If we ever needed a reminder of the importance of the grocery sector to New Zealanders, there’s nothing like a Kiwi summer… getting everything you need for the festive season or filling up the chilly bin for a trip to the beach.
This is an industry that never sleeps, and no matter where you are or what you’re doing, you’re never far from the pulse of the grocery supply chain – out on the road, you can see the fresh fruit and veg ripening and goods on the move around the country bringing to a supermarket near you that special ingredient that you’re missing from your pantry.
Pierre van Heerden
This $25 billion sector powers our lives and many New Zealanders' livelihoods and makes up a big chunk of the local economy. I’ve got a real passion for ensuring that everyone in the sector has the right environment to help each of you flourish – and remember that you can be part of the change needed to deliver better outcomes for Kiwi consumers and new opportunities for retailers and suppliers.
This week, I launched my inaugural quarterly e-newsletter. I’ve included the key points from the newsletter in this column, and if you would like to receive the full version or subscribe to future newsletters, you can sign up by emailing grocery.regulation@comcom.govt.nz.
There is a significant focus on the grocery sector right now. The expectation of achieving greater competition and delivering meaningful outcomes for New Zealanders is higher than ever. In talking to people across the sector, I think it’s fair to say there is a sense of pride in the focus on the grocery sector – major supermarkets, suppliers, and new and expanding entrants – and the vital role you all play as part of this ecosystem that fuels New Zealanders, their homes, and livelihoods.
When I started in the newly-created Grocery Commissioner role in July last year, I talked about how improving competition in the sector is a long game that will create long-term, sustainable change.
Part of achieving this is ensuring that you play your part in helping the sector to deliver on this opportunity. Whether you’re a regulated supermarket or expanding retailer, supplier, or another stakeholder, you must understand your obligations, exercise your rights, and bring important information that could hamper competition to the Commission’s attention.
Updates within our work programme:
Monitoring major supermarkets
Within our Grocery team, we have been monitoring the implementation of new regulatory requirements by major supermarkets, including the wholesale regime and grocery supply code, further discussed in this newsletter. We are also focused on requesting information from the major supermarkets to help us with our first annual monitoring report to be published this year. This report will look at how competition is working in the sector. I will have more to share on this soon, so watch this space.
Anonymous “whistleblowing” tool
You may have seen announced last week that our new grocery Anonymous Reporting Tool is now live and available for use. The tool allows individuals to report on conduct in the grocery industry without revealing their identity. We have heard from the industry that there are situations where someone who has knowledge or specific information about the conduct of a grocery industry participant (e.g., a regulated grocery retailer, supplier, or other retailer) might be reluctant to report it for fear of negative consequences or reprisals (such as being delisted from a retail store).
The Anonymous Reporting Tool can be accessed via our Make a Complaint page.
Grocery supply code
The Grocery Supply Code came into force on 28 September 2023. The Code creates new rules for regulated grocery retailers around how they deal with grocery suppliers and for the content and processes associated with supply agreements.
The Code applied immediately to supply agreements made since 28 September 2023. Regarding supply agreements made before the Code’s introduction, regulated grocery retailers have a grace period of six months to identify inconsistencies with the Code and offer variations or new supply agreements. That six-month grace period will end on March 28, 2024.
Please note the obligation is for the regulated grocery retailer to make the offer; suppliers are not required to accept the offer. Suppliers should also not feel pressured to sign any offers from regulated grocery retailers.
After 28 March, the Code's provisions apply irrespective of what is in the agreement. We encourage you to seek legal advice to help understand your rights and situation.
We have preliminarily reviewed the standard grocery supply agreements being issued to suppliers by regulated grocery retailers. We are in the process of providing feedback to regulated grocery retailers as to any issues we think need attention.
We are developing a Grocery Supply Code Checklist to help suppliers, and legal advisors determine if agreements comply with the provisions of the Grocery Supply Code. We plan to make this available in February, but you can read more in our Grocery Supply Code Factsheet.
Wholesale update
Another crucial part of the reforms was introducing requirements for the major supermarkets to provide wholesale to other retailers. Through this new wholesale regime, it is intended that other grocery retailers can access some of the benefits of the major supermarkets’ scale and efficiency to provide a better competitive range and pricing to consumers.
We are watching the roll-out of the major supermarkets’ wholesale offerings carefully and will assess these operations in line with the legislation. We are keen to hear from different stakeholders in the sector to understand their perspectives on the new wholesale operations. This includes retailers trying to obtain goods and suppliers critical in enabling wholesale supply.
If we haven’t been in contact already and you want to share your perspective, we encourage you to email grocery.regulation@comcom.govt.nz. If you are concerned about revealing your identity, you can report information to us through our anonymous reporting tool here.
Other work being led by the Commission
You may be aware that the Commerce Commission has recently opened investigations into Foodstuffs North Island, Foodstuffs South Island, and Woolworths NZ, considering whether the parties' specific pricing and promotional practices comply with the Fair Trading Act. As these are ongoing investigations, we are unable to provide further information. However, further information may be uploaded to our case register as the investigation progresses.
There has also been a significant amount of attention around the application the Commission received for the proposed merger of Foodstuffs North Island and Foodstuffs South Island. Submissions on this merger closed on 1 February 2024 and are being assessed by the mergers team. Mergers are assessed using the substantial lessening of competition test. If you would like to read more about this process, there is more information here.
Summary
The success of the new grocery regime relies on everyone playing their part, and I am heartened by the level of support I am getting from across the sector. Please read up on your obligations, bring any potential issues or matters to us and understand your rights.
My team and I will update you with key developments and reminders about compliance, deadlines, and issues. We will continue to call out concerning behaviour and take action where needed to deliver on our long-term goal.
Please subscribe to our quarterly newsletter to receive these updates via email. You can do this by emailing grocery.regulation@comcom.govt.nz.
A well-functioning market is suitable for all of us; together, we can deliver better prices, better quality innovation, and consumer choice.
Pierre van Heerden
Grocery Commissioner
