National vows to 'pursue' break up supermarket giant Foodstuffs

Watch the announcement live belowNational has made a supermarket break-up a key part of its election pitch, proposing to sever Pak'nSave from New World in a bid to drive down grocery prices.The significant policy was announced with little warning on Wednesday morning, and on the same day that Labour promised to ban big companies from charging excessive prices.National's plan would turn the company into supermarket chains: Pak'nSave, New World/Four Square and Woolworths.The breakup, however, would be contingent on a six-month review by the Commerce Commission into whether the split would leave shoppers better off.If the watchdog gave it the green light, National said it would legislate to force through the separation.In a statement, finance spokesperson Nicola Willis said the shake-up could eventually save households up to $1320 a year, pushing down grocery prices about 5 percent lower than they would otherwise be.The numbers came from a government-commissioned cost-benefit analysis also released today.The modelling estimated prices would be about 3.5 percent lower in the first year of separation, with gains growing as the new chains bedded in. By 2035, the estimated annual household benefit ranged from $200 to $1320 depending on income and family type."That's real money back in the pockets of New Zealanders," Willis said."More competition means supermarkets have to work harder for every customer, on price, specials, range and service. That is how shoppers get a better deal."The independent report also carried some hefty warnings, with the economists warning their analysis was "indicative rather than definitive" and flagging potential "insurmountable" legal and implementation hurdles.Willis stressed that National would act carefully on the Commission's advice and not play "supermarket executive from the Cabinet table"."There is a very high bar for this kind of intervention and National is not pursuing structural separation in any other sector," Willis said."However, after years of reviews and incremental reform, it's clear the status quo isn't working. It's time for change."National said no individual Pak'nSave, New World or Four Square owner would be forced to sell or change brands.Instead, the two Foodstuffs brands would be split into rival nationwide groups, with separate structures and incentives to compete against each other.The Commerce Commission's latest monitoring showed Foodstuffs and Woolworths still controlled about 82 percent of the grocery market, with little movement in the core measures of competition over the past year.More to come.