The Commerce Commission has issued a warning to Woolworths New Zealand over an apparent breach of the Grocery Industry Competition Act, stemming from its review of major supermarkets’ product delisting practices.
“The possibility of products being removed from shelves is a significant weight on suppliers that can reinforce the power imbalance between major supermarkets and smaller suppliers,” Commerce Commission Head of Groceries Alice Hume said.
“Woolworths, Foodstuffs North Island, and Foodstuffs South Island hold 82% of the grocery market in New Zealand and so are the main avenue for most suppliers to sell products.”
“Losing access to such a large portion of the market can effectively signal the end of a smaller supplier. The risk of losing market access can lead to suppliers accepting conditions that aren’t beneficial to them, and a lack of trust about how supermarkets make these decisions.”
“We’ve heard concerns directly from suppliers about the ongoing power imbalance and the major supermarkets’ processes when delisting products,” Hume said.
The Grocery Supply Code imposes requirements on major supermarkets during range reviews to determine stocked products. In these reviews, supermarkets may “delist” items they decide no longer to carry.
The new process grants suppliers clearer rights to challenge delisting decisions and greater transparency in dealings with major supermarkets.
Breaches of the Code also violate the Grocery Industry Competition Act.
ComCom examined the range review processes of all major supermarkets to ensure compliance with their obligations under the Code.
The review identified and assessed that Woolworths New Zealand risked failing to meet its obligations.
Following the investigation, Woolworths New Zealand has been issued a warning for what is likely a breach of the Grocery Industry Competition Act—though only a court can confirm any violation. Woolworths has since updated its processes to comply with its obligations.
“The Code plays a crucial role in levelling the playing field between the major supermarkets and smaller suppliers, so we take compliance very seriously,” Hume said.
“We’ve recently reviewed and updated the Code to make sure that suppliers are protected from retaliation when they raise concerns about or challenge the major supermarkets on their compliance with the Code.”
Suppliers are urged to report any concerns about delisting or other potentially unfair treatment by major supermarkets.
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