The Commerce Commission is calling on suppliers to come forward if there are any concerns around non-compliance or potential unfair treatment from major supermarkets.
This comes after the commission announced that it wants to stamp out old-style “handshake” supply agreements in the grocery sector.
The commission said this is necessary to level the playing field and address a historical power imbalance and pressure tactics between the major retailers and produce and goods suppliers.
Grocery Commissioner Pierre van Heerden said new rules taking full effect this month will help drive more effective negotiations between the major supermarkets and suppliers.
These will in turn deliver long-term benefits for consumers.
The new Grocery Supply Code, which took full effect on March 28, will for the first time provide transparency and certainty for suppliers, ensuring appropriate and comprehensive agreements with supermarkets and will “encourage suppliers to negotiate the specifics of deals before signing”.
“A handshake or verbal agreement is no longer good enough, and suppliers should not feel pressured into signing an agreement without the chance to negotiate the terms with a supermarket first,” Van Heerden said.
Kiwi shoppers should know that suppliers of the products they buy are being treated fairly and transparently by supermarkets, he said.
“This is a $25 billion sector, and with deals often being made ad hoc, verbally and at times pressuring small suppliers, this new Grocery Supply Code is about formalising more comprehensive agreements – creating more transparency and certainty for suppliers about what they are signing up to, protecting them from unfair conduct, so they can better compete and succeed.”
The commission will monitor supermarkets to stamp out non-compliance with the code, Van Heerden said.
There are a number of protections for suppliers in the code that prohibit retailers from requiring certain types of payments or engaging in certain conduct, unless the supplier agrees to them under the agreement.
Horticulture New Zealand had already backed the commission’s call for a grocery code of conduct in 2021.
Farmer’s Weekly reported then that HortNZ chief executive Nadine Tunley said it would increase transparency and reverse the imbalance of power.
“HortNZ supports any move to ensure that growers get a better return on their investment, so that they will continue to invest in fruit and vegetable growing,” Tunley said.
A report by the NZ Food and Grocery Council to the commission said that in most cases there was an imbalance of bargaining power in favour of grocery retailers.
Some large suppliers of well-known brands have relatively strong bargaining positions, but in many cases suppliers are likely to be more dependent on the major grocery retailers than the retailers are on suppliers.
