Significant Milestone in Grocery Sector

Commerce Commission and Senate

The Grocery Supply Code, set to take effect on September 28, 2023, marks a significant milestone in New Zealand's grocery sector. The Grocery Commissioner, Pierre Van Heerden, is dedicated to leveraging this unique opportunity to instigate lasting and sustainable change that benefits consumers in the country. This regulatory transformation is part of a broader array of reforms initiated by the government, a direct response to the findings of the Commerce Commission's 2022 Market Study on the grocery industry. Collectively, these reforms are aimed at fostering a more competitive landscape in the grocery sector, ultimately enhancing the experience for consumers.

At its core, the Grocery Supply Code is designed to promote competition and efficiency within the grocery industry. It achieves this by fostering fair conduct between regulated grocery retailers (RGRs) and their suppliers, ensuring transparency in contractual agreements, and creating an environment where a diverse range of suppliers can effectively compete.

A fundamental concern addressed by the Code is the imbalance of negotiating power that exists between major supermarkets and certain suppliers. This disparity in power dynamics can stifle innovation and limit product choices, which in turn affects pricing and variety for consumers.

The overarching vision for a more competitive grocery sector encompasses a trading environment characterized by fairness, supplier innovation, and a wider array of choices and competitive prices for New Zealanders, all achieved through heightened competition among suppliers, wholesalers, and retailers.

Clear expectations have been set for both RGRs and suppliers. RGRs are expected to publicly commit to the Code, ensure their staff is well-informed about its provisions, effectively communicate it to their suppliers, and establish robust systems for capturing supplier feedback. Furthermore, they are encouraged to publicly report their compliance with the Code.

Suppliers, on the other hand, are strongly urged to be aware of their rights, report any instances of inconsistent behaviour by RGRs, and avoid agreeing to opt out of the Code's protections unless it is clearly in their interest to do so.

Transparency, progress monitoring, enforcement of compliance, and regular Code reviews are all integral aspects of the regulatory framework. The primary objective is to minimize any unintended consequences and cultivate a trading environment in which businesses compete confidently. This, in turn, is expected to result in an expanded array of choices and competitive pricing for consumers.

The Code is applicable to all new agreements beginning September 28, 2023, with existing agreements granted a grace period until March 28, 2024, to align with Code provisions. Additionally, plans are underway to establish a dispute resolution scheme dedicated to handling Code-related issues.

The Grocery Commissioner and the regulatory body are readily available to offer assistance, lend an ear, and ensure that individuals' information remains confidential. Complaints can be lodged through the Commission's website, and protocols exist to protect the identities of those providing information. Stakeholders are encouraged to stay updated on developments in the grocery sector via the Commission's website and social media channels. Furthermore, they can contact the Grocery team via email.

The Grocery Supply Code represents a pivotal stride toward a more competitive and consumer-centric grocery sector in New Zealand, and the Grocery Commissioner is fully committed to its success.