Labour is promising to make price gouging illegal, unveiling new powers targeting large companies it says are using their market dominance to charge excessive prices for essentials including food, power, fuel, banking and insurance.
The election policy would introduce a legal test for excessive pricing and give the Commerce Commission new powers to investigate companies with substantial market power.
Businesses found to have gouged consumers could face financial penalties and be required to return their excess profits.
Labour also wants protections extended to suppliers, targeting situations where dominant companies use their market position to force the prices they pay producers unfairly low.
The policy puts the cost of living and competition firmly into the final weeks of the Election 2026 campaign.
What Labour is proposing
Labour’s proposal would apply to large companies operating in markets for essential goods and services where they hold substantial market power.
The sectors identified include:
- Food
- Electricity and other essential power services
- Fuel
- Transport
- Telecommunications
- Banking
- Insurance
The party says the law would establish a test based on whether prices are significantly above what would be expected in a competitive market and whether those higher prices are sustained over time.
The Commerce Commission would be empowered to investigate suspected breaches.
Consumer and supplier representative groups would also be able to pursue cases under the proposed regime.
Companies found in breach could be ordered to surrender the excess profits generated through the pricing behaviour as well as facing additional penalties.
Small businesses not the target
Labour Commerce and Consumer Affairs spokesperson Arena Williams says the proposal is deliberately aimed at companies with significant market power rather than small businesses.
Labour says the policy would not affect the overwhelming majority of New Zealand businesses, including local dairies, cafés and other small operators.
The focus would instead be on markets where consumers have limited realistic alternatives or where barriers make it difficult for new competitors to enter.
That distinction will be important.
Charging a high price would not automatically amount to illegal price gouging.
Labour’s proposed test would require consideration of what prices might reasonably look like under competitive market conditions and whether excessive pricing had persisted.
Cost of living becomes the battleground
The announcement comes as households continue to face significant cost pressures.
Annual inflation reached 4.1 percent in the June 2026 quarter, driven substantially by higher fuel prices associated with conflict in the Middle East.
The Reserve Bank expects inflation to remain above its 1-to-3-percent target range for the remainder of 2026 before falling back inside the band next year.
Higher fuel costs are also feeding through into the prices of other goods and services, including food and transport.
That makes the distinction between genuine increases in business costs and excessive profit-taking particularly important.
Labour’s policy is aimed at the latter.
Food prices put supermarkets in spotlight
The grocery sector will inevitably become one of the major focuses of the debate.
Labour says nearly one in three New Zealand households was unable to afford enough food last year and points to substantial increases in the prices of household staples.
Williams says growers and other suppliers can also find themselves squeezed by powerful companies at the same time consumers are paying more at the checkout.
That is why Labour’s proposal would cover both sides of the transaction.
A dominant business could potentially face action not only for charging consumers excessive prices but also for using its market power to pay suppliers unfairly low prices.
For farmers, growers and food producers, that element could prove just as significant as the consumer protections.
What could it mean for Māori?
The proposal has particular relevance for whānau Māori because the impact of increasing essential costs is not evenly distributed.
Households already spending a large proportion of their income on kai, electricity, transport, housing and other necessities have less capacity to absorb another increase.
That means even relatively small movements in grocery, fuel and power bills can create significant pressure.
The supplier provisions could also matter for Māori businesses operating in food production, horticulture, primary industries and other sectors where smaller producers negotiate with much larger companies.
For Māori enterprises, the question is therefore not only what whānau pay at the supermarket.
It is also whether smaller suppliers receive a fair return when dealing with companies possessing considerably greater negotiating power.
International comparisons will be tested
Labour argues New Zealand is behind other comparable economies in dealing with excessive pricing by companies with significant market power.
The party points to competition regimes in the United Kingdom, Europe, Canada and Australia as evidence that stronger controls can operate alongside normal commercial competition.
But the detail of any New Zealand legislation would be crucial.
Regulators would need to distinguish between prices rising because of legitimate factors — including international commodity prices, wages, transport, energy and supply-chain costs — and prices being kept artificially high because competition is weak.
That could make defining and proving excessive pricing one of the most contested elements of the proposal.
A bigger argument about competition
Behind Labour’s announcement sits a much broader economic question.
What happens when consumers technically have choices, but only a small number of powerful companies dominate an essential market?
Traditional competition policy has often concentrated on anti-competitive conduct, mergers and barriers to competition.
Labour now wants the law to directly confront the prices charged by dominant businesses in essential markets when those prices remain significantly above competitive levels.
That represents a potentially significant expansion of New Zealand’s consumer protection framework.
Election fight shifts to the household budget
Hipkins is positioning the policy as part of Labour’s wider cost-of-living campaign.
The party has already announced proposals involving healthcare costs, public transport fares, household energy and fuel taxes.
National and other parties will now face pressure to explain whether they believe existing competition law is sufficient or whether additional powers are required.
The debate is likely to come down to two competing questions.
How much should governments intervene in the prices charged by private companies?
And what should governments do when an essential market becomes so concentrated that normal competition may no longer provide enough protection for consumers?
For households struggling with the weekly supermarket shop, filling the car or paying power and insurance bills, those aren’t abstract economic arguments.
They’re decisions that can determine how much money is left at the end of the week.
Labour has now placed its answer on the election table:
When a powerful company uses a lack of competition to excessively increase the price of something families cannot do without, Labour wants the law to step in.
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