Friday, 4 March 2011

Can we say "rent seeking"

From an article in the New Zealand Herald:
Kevin Hix, owner of Auckland's QF Tavern, told a committee considering the Alcohol Reform Bill yesterday that the two big supermarket chains had an extraordinary amount of power over the breweries. [...]

"They are cutting the margins to the point where it's very difficult for the breweries to move.[...]

Mr Hix was one of many people in the liquor industry at yesterday's hearing who supported the bill's measures to stem the proliferation of alcohol outlets since the industry was liberalised in 1989.[...]

But Mr Hix said the real problem was the spread of liquor sales in shops and corner grocers that had led to price-cutting.

"I don't know how supermarket operators can sleep at night."[...]

"Now you can buy a Steinlager in a supermarket for $2. In my bars it's $8 to $8.50.[...]

The bill, the first major reform of the industry since 1989, would give local councils powers to control the numbers and locations of liquor outlets. It would make all bars close by 4am and would ban advertising of price discounts of more than 25 per cent below the "normal" price of an alcoholic product.

But Murray Spearman, manager of the Portage and Waitakere licensing trusts in West Auckland, said the bill failed to define the "normal" price and did not go far enough.

"We suggest the best method is a ban on alcohol product price advertising," he said.
I have seen some self-serving, anti-competitive b-s in my time but this really does take the cake beer. Bars may be having a hard time due to competition from other outlets, but so what, that's what competition is all about. This submission to the committee considering the Alcohol Reform Bill is nothing more than a call for the government to guarantee cartel profits to existing bars.


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