New Zealand's Weak Competition Laws Enable Corporate Dominance
The New Zealand economy is plagued by a 'parent-child' relationship between dominant corporations and small suppliers, according to Monopoly Watch New Zealand (MWNZ). Prime Minister Christopher Luxon's recent comments suggesting that businesses should be more independent from the government inadvertently highlighted this issue.
MWNZ Research Director Tex Edwards argues that instead of looking to the government for support, small business owners are trapped in a dependency on a handful of large corporations that control essential services and infrastructure. This is due to New Zealand's weak competition law enforcement, which has not kept pace with modern corporate strategies.
A 2024 OECD Economic Survey identified weak competition as a structural factor hindering productivity growth in New Zealand, with the country averaging just 0.2% annual multi-factor productivity growth since 2000, compared to 0.8% across the OECD as a whole.
Market studies have consistently found persistently high margins, limited new entry, and subdued competitive pressure in various sectors, including groceries, fuel, building supplies, and banking. Small businesses account for approximately 97% of all New Zealand enterprises and contribute over a quarter of GDP, yet the profit and bargaining power reside with large corporations.
The grocery supply sector is particularly concerning, as supermarket duopolies impose retroactive rebates, promotional charges, and range-review fees on suppliers, further shrinking their already-thin margins. This pattern repeats across sectors where a small number of incumbents dominate, earning profit per employee far in excess of the wider economy.
MWNZ suggests that modernizing the Commerce Act to give the Commerce Commission more effective tools would be the single most effective way for the government to support small businesses and address these 'parent-child' relationships. This would enable the regulator to intervene in cases where dominant corporations use their power to stifle competition.