Sunday, August 14, 2022

Supplier-retailer code of conduct part of supermarket shakeup

A mandatory code of conduct between supermarkets and suppliers along with establishing an industry regulator are among the dozen changes the Government wants to introduce to the grocery sector.

The changes come as the Government responds to the Commerce Commission’s market study of New Zealand supermarkets.

The report found supermarkets earn $1 million a day in excess profits, straight from the pockets of Kiwi consumers.

The Government has accepted 12 of the report’s 14 recommendations and is taking stronger action on the other two.

Minister of Commerce and Consumer Affairs David Clark said the supermarket industry was not working.

“It’s not competitive and shoppers aren’t getting a fair deal. The duopoly needs to change, and we are preparing the necessary legislation to do that.”

Clark said the Government had rejected the commission’s recommendation for a three year review timeframe because of the cost of living pressures facing New Zealanders.

“Our supermarkets know they’re in the spotlight, and we’ve recently seen some posturing around price rollbacks. However, it doesn’t fix the systemic problem at large – which is a lack of genuine competition in the sector.”

Clark called on the supermarkets to open up their wholesale arms to would-be competitors, at a fair price. 

“Do this knowing the Government is determined to get a regulatory backstop finalised by the end of the year.

“If supermarkets do not strike good-faith wholesale deals with their competitors – our regulatory measures will make it happen for them. We are not afraid to unlock the stockroom door to ensure a competitive market.

“We are also looking at how to implement compulsory unit pricing on grocery products which will give shoppers the ability to better compare products. Plus, we’re getting ready to launch consultation on the code of conduct that retailers will have to adhere to.”

The Commerce Commission will act as an interim industry regulator until the Government has established an entity for this role.

“Once established the ‘watchdog’ will help keep pressure on the grocery sector, by providing annual state-of-competition reviews to keep supermarkets honest, as opposed to the check-in after three years recommended by the commission. It will also facilitate a resolution scheme to mediate disputes between suppliers and retailers,” Clark said.

The two recommendations not accepted by the Government relate to implementing a voluntary wholesale access regime and to a review of competition in three years.

Clark said he has spoken with both supermarket companies.

“They know what is expected from them and the length of time we are prepared to give them to change before regulation kicks in.

The changes will sit alongside legislation announced at the Budget to ban supermarkets from using restrictive covenants on land, and leases to block competition from setting up shop in certain suburbs and shopping centres. This Bill is currently with select committee.

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