Foodstuffs didn’t wake up yesterday morning and discover that it had become one of New Zealand’s two major supermarket operators. New Zealand has historically had much less of that head-to-head geographic competition. Planning restrictions, land availability, supermarket development agreements and restrictive covenants have all been identified as barriers that can make it difficult for a competing supermarket to establish itself in an existing supermarket’s catchment.
Perhaps the problem isn’t that Foodstuffs is too big. Perhaps the problem is that its competitors have been prevented from getting close enough to challenge it. Before politicians start dismantling companies that took generations to build, they should consider this one basic fact: “Don’t break up the supermarket. Break down the barriers that stop its competitor from opening across the road.”
