As the new Code comes into force on the 1st of May 2026, the Commerce Commission’s Head of Groceries, Alice Hume, said that the sector should start preparing.
While this date cannot be confirmed until an MBIE-led process to amend existing regulations is complete, she said it is likely to occur and will be confirmed shortly.
The Regulated Grocery Retailers (RGRs), Woolworths New Zealand, Foodstuffs North Island and Foodstuffs South Island, should identify terms in current grocery supply agreements that are inconsistent with the new Code.
They will have until one month after the Code comes into force to send their grocery suppliers either a proposed variation of terms or a proposed new agreement to bring the agreements into line with the new Code.
Hume added that suppliers are not required to accept the offer and can negotiate in response to the proposal. The protections of the Code will apply irrespective of whether a new agreement is reached.
The most important changes to the Grocery Supply Code include:
- New protections against retaliation. The Commission has introduced a new protection for suppliers against retaliation when exercising a right under the Code, engaging with the Commission or the Dispute Resolution Scheme.
- Changes to address the practice of investment buying. An RGR will no longer be able to order excess stock at a promotional price to retail at a higher price after the promotional period. In this scenario, the RGR must now refund the difference to the supplier.
- Payments for wastage. The Commission has removed an RGR’s ability to charge suppliers for wastage incurred while groceries are in the RGR's effective control.
- New record-keeping requirements for retailers. Further record-keeping requirements will incentivise RGRs to comply with the Code's provisions and assist the Commission with any related investigations. This should not result in an unreasonable increase in administrative burden for either the RGRs or the suppliers.
During the review process, Hume mentioned that the Commission was aware that many suppliers relied on RGRs for a substantial portion of their business. The Commission heard concerns about pressure to supply at unreasonable prices, including the value received from certain payments to RGRs, category review processes, and the limited ability for suppliers to push back on unfair retailer demands or behaviour.
The Commission has identified some changes to the Code, but a key consideration is also how existing Code clauses are complied with and enforced.
Additionally, RGRs have reported to the Commission that they now have clearer, more consistent trading terms, making trading relationships more certain. RGRs have also reported being more systematic and transparent in how they carry out practices such as range reviews, delisting, and handling supplier price increase requests.
In adjusting their processes to comply with the Code, RGRs have found Commission communications, including advice and warning letters, helpful.
“It is also important that suppliers continue to let us know when they are experiencing concerns; this can either be directly to us or through the Anonymous Reporting Tool if they are concerned about revealing their identity," said Hume.
Once the new Code takes effect, Hume said there are significant consequences for breaching, or attempting to breach, the Code, including pecuniary penalties.
For an individual, a maximum of NZD 200,000. In any other case, the greater of:
- NZD three million, or
- the commercial gain, or if this cannot be easily established, three percent of the turnover of the RGR group.
“We are taking an intelligence-led approach with a combination of responding to specific enquiries and also looking into recurring themes. Receiving up-to-date information from suppliers is extremely important for guiding this work.”
Looking ahead, the Commission expects that, over time, there will be improved supplier confidence in exercising rights under the Code, as well as greater RGR compliance with the Code.
“Suppliers are protected from power imbalances between RGRs and suppliers. Ultimately, this environment will lead to long-term efficiency for consumers by grocery channels being optimally competitive.”
Read the new Grocery Supply Code here - https://www.comcom.govt.nz/regulated-industries/grocery/grocery-supply-code/
Read the executive summary of the review here - https://www.comcom.govt.nz/regulated-industries/projects/review-of-the-grocery-supply-code
