Foodstuffs challenges split-store modelling, calls benefits unrealistic
Foodstuffs commissioned a review that disputes the economic assumptions behind the government's plan to separate Pak'nSave from New World and Four Square, labeling the projected gains as implausible.
National proposes that the Commerce Commission evaluate whether detaching Pak'nSave from New World and Four Square would benefit shoppers, based on a Sense Partners study that forecasts price drops of about 3.5% in the first year and a $2.9 billion economy-wide gain over two decades. Foodstuffs responded by commissioning HoustonKemp, whose partner Greg Houston called the projected net benefits "too good to be true" and warned that the model would lead to sustained losses for the sector.
The five-page review points out that the modelling assumes no intra-brand competition, an assumption HoustonKemp says is unsupported given the independent ownership of Foodstuffs stores. Former UK Competition Commission chief John Davies has already praised the original work, but National emphasises that the Commerce Commission’s assessment will determine the outcome. Other parties, including New Zealand First, Labour, the Greens and ACT, have put forward alternative approaches to supermarket competition.
