'n Day says it also wants the duopoly to release its hold on the supply of goods.

“By having independent or forced wholesale to competitors on meaningful terms, that’ll allow of real competition in the industry,” says general manager Matthew Lane.