The Commerce Commission has issued a warning to Foodstuffs North Island for a probable violation of grocery competition regulations.
The Grocery Industry Competition Act 2023 mandates retailers to always engage with suppliers in good faith.
“I’m concerned that this follows a pattern of behaviour that has been present in the industry for decades,” Grocery Commissioner Pierre van Heerden said.
“This behaviour has been enabled for so long due to the significant power imbalance between the major supermarkets, who hold the vast majority of the market, and suppliers, who have limited bargaining power in comparison.”
Van Heerden said Foodstuffs North Island seems to have hindered and postponed a supplier’s request by behaving in a manner that we consider uncooperative and unreasonable.
“In this instance, based on the evidence we have, we decided a warning was the right response. However, if more examples come to light, we will not hesitate to take further action.”
He mentioned that the Category Manager at FSNI, who served as the primary contact for the supplier, was also investigated for their involvement in this issue.
“Suppliers are reliant on their relationships with the retailers’ commercial teams, so the staff in these roles within the supermarkets hold a lot of power.”
“Any behaviour that weaponises this power imbalance is unacceptable,” he added.
“The major supermarkets have a responsibility to make sure their staff are properly trained. They need to make sure their staff follow the rules and deal with suppliers in good faith.”
Van Heerden pointed out that amendments to the Supply Code were suggested to increase oversight of these relationships and to clarify what constitutes acceptable conduct.
“Our supplier survey showed that 37% of suppliers reported their interactions with Foodstuffs North Island as negative or very negative.”
“This is significantly higher than suppliers’ ratings for Woolworths and Foodstuffs South Island, at approximately 20%.”
ComCom expressed appreciation for suppliers who have come forward to report issues, allowing them to take action. In this case, they received information directly from the supplier involved.