Renewed calls to break supermarket duopoly as specials raise original price

There are renewed calls for the supermarket duopoly to be broken up following a new Commerce Commission investigation into misleading pricing at Woolworths and Foodstuffs.  

It follows more than 600 complaints to Consumer NZ about so-called specials including misleading deals - where some specials have the price going up instead of down. 

For example, feta, which was $4.80 is now $4.90, and dog roll which was $12.50 is now $13.10.  

Or, in some cases, people are buying in bulk and paying more than they would if buying the items separately. For example, rice crackers which were $1.09 each, times that by four and it's $4.36. Or, buy four together and it's the special price of $5.00.  

Or, a can of pet food - buy two separately for $2.79 each and it's $5.58 together, but apparently it's a real deal at $6.   

One example of the misleading supermarket specials.
One example of the misleading supermarket specials. Photo credit: Newshub

Consumer NZ CEO Jon Duffy told Newshub it's a marketing tactic. 

"They're creating a whole lot of confusion, that must be a strategy so yes it's a systemic issue," Duffy said. 

It's something customers are well aware of, one person told Newshub. 

"I don't make a fuss but it's annoying, I have found that to be true," one person said. 

"Well that's a bit sneaky," another exclaimed. 

A third person described it as "not good", adding "I think everyone needs to be checking and making sure".  

The Commerce Commission's investigation is focusing on whether some pricing and promotional practices comply with the Fair Trading Act - which could end up in court, depending on the findings.  

"If the court finds the supermarkets are guilty in misleading people about the prices of their goods, there can be quite hefty fines levied against the supermarkets," Duffy explained. 

A campaigner against the supermarket duopoly, Monopoly Watch spokesperson Tex Edwards, said confusing pricing is a known marketing strategy - one which Telecom admitted using in the early 2000s. 

Edwards believed it's creating a useful diversion for the supermarkets. 

"That's why it's a success for the supermarkets, it's almost a tactic to sidetrack the Commerce Commission and officials," he added. 

Both Foodstuffs and Woolworths declined Newshub's request for an interview, but said in a statement they'll cooperate fully with the investigation. 

They added they are making ongoing improvements to pricing and promotion accuracy. 

However, Edwards wants the supermarket duopoly broken up 

"A forced sale of somewhere between 80 and 100 supermarkets, and the forced sale of distribution centres," he stressed. 

He's worried that the merging of Foodstuffs North Island and Foodstuffs South Island will be a bad move for consumers because it'll constrain competition.  

"It's a way of increasing barriers to entry and enabling incumbents to sell out of their business before an inevitable break-up comes," Edwards added.