Labour promises wholesale separation for Foodstuffs and Woolworths
Labour would force Foodstuffs and Woolworths to run their wholesale operations independently from their retail stores if it wins November's election.
The policy would create two separately managed wholesalers, Foodstuffs Wholesale and Woolworths Wholesale. Labour says independent operation would give smaller grocers more places to buy stock and make it easier for new supermarkets to open and grow, according to RNZ.
Commerce and consumer affairs spokesperson Arena Williams is fronting the proposal. The mechanism is operational separation. Wholesale and retail would sit under the same ownership but run at arm's length, with separate management and commercial incentives.
Labour says that separation would stop the wholesalers cutting off supply once smaller retailers start winning customers. The rule would function as a non-discrimination obligation. Volume would not determine access.
The plan would also unwind restraint of trade provisions inside the existing networks. Labour points to stores such as Four Square. It says those restraints currently prevent members from discounting below set levels, switching banners, or leaving to trade independently.
The proposal builds on the last round of grocery intervention. The previous government required Woolworths and Foodstuffs to conclude wholesale supply agreements with rival retailers or face regulated wholesale pricing set by government. That ultimatum produced negotiated supply deals rather than direct price control.
Labour is now arguing those deals did not fix the underlying incentives. Its case rests in part on the Commerce Commission's wholesale review earlier this year. The review found Woolworths had strengthened its wholesale offer, including through a dedicated wholesale business. It found Foodstuffs North Island had made incremental improvements, while Foodstuffs South Island had been slower to act.
On outcomes, the Commission found competition remained weak. Pricing, range and access had not shifted far enough to support sustained independent retailing. That finding is central to Labour's argument for a structural remedy rather than another round of monitored supply terms.
National is campaigning on a different intervention. It has vowed to break up Foodstuffs if re-elected, a retail-level split rather than a wholesale separation. Under that plan the Commerce Commission would get six months to assess whether the break-up could be done, according to RNZ.
The distinction matters for officials and for the sector. Labour would intervene at the wholesale layer and apply the rule to both major groups. National would intervene at the retail layer and target the Foodstuffs co-operative model specifically.
The broader context here is the choice between regulating conduct and restructuring incentives. Wholesale separation assumes the problem is vertical integration, where a wholesaler that also retails has reason to favour its own stores on price, range, or service. Independent management, separate accounts and information barriers are meant to neutralise that incentive without changing ownership of stores.
In my view, the questions political staff and policy advisers will test are definitional and practical. What counts as independent in day-to-day purchasing, logistics and ranging decisions. How the ban on supply cut-offs and the removal of restraints are drafted and enforced. And whether two wholesalers, both still linked to the incumbents, provide enough depth of range and national distribution to underwrite genuine entry. Those are implementation issues, but they will determine whether the policy reads in the Beehive as competition reform or as a compliance exercise.
