Business
The Minister of Trade chooses the wrong scapegoat to demonstrate supermarkets’ anti-competitive behavior: Ponsonby residents are spoiled for choice when shopping
Freshly baked pastries, European cheeses, Samoan chocolates, brightly colored fruits and vegetables and flowers – Gurmukh Mann knows that his customers are willing and able to pay for the best.
In March, Mann took over Bhana Brothers Grocery Store, an 80-year-old institution on Auckland’s most elegant retail strip. He renamed the Ponsonby Rd store My Grocer and lined his shelves with imported food and deli products. “Everyone knows the famous Bhana Brothers, especially because of their large buckets of flowers outside, and I could immediately see the potential to continue the concept, but in a slightly different way,” he says. Broadleaf.
At a time when the two major supermarket chains are being scrutinized to exclude newer, smaller competitors, Mann is not the only challenger in Ponsonby.
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Not only did Woolworths NZ just open a second, smaller Countdown subway on Jervois Rd this month, replenishing its existing supermarkets, but locals also have the option of driving 500m down College Hill to Victoria Park New World, or drive along Richmond Rd to Farro. Fresh.
It’s all a bit awkward for Commerce Secretary David Clark, who last month, on the eve of the budget, urgently tabled a bill to Parliament to prevent Woolworths and Foodstuffs from using land-based and leasing exclusivity agreements to boost their market dominance. retain.
“Our supermarkets were effectively involved in land wars,” he told Parliament, “which in some cases left suburbs and shopping centers without a choice. An example of this is in Ponsonby in Auckland, which is only served by Countdown.”
He took the lead last week in a press release in which he described Ponsonby as an example of the impact of restrictive alliances.
But locals say there are no such covenants in place. He was chosen to take on the wrong business community, they say. In fact, attorneys specializing in such alliances say it would be nearly impossible to close a retail strip like Ponsonby Rd, with hundreds of land blocks held by nearly as many owners.
There is reportedly an exclusivity agreement entered into in the 20-year lease on the Cider Building – the modern five-storey office block on Williamson Avenue, anchored by a large 4,000 m² Countdown supermarket, including two-storey underground parking. The owner is the real estate company Oyster Group, whose CEO, Mark Schiele, declined to comment.
Last night, Clark said the lease agreement is likely to be covered by the new Trade (Grocery Sector Associations) Amendment Bill, which last night had its third parliamentary reading to pass into law. “This is a lease agreement in which Countdown has an interest,” he told Newsroom.
“The test will be whether the exclusivity clause in the lease has the purpose, effect or probable effect of obstructing a retail grocery store or other retail store competing against Countdown. However, it will be up to the courts to decide.”
Newsroom has previously reported on such extraordinary legal battles as one in Auckland’s Highland Park, where two adjacent Countdowns exclude a Pak’nSave. And in Prebbleton, just outside Christchurch, where Foodstuffs sold an attractive piece of land to a mall developer, on the condition that opposing liquor brands could open in the new center.
But Kate Porter, Countdown spokeswoman, said the company has no leases or real estate transactions in Ponsonby that would restrict competitors.
“Our leases are commercially sensitive. Regardless, however, we do not believe that any of our leases have affected or affected competition in Ponsonby – which, apart from all the retailers we have discussed, is also one of the country’s most successful New Worlds. and an extremely busy Farro.
“We are really unsure why the minister singled out Ponsonby,” she added. “My view is that it seems to be a place with one supermarket brand, but as below, there is actually a huge variety of competition, including a New World. There are, of course, places where we are historically more present than other retailers, and vice versa. “
Other than that single lease on the Cider Building, Ponsonby knows commercial real estate agents and owners of no restrictive alliances. A company considering opening a grocery store in the large Ponsonby Central Retail Center, owned by well-known local Andy Davies, has been told there is no legal impediment.
And Daniel Friedlander, CEO of Samson Corporation, says the problems are not related or lease agreements – the problem is that there is no more room to build a supermarket. “I do not think there are enough sites,” he said. “The last major site is the one on Williamson Avenue where they built the Countdown.”
Samson Corporation owns retail properties up and down Ponsonby Road, but no properties large enough for even a Metro supermarket. “No, we would not have the parking for them,” Friedlander said.
Any covenants that did exist would be historic, put in place by previous local landowners, he said. “I will not have the funniest reason why the minister mentions Ponsonby. You will have to ask him.”
Woolworths’ big competitor is Foodstuffs, which owns the brands New World, Pak’nSave and Four Square. It says it has no affiliates in place in Ponsonby.
Under pressure from the Trade Commission, Foodstuffs North Island has already agreed to end the use of restrictive land contracts and exclusivity clauses in leases, and has immediately begun a process to remove all existing such clauses. Meanwhile, the company’s CEO, Chris Quin, has given an undertaking that they will not enforce any covenant or exclusivity clause.
To date, 78 of 135 restrictive bonds have been removed, the company says. The remaining bonds are registered on land that Foodstuffs North Island no longer owns, so they approach the owner of each parcel of land to remove it.
Both supermarket chains say there will be some covenants that are legally difficult to remove, which is why they welcome the new legislation removing them by force.