Governance on the edge: Directors, dominance and the competition reset

In the shadows of well-performing balance sheets, a new fault line is emerging in the New Zealand economy: concentrated markets that stifle competition – and test governance.

Directors may soon find themselves on the frontlines of reform.

With the Commerce and Consumer Affairs portfolio now laser-focused on boosting competition, and the Minister of Finance and Economic Growth backing efforts to “rebalance the economy” through stronger market disciplines, the Government is sharpening its economic performance toolkit. Policy shifts are targeting duopolies and oligopolies from groceries to banking and signalling a move away from deference to market incumbents. Parliament’s inquiry into banking competition has a similar focus.

This isn’t just regulatory rhetoric. The establishment of the Grocery Commissioner, strengthened Commerce Commission powers and calls for easier market entry suggest a broader shift: market power is no longer a private matter. It’s a public concern and one directors can’t afford to ignore. 

Governance and competition: a two-way mirror 

The interplay between competition and corporate governance has always been nuanced. In competitive markets, good governance is often a necessity, not just a virtue. Transparent boards, robust risk management and clear accountability become differentiators. They build trust, attract talent and align long-term strategy with stakeholder expectations. 

Telecommunications offers a textbook example. Spark, as a dual-listed entity on the NZX and ASX, competes vigorously with One New Zealand and 2degrees. It maintains clear governance disclosures on non-financial matters, remuneration and board independence driven as much by investor scrutiny as by customer expectations. Here, governance potentially enhances competitiveness. 
But in less contested sectors, that virtuous circle frays.

New Zealand’s retail grocery market (dominated by Foodstuffs and Woolworths NZ) has drawn fire from regulators and the public alike. The Commerce Commission’s market study found systemic barriers to entry, a lack of genuine price competition and practices such as restrictive land covenants that protect incumbents. Governance, in these cases, might appear to be less a mechanism for accountability and more a shield for entrenchment. 

That’s no longer tenable. 

The reform agenda 

The Government is making clear that weak competition is not a technical issue, it’s an economic growth and social one. The Minister of Commerce and Consumer Affairs has called out “entrenched power” and reaffirmed the Government’s intention to strengthen the Commerce Act, implement new market studies and reduce barriers to entry across key sectors. 

The Minister of Finance and Economic Growth, Hon. Nicola Willis, in recent speeches, has connected competition to broader goals of inclusive growth and productivity. In her words: “The economic impetus for this is clear. Strong competition protects consumer interests, it puts downward pressure on costs, it incentivises innovation and investment, it supports efficient allocation of resources and it drives productivity.” 

That is a pointed signal to dominant firms and their boards. For directors, this changes the game. It means boards must now ask whether their firm’s market position is defensible not just commercially, but socially. They should consider whether governance frameworks are fostering innovation or quietly protecting the status quo. 

And it means preparing for rising regulatory scrutiny, reputational risk and potentially new obligations to disclose conduct that affects competition. 

When competition distorts governance 

Ironically, competition can also create governance stress in the other direction. In low-margin, high-pressure environments, directors may feel incentivised to cut corners – to reduce internal controls, delay investment in systems, or sideline ethical concerns in pursuit of short-term gain. 

The GFC-era finance company failures were emblematic. Boards failed to control related-party lending, disclose risk exposures or manage liquidity. Governance was sacrificed for growth. The result: systemic collapse and a long tail of regulatory response. 

Boards today must resist this pressure. Intense competition (along with other economic and financial pressures) should trigger more robust governance, not less robust governance. 

The capital markets lens 

New Zealand’s electricity gentailers (Meridian, Mercury, Contact and Genesis) offer a case study in adaptive governance. While operating in a concentrated market, they are dual-listed and subject to both NZX and ASX governance expectations. Their disclosures on sustainability (including Climate-Related Disclosures), pricing, and the composition of their boards – with a range of expertise, experience, skills and world views around the board table – reflect the discipline of the market and the heightened expectations of shareholders and civil society alike. 

But not all firms are listed. Cooperatives such as Fonterra and Foodstuffs operate without the same capital market scrutiny, but their governance must still meet modern stakeholder expectations, especially as market concentration draws more political heat. 

Questions for directors  

In this new environment, directors should challenge themselves: 

• • Are we benefiting from market power or building trust through fair competition?
  • Do our governance practices foster innovation and access or protect incumbency?
  • Are we prepared for a regulatory shift that puts competition and fairness at the centre of business scrutiny? 

Good governance isn’t just about mitigating risk. In today’s New Zealand, it’s about anticipating the mood, and movement, of a changing economy. 
Boards that fail to read the direction of reform may soon find themselves the subject of it. 
 
Find out more about the interrelationship between competition and governance in the AI-assisted podcast below: